Which of the following are arguments that have been and currently are used to justify protectionism? (a) The infant industry argument (b) Tariffs create lower profits, generate fewer jobs, and reduce wages in the U.S. (c) Countries should not operate on the basis of comparative advantage. (d) All of the above ANSWER (a)
The economy of the northern colonies, in particular New England, was largely based on (a) small-scale farming. (b) slave trade. (c) cotton production. (d) all of the above. ANSWER (a)
Economic growth ________. A) is driven by different elements in different economies B) is driven primarily by digital technology C) is driven primarily by labor growth D) cannot be explained using economic models ANSWER A
In the classical theory of aggregate demand, a decrease in the velocity of money leads to a. a downward shift in the aggregate demand curve, a fall in prices, and no change in output. b. an increase in the aggregate demand curve, a rise in prices, and no change in output. c. no change in […]
World War II (1941–45) bond sales (a) were successful and purchased primarily by banks, not private individuals. (b) were successful and purchased primarily by private individuals, not banks. (c) were successful but eventually led to inflation when bondholders decided to cash them in or sell them to the Fed. (d) were not successful. ANSWER […]
Which government policy is the principal focus of Ricardian Equivalence? A) tax cuts B) government spending increases C) government borrowing D) seignorage ANSWER A
Which of the following efficiency wage models centers on the morale of a firm’s workers? The a. shirking model. b. gift exchange model. c. turnover model. d. None of the above ANSWER B
According to the Keynesian model, the optimal fiscal policy is to a. increase cyclical but not structural deficits during a recession. b. reduce cyclical and structural deficits during a recession. c. increase structural deficits during an recession. d. maintain a balanced budget in case of national emergency. ANSWER A
Traditional Keynesians tend to favor a. monetary policy over fiscal policy because of the effectiveness of central banks. b. monetary policy over fiscal policy because it reduces interest rates.. c. fiscal policy over monetary policy because it doesn’t impact interest rates. d. fiscal policy over monetary policy because of the liquidity trap. e. none of […]
The slowdown in U.S. economic growth in the period 1974-95 was primarily caused by ________. A) falling labor growth B) falling capital growth C) falling productivity growth D) none of the above ANSWER C
