Politicians often argue for tariff increases in order to reduce the nation's dependence on imports. If tariffs are increased, the long-run effect is most likely to be:
A. an increase in American imports, and a decrease in American exports.
B. an decrease in American imports, and an increase in American exports.
C. an increase in both American imports and exports.
D. a decrease in both American imports and exports.
Ans: D. a decrease in both American imports and exports.
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Industrial policies are:
A. favorable tax policies to encourage private domestic investment in certain industries. B. favorable trade policies to encourage private investment in certain industries. C. government investments in certain industries to encourage growth in those industries. D. All of these are true.
Refer to the above figure. The equilibrium level of real GDP occurs
A. to the right of point A. B. at point A. C. to the left of point A. D. at the undetermined point on the graph depending upon the level of investment.