In a market economy, supply and demand are important because they
a. play a critical role in the allocation of the economy's scarce resources.
b. determine how much of each good gets produced.
c. can be used to predict the impact on the economy of various events and policies.
d. All of the above are correct.
d
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One reason for the success that firms have in getting the government to erect barriers to foreign competition is that jobs lost to foreign competition are easy to identify but jobs created by foreign trade are often hard to identify
Which of the following is a second reason? A) Firms that benefit from trade barriers have more money to lobby government officials to support the barriers than do firms that are harmed by trade barriers. B) The costs that tariffs and quotas impose on consumers are large in total but relatively small per person. C) The benefits from free trade are less than the costs. D) People who benefit from foreign trade tend not to vote in elections; people who are harmed by foreign trade are much more likely to vote.
Assume that the expectation of declining housing prices cause households to reduce their demand for new houses and the financing that accompanies it. If the nation has low mobility international capital markets and a flexible exchange rate system, what happens to the real risk-free interest rate and real GDP in the context of the Three-Sector-Model?
a. The real risk-free interest rate falls, and real GDP rises. b. The real risk-free interest rate rises, and real GDP remains the same. c. The real risk-free interest rate and real GDP remain the same. d. The real risk-free interest rate falls, and real GDP falls. e. There is not enough information to determine what happens to these two macroeconomic variables.