Which of the following is true?
a. Once the equilibrium price and output is reached, all the mutually beneficial trade opportunities between suppliers and demanders will have taken place, and the sum of consumer and producer surplus is maximized.
b. The deadweight loss of a tax is the difference between the lost consumer and producer surplus and the tax revenue generated.
c. Those goods that are heavily taxed often have a relatively inelastic demand curve in the short run, so that the burden falls mainly on the buyer, and the deadweight loss to society is smaller than if the demand curve was more elastic.
d. All of the above are true.
Question 2Rational expectations theory suggests that government or central bank policies designed to change aggregate demand will be effective.
a. True
b. False
Indicate whether the statement is true or false
Question 3To follow an outward-oriented strategy, a country that has scarce natural resources and abundant labor supplies should _____.
a. export primary goods and import manufactured products
b. export manufactured goods and impose import restrictions on primary goods
c. export both primary and manufactured products
d. export primary goods and impose trade restrictions on manufactured goods
e. export manufactured products and import primary goods
Question 4If a tax is increased,
a. consumers will pay a higher price.
b. consumers will lose consumer surplus.
c. producers will receive a lower price after taxes.
d. all of the above are true.
Question 5Critics of the extreme rational expectations theory argue that wages and input prices do not adjust instantaneously.
a. True
b. False
Indicate whether the statement is true or false
Question 6The Taiwanese government allows tax credits for domestic producers who compete with manufacturers in First World nations. This suggests that Taiwan engages in _____.
a. trade protectionism
b. export substitution
c. foreign exchange market intervention
d. import substitution
e. voluntary export restrictions
Question 7After a tax is imposed,
a. consumers pay a higher price.
b. consumers lose consumer surplus.
c. producers lose producer surplus.
d. all of the above are true.
Question 8Rational expectations theory implies that the more completely the effects of policy makers are foreseen, the smaller their short run effects on real output and unemployment, and the greater their short run effects on the price level.
a. True
b. False
Indicate whether the statement is true or false
Question 9The economic development strategy aimed at exporting domestically manufactured goods is called a(n):
a. replacement strategy.
b. market-oriented strategy.
c. inward-oriented strategy.
d. outward-oriented strategy.
e. future-oriented strategy.
Question 10The more elastic the supply 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.
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