Refer to the figure above. With free trade, the total quantity of imports would equal
A) 10,000 units.
B) 20,000 units.
C) 22,000 units.
D) 30,000 units.
B
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In the modern Keynesian model, over much of its range the short-run aggregate supply (SRAS) curve is
A) horizontal. B) vertical. C) upward sloping. D) downward sloping.
If interest rates are to remain constant, the money supply should change: a. in the opposite direction to a change in aggregate demand. b. in the same direction as a change in money demand
c. only when investment changes. d. only when the demand for money decreases. e. only when the inflation rate changes.
Describe how the substitution effect and the income effect influence decisions
What will be an ideal response?
Answer the following statements true (T) or false (F)
1. When the government bails out failing banks, it creates a moral hazard problem; but when the government bails out homeowners who are defaulting, there is no moral hazard problem. 2. When critics of unemployment insurance claim that some of the unemployed are not exerting much effort to find jobs because of the unemployment benefits, they are referring to the moral hazard problem. 3. E-bay and Amazon provide "sellers' ratings" information based on the experiences of past buyers. This is to help resolve the adverse selection problem faced by potential buyers. 4. An example of an adverse selection problem is in insurance, where the people most likely to claim insurance payouts are the people who will seek to buy the most generous policies.