"Supporters of import restrictions and protectionist policies place greater weight on producer welfare than on consumer welfare." Comment
What will be an ideal response?
Import restrictions increase the producer surplus of domestic producers. Consumer surplus, however, decreases by more than producers gain. Thus the statement seems to be correct.
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An argument in favor of 100 percent reserve banking is that
A) a bank deposit is owned by the depositor, so the bank has no legal right to lend the deposit to someone else. B) banks should be allowed to lend deposits in order to increase their profits and strengthen the banking system. C) unregulated institutions would be riskier than regulated fractional-reserve banks. D) it would limit the precision of the central bank's control over the quantity of money.
According to Gordon, all of the following are important ingredients in the recent U.S. housing bubble EXCEPT
A) low interest rates. B) saving glut. C) financial innovation. D) trade deficit.