Econ Final

In one year the United States had a current account deficit of $461 billion. The balance on the capital account was -$8 billion. What was the balance on the financial account?

+$453 billion

Answer the question on the basis of the following information: Harry owns a barber shop and charges $6 per haircut. By hiring one barber at $10 per hour, the shop can provide 24 haircuts per eight-hour day. By hiring a second barber at the same wage rate, the shop can now provide a total of 42 haircuts per day. Refer to the given information. The MP of the second barber is:

18 haircuts.

Which of the following will not cause a shift in the demand for resource X?

A decline in the price of resource X.

With flexible exchange rates, an increase in U.S. interest rates can be expected to:

Adversely affect U.S. exporters

Which of the following cases established that the mere possession of monopoly power violated antitrust laws?

Alcoa case of 1945

The argument that a large firm dominating an industry will not necessarily act like a monopolist, as expressed in the 1920 U.S. Steel case, suggests that the application of antitrust laws should be based on firm:

Behavior

The legislation which prohibits the acquisition of assets of another company if the transaction would significantly reduce competition, thereby closing a loophole in the Clayton Act is the:

Celler-Kefauver Act

The public interest theory of regulation stipulates that government regulation of a natural monopoly is necessary in order to achieve the following, except:

Eventually breaking up the monopoly to achieve competition within the industry

The administrative agency charged with enforcing the provisions of the Clayton Act (1914) was established by additional legislation in the same year. This legislation was the:

Federal Trade Commission Act

(Last Word) Frederic Bastiat's Petition of the Candlemakers most directly refutes which of the following arguments for protectionism?

Increased domestic employment argument.

A major difference between industrial regulation and social regulation is that industrial regulation:

Is targeted at the prices charged, the costs of production, and amount of profit

To maintain a fixed exchange rate, the government can use the following tools, except:

Keeping its level of international reserves strictly fixed

If a firm is hiring variable resources D and F in perfectly competitive input markets, it will minimize the cost of producing any level of output by employing D and F in such amounts that:

MPD/PD = MPF/PF.

A firm is hiring resources X, Y, and Z in the profit-maximizing amounts when:

MRPx/Px equals MRPy/Py equals MRPz/Pz equals 1

The principal objective of industrial regulation is to:

Protect the consuming public from the market power of natural monopolies

The theory of regulation developed to deal with "natural monopolies" is called:

Public interest theory

Assuming pure competition, which of the following are equivalents?

Px = MC and MRPL/PL = MRPC/PC = 1.

Which is the most valid criticism of the regulation of natural monopolies and other firms subject to regulation by regulatory commissions?

Regulated firms may have little incentive to contain costs since they are assured a "fair" return above costs

The legislation that prohibited "every contract ... or conspiracy, in restraint of trade and commerce... " is the:

Sherman Act

Which of the following statements is true?

The active antitrust perspective believes that the government should play the role of officials and umpires and enforce the rules of the competitive game

Which of the following arguments contends that certain industries need to be protected in the interest of national security?

The military self-sufficiency argument.

Other things being equal, the international value of foreign currencies will increase against the U.S. dollar if:

There are withdrawals of funds by foreigners from U.S. money markets

What is a major characteristic of a natural monopoly?

There is a large range for economies of scale

The following table contains data for the U.S. balance of payments in a prior year. Answer the question on the basis of this information. All figures are in billions of dollars. U.S. goods exports +$793 U.S. goods imports -1573 U.S. exports of service +280 U.S. imports of services -222 Net investment income +5 Net transfers -81 Capital account -5 Foreign purchases of assets in the U.S. +1198 U.S. purchases of foreign assets -395 Refer to the table above. There was a:

Trade deficit, and a current account deficit

Those who may file antitrust lawsuits against violators of the Sherman Act include the following, except:

U.S. Department of Labor

The fact that international specialization and trade based on comparative advantage can increase world output is demonstrated by the reality that:

a nation's trading possibilities line lies to the right of its production possibilities line.

Other things equal, the resource demand curve of an imperfectly competitive seller will:

be less elastic than that of a purely competitive seller.

Other things equal, we would expect the labor demand curve of a monopolistic seller to:

decline more rapidly than that of a purely competitive seller.

In order for mutually beneficial trade to occur between two otherwise isolated nations:

each nation must be able to produce at least one good relatively cheaper than the other.

Suppose the United States sets a limit on the number of tons of sugar that can be imported each year. This is an example of a(n):

import quota.

If a 10 percent wage increase in a particular labor market results in a 5 percent decline in employment in that market, labor demand is:

inelastic.

Answer the question on the basis of the following information about the cost ratios for two products—fish (F) and chicken (C)—in countries Singsong and Harmony. Assume that production occurs under conditions of constant costs and these are the only two nations in the world. Singsong: 1F = 2C Harmony: 1F = 4C Refer to the given information. In Singsong the domestic real cost of each chicken:

is ½ fish.

Economists who criticize trade adjustment assistance argue that:

it only benefits a very small fraction of all unemployed workers.

Assume the price of capital doubles and, as a result, firms make no change in the relative quantities of capital and labor they employ. This implies that:

labor is not readily substitutable for capital.

Suppose that the labor cost-total cost ratio in industry A is 82 percent while in industry B it is 21 percent. Other things equal, labor demand will be:

more elastic in industry A than in B.

(Consider This) According to Dallas Federal Reserve economist W. Michael Cox, taken to its extreme, the logic of "buying American" implies that:

people should only consume what they can produce themselves.

(Last Word) The rapid spread of ATMs has:

reduced the demand for bank tellers.

(Consider This) In the market for superstars:

small differences in talent get magnified into huge differences in pay.

(Last Word) Frederic Bastiat's satirical argument against protectionism called for protecting domestic producers from:

the sun.