Suppose the government spends $10 billion subsidizing firms producing electricity with wind turbines because these firms are high cost producers. Will the subsidies lead to economic growth and higher income levels?
A) No, the turbines are an inefficient form of producing electricity and therefore the subsidies will increase the opportunity cost of supplying it.
B) Yes, because more people will be employed by the firms producing electricity with wind turbines.
C) Uncertain, higher income levels will be achieved if the employment of the firms producing electricity with the wind turbines expands; if not, incomes will fall.
D) Yes, because the government will be able to finance the subsidies without reducing private sector output.
A) No, the turbines are an inefficient form of producing electricity and therefore the subsidies will increase the opportunity cost of supplying it.
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If the dollar falls by 20% against the euro and rises by 10% against the yen, which of the following values for European and Japanese trade with the United States are consistent with a 10% increase in the effective exchange rate of the United States?
a. Europe: 33%; Japan: 66% b. Europe: 66%; Japan: 33% c. Europe: 50%; Japan: 50% d. None of these values is consistent with this increase.
In the main chorus of the Keynes-Hayek rap lyrics, Keynes states "I want to steer markets" and Hayek replies, "I want them set free.". These statements are referring to
a. the tendency of Keynesians to favor government intervention and central planning and the tendency of Hayekians to favor free markets. b. the tendency of Keynesians to favor restrictive fiscal policy and the tendency of Hayekians to favor expansionary fiscal policy. c. the tendency of Keynesians to favor budget deficits and the tendency of Hayekians to insist on budget surpluses. d. the tendency of Keynesians to favor fiscal policy and of Heyekians to favor monetary policy.