ECO561/ ECO561 FINAL EXAM NEW (2016)

Aug 14th, 2016
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Question Because the Federal government typically provides disaster relief to farmers, many farmers do not buy crop insurance even through it is federally subsidized. This illustrates: a) the adverse selection problem. b) the moral hazard problem. c) a failure of the market for externalities. d) the existence of positive externalities 2. In order for mutually beneficial trade to occur between two otherwise isolated nations: a) each nation must face constant costs in the production of the good it exports b) one nation's production must be labor-intensive while the other nation's production is capital-intensive c) each nation must be able to produce at least one good relatively cheaper than the other d) each nation must be able to produce at least one good absolutely cheaper than the other 3. Countercyclical discretionary fiscal policy calls for: a) surpluses during recessions and deficits during periods of demand-pull inflation. b) deficits during recessions and surpluses dur

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Eco561 final exam 2016QuestionBecause the Federal government typically provides disaster relief to farmers, many farmers donot buy crop insurance even through it is federally subsidized. This illustrates:a) the adverse selection problem.b) the moral hazard problem.c) a failure of the market for externalities.d) the existence of positive externalities2. In order for mutually beneficial trade to occur between two otherwise isolated nations:a) each nation must face constant costs in the production of the good it exportsb) one nation's production must be labor-intensive while the other nation's production is capitalintensivec) each nation must be able to produce at least one good relatively cheaper than the otherd) each nation must be able to produce at least one good absolutely cheaper than the other3. Countercyclical discretionary fiscal policy calls for:a) surpluses during recessions and deficits during periods of demand-pull inflation.b) deficits during recessions and surpluses during periods of demand-pull inflation.c) surpluses during both recessions and periods of demand-pull inflation.d) deficits during both recessions and periods of demand-pull inflation.4. The primary gain from international trade is:a) increased employment in the domestic-export sector.b) more goods than would be attainable through domestic production alone.c) tariff revenue.d) increased employment in the domestic-import sector5. Research for industrially advanced countries indic

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