Your text identifies all of the following as reasons why unsustainable debt may occur EXCEPT A) when countries are dependent on one or two key export commodities, and there is a sudden drop in the price of those commodities. B) when natural disasters occur. C) when civil conflicts are resolved and a peace dividend occurs. […]
The United States, as it began its long and successful growth in the early 19th century, consciously promoted domestic production through such activities as tariffs, Clay’s American System, and many direct subsidies to railroads, canal companies, farmers (free land) etc. Today we view this blatant example of large scale and extensive import-substitution industrialization as having […]
Japan’s protection of its semiconductor (RAM) producers is today seen as an object lesson in A) how strategic planning may backfire and cause a large waste of resources. B) how externalities may be successfully exploited by protectionist policies. C) how excess returns may be successfully exploited by protectionist policies. D) how government intervention may create […]
The first and biggest problem the EU faces in its expansion to the east is A) the reform of its agricultural subsidy programs. B) the lack of democracy in the countries that are most likely to become members. C) the unwillingness of the new members to adopt EU rules. D) the lack of market economies […]
In a two product two country world, international trade can lead to increases in A) consumer welfare only if output of both products is increased. B) output of both products and consumer welfare in both countries. C) total production of both products but not consumer welfare in both countries. D) consumer welfare in both countries […]
The U.S. Balance of Payments is constructed by A) the U.S. Department of Labor. B) the U.S. Department of Agriculture. C) the U.S. Department of Commerce. D) the Council of Economic Advisers to the President. ANSWER C
The LM curve represents combinations of income and interest rate which A) clear the goods market. B) achieve the external equilibrium. C) clear the money market. D) achieve internal equilibrium. ANSWER C
An increase in the money supply would A) shift the LM curve to the left. B) shift the IS curve to the right. C) shift the IS curve to the left. D) shift the LM curve to the right. ANSWER D
What is immizerizing growth? Describe how it could happen and give at least one cited historical example. What will be an ideal response? ANSWER Immizerizing growth represents economic growth that results in a reduction in national welfare. When a large country expands its productive capacity of an exported good, the biased economic growth will […]
Given the information in the table above, if the world equilibrium price of widgets were 4 cloth, then A) both countries could benefit from trade with each other. B) neither country could benefit from trade with each other. C) each country will want to export the good in which it enjoys comparative advantage. D) neither […]
