Governments choose to use voluntary export restraints (VERs) rather than tariffs because
A. voluntary export restraints do not generate any welfare loss in the importing country.
B. tariffs more obviously violate the international rules of the World Trade Organization (WTO).
C. the increase in the price of the imported good in the domestic market is lower in the case of a VER than a tariff.
D. voluntary export restraints have the potential to generate higher revenue.
Answer: B
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The figure above shows the market for pants. If the efficient quantity is produced,
A) there will be no consumer surplus. B) the sum of consumer and producer surplus will be maximized. C) a small deadweight loss will result. D) the sum of consumer and producer surplus will be minimized. E) the consumer surplus on all the pants must equal the producer surplus on all the pants.
Along the Keynesian range of the aggregate supply curve, an increase in the aggregate demand curve will increase:
a. both the price level and real GDP. b. only real GDP. c. only the price level. d. real GDP and reduce the price level.