The argument that it is necessary to protect a new industry to enable it to grow into a mature industry that can compete in world markets is known as the
A) national security argument.
B) diversity argument.
C) infant-industry argument.
D) environmental protection argument.
E) national youth protection argument.
C
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If the price of a product increases by 5 percent and the quantity demanded decreases by 5 percent, then the elasticity of demand is
A) 0. B) 1. C) indeterminate. D) 5. E) 25.
Governments are also affected by inflation. In which of the following ways is the government affected by inflation?
a. Expected inflation increases the real interest rate paid by the government on its new bond issues (i.e., deficit financing). b. Inflation increases nominal income tax revenues received by the government. c. Inflation automatically decreases government spending. d. All of the above are true. In other words, the government is affected by each one of them.