A government payment to producers for the difference between a target price and the price at which producers were able to sell their goods is known as a:
a. subsidy.
b. deficiency payment.
c. producer surplus.
d. price support.
Question 2Rules advocates believe that the central bank should change interest rates in an attempt to fine tune the economy.
a. True
b. False
Indicate whether the statement is true or false
Question 3The deteriorating-terms-of-trade-argument is based on an assumption that the value of ____ will fall over time.
a. labor inputs
b. capital inputs
c. technology
d. manufactured goods
e. primary products
Question 4A tax would not impose a welfare cost only if:
a. the quantity exchanged did not change as a result.
b. supply was perfectly elastic.
c. supply was unit elastic.
d. the demand curve was perfectly elastic.
Question 5Stagflation caused by a negative supply shock makes macroeconomic policy very difficult; trying to reduce the size of a recession caused by the shock leads to a higher price level.
a. True
b. False
Indicate whether the statement is true or false
Question 6If the government wanted a tax to raise a great deal of revenue but not burden producers much, it would want to tax an industry with
a. elastic supply and demand curves.
b. inelastic supply and demand curves.
c. inelastic supply and elastic demand.
d. elastic supply and inelastic demand.
Question 7What is measured by the ratio of export prices to import prices?
a. The terms of trade
b. The productivity ratio
c. The trade standards
d. The gains from trade
e. The balance of trade
Question 8Most macroeconomists believe that both fiscal and monetary policy can shift aggregate demand and that such interventions can be counterproductive.
a. True
b. False
Indicate whether the statement is true or false
Question 9Which of the following is an argument in favor of outward-oriented strategy?
a. It leads to a fall in government deficit spending.
b. It leads to a fall in domestic prices of imported goods.
c. It helps the economy to grow more rapidly by encouraging exports.
d. It leads to an increase in the price of exported goods in the foreign markets.
e. It leads to an increase in the supply of goods and services in the domestic market.
Question 10If the government wanted a tax to reduce the quantity exchanged a large amount but not raise much in tax revenue, it would want to tax an industry with
a. elastic supply and demand curves.
b. inelastic supply and demand curves.
c. inelastic supply and elastic demand.
d. elastic supply and inelastic demand.
Question 11Activists believe that monetary and fiscal policy will only work if it comes as a surprise to the public.
a. True
b. False
Indicate whether the statement is true or false
Question 12Which of the following would encourage domestic producers to compete internationally?
a. Tax increases
b. Policies that make domestic sales more attractive
c. Cash payments
d. Expropriation
e. High-interest loans