When does the domestic government gain the MOST revenue?
A) when it imposes a tariff
B) when it imposes an import quota
C) when it negotiates a voluntary export restraint
D) The amount of revenue it gains is the same with a tariff and a voluntary export restraint.
A
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According to the menu cost theory, firms will be slow in changing their prices because
A) if prices changed frequently, individuals would reduce their demand for that good because of uncertainty. B) frequent price changes would be a sign of monopolistic behavior. C) the cost of changing the price might exceed the additional revenue the price change would generate. D) demand for their product would fall because consumers would purchase goods from firms that had not raised their prices.
The growth rate of real GDP in Astoria is 7.5%. Assume the growth rate of velocity is constant at a rate of 5%
If Astoria wishes to decrease the inflation rate from the annual rate of 5.99% to a target rate of 4.5% and maintain its current growth rate of real GDP, what will the growth rate of the money supply need to be? A) 6.49%. B) 7%. C) 8%. D) 8.49%.