Restrictions that limit sugar imports, subsidies for the construction of sports stadiums, and federal spending on programs like the construction of an indoor rain forest in Iowa all provide examples of government programs
What will be an ideal response?
that reflect the political attractiveness of special-interest issues
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Two firms, Industrio and Capitalista, have access to five production processes, each of which has a different cost and gives off a different amount of pollution. The daily costs of the processes and the corresponding number of tons of smoke emitted are shown in the table below. Both firms currently use process A, and each emits 4 tons of smoke per day. The government is considering two plans to reduce pollution: requiring both firms to reduce pollution by 25 percent or auctioning pollution permits. Each permit would entitle the owner to emit one ton of smoke per day. Without a permit, no smoke can be emitted.Process(smoke/day) A(4 tons/day) B(3 tons/day) C(2 tons/day) D(1 ton/day) E(0 tons/day) Cost to Industrio ($/day) $350$400$500$700$1,000 Cost to Capitalista
($/day) $225$250$290$400 $600Suppose the government decides to auction 6 permits. The government conducts the auction by starting at a price of $1 and asking how many permits each firm wants to buy at that price. If the total is more than 6, it raises the price by $1 and asks again until the total quantity demanded falls to 6. Under this system, each permit will sell for ________ with Industrio buying ________ and Capitalista buying ________. A. $41; 4; 2 B. $31; 2; 4 C. $101; 3; 3 D. $51; 4; 2
According to liquidity preference theory, as real income increases, so does ________
A) the supply of real money balances B) the demand for real money balances C) the real interest rate D) all of the above E) none of the above
Although a corporation that is owned by its member banks, the Federal Reserve System
a. reports directly to the president in an annual report. b. is quite independent of them, and they receive almost none of the Fed's profits. c. is administered by Congress and all its profits are distributed to the member banks. d. turns all its profits over to the state governments of each district bank.
An inflationary gap will occur when
A. real GDP exceeds nominal GDP. B. nominal GDP exceeds real GDP. C. real GDP exceeds potential GDP. D. potential GDP exceeds real GDP