Assuming a firm would not survive without protection, what should the government do if the present value of the profits and value added from operating an infant industry firm exceed the deadweight loss of imposing protection?
a. It should impose the tariff—the gains exceed the losses.
b. It should not impose the tariff—the losses exceed the gains.
c. If it imposes the tariff, it may actually create more problems that cannot be foreseen—do not impose the tariff.
d. The government should just ban all imports of that product until the "infant" is able to compete on its own.
Ans: a. It should impose the tariff—the gains exceed the losses.
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What asset is created by government, not sold on financial markets, not issued by financial intermediaries, and is held directly by savers?
A) checkable deposits B) currency C) government bonds D) mortgages