The basic problem with the government setting an absolute poverty line is that it is

The crowding out effect is often associated with

A) a temporary increase in taxes. B) the reinforcing impact of state and local tax changes on federal tax changes. C) the impact of a tax rate increase when the aggregate supply function is horizontal. D) an increase in the interest rate caused by government borrowing.

An example of how trade diversion results in a suboptimal situation is auto parts trade between Mexico and the United States. After NAFTA:

a. Mexico decreased its sales of auto parts to the United States. b. the United States purchased more auto parts from Mexico due to the elimination of tariffs and reduced purchases from East Asia, which was the lowest-cost producer. c. the United States brought a complaint against Mexico for low quality auto parts. d. the United States purchased fewer auto parts from Mexico due to the elimination of tariffs and increased purchases from East Asia, which was the lowest-cost producer.