A completely and accurately anticipated expansionary monetary policy will increase real output in the short run but not in the long run.
a. True
b. False
Indicate whether the statement is true or false
Question 2An inefficient manufacturing base is likely to result when:
a. only those goods are produced in which the domestic economy has a comparative advantage.
b. a newly developing economy has no international trade controls.
c. competitive foreign imports are restricted.
d. the economy produces only those goods in which it has technical expertise.
e. producers compete solely on the basis of low cost.
Question 3The more elastic the demand curve, the ____ will be the effect of a tax on the quantity exchanged and the ____ will be the welfare cost.
a. greater; greater.
b. greater; smaller.
c. smaller; greater.
d. smaller; smaller.
Question 4When expansionary policy is unanticipated, it leads to a short-run expansion in output and employment.
a. True
b. False
Indicate whether the statement is true or false
Question 5The practice of imposing import restrictions to protect a newly developing domestic economy typically results in:
a. a rapid improvement in the standard of living.
b. expanded trade relations with other nations.
c. lower prices of domestic products.
d. allocation of resources away from the primary products.
e. greater cost efficiency in domestic production.
Question 6Other things equal, for a given tax, if the demand curve is more elastic,
a. the greater the tax revenue raised and the greater the deadweight cost of the tax.
b. the greater the tax revenue raised and the smaller the deadweight cost of the tax.
c. the less the tax revenue raised and the greater the deadweight cost of the tax.
d. the less the tax revenue raised and the smaller the deadweight cost of the tax.
Question 7If people expect economic fluctuations to be permanent and caused primarily by supply-side shifts, then the result is likely to be a positive relationship between the inflation rate and the unemployment rate.
a. True
b. False
Indicate whether the statement is true or false
Question 8Which of the following is true?
a. If the consumer is a buyer of several units of a good, the earlier units will have greater marginal value and therefore create more consumer surplus, because marginal willingness to pay falls as greater quantities are consumed in any period.
b. When some units of output can be produced at a cost that is lower than the market price, the seller receives a surplus, or net benefit, from producing those units.
c. At the market equilibrium both consumers and producers benefit from trading every unit up to the market equilibrium output.
d. All of the above are true.
Question 9A tariff imposed on foreign imports will cause _____.
a. demand for imports to increase
b. domestic prices of imported goods to rise
c. market supply of importable goods to increase
d. domestic prices of imported goods to fall
e. market supply of domestic goods to decline
Question 10The natural rate hypothesis suggests that improvements in technology that occur normally during the course of time will lead the economy to the natural rate of unemployment.
a. True
b. False
Indicate whether the statement is true or false
Question 11The replacement of foreign manufactured goods by domestically manufactured goods is called _____.
a. import swap
b. export substitution
c. primary production
d. import substitution
e. trade protectionism
Question 12A tax in an industry would result in:
a. a decrease in consumer surplus.
b. a decrease in producer surplus
c. a decrease in the gains from trade.
d. all of the above.
Question 13Either supply shocks or adjusting inflation expectations can shift the short run Phillips curve.
a. True
b. False
Indicate whether the statement is true or false
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