Use a graph to demonstrate why quotas are likely to cause increased deadweight losses over time
What will be an ideal response?
Over time, demand for most goods rises, as populations increase (as well as for other reasons). The graph should show an increase in demand, given a constant quota amount. Since the quota does not change, the effect of the quota will be to raise price even more than previously. This increases the size of the deadweight loss due to underconsumption of the good and increase the deadweight loss due to domestic overproduction.
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Apart from the United States, in countries where central bank board members serve fixed terms of office,
A) none have terms as long as fourteen years. B) many serve for life or good behavior. C) all have terms longer than fourteen years. D) the head of the central bank rarely has a term longer than one year.
The appropriate “medicine” for correcting payments imbalances under a fixed exchange rate system is
A. inflation for deficit countries and recessions for surplus countries. B. no change for surplus countries and tax cuts for deficit countries. C. inflation for surplus countries and recessions for deficit countries. D. sales of gold for deficit countries and revaluations for surplus countries.