Use the Following to Answer Questions

question 39

Multiple Choice

Use the following to answer questions:
Figure: The Market for Calculators
-(Figure: The Market for Calculators) Look at the figure The Market for Calculators. Assume that S and D represent the domestic demand and supply of calculators. The world price, P_W, equals $100. The government imposes an import tariff of $20 per calculator. Compared with the free trade situation, the tariff leads to a deadweight loss equal to area:

• A)K + L.
• B)G + J.
• C)G + H + I + J.
• D)There is no deadweight loss, since the tariff revenue the government receives offsets any losses.

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Definitions:

Leading Economic Indicator

A statistic that predicts future economic activity and trends before they occur, such as the stock market or job applications.

Money Supply

The total amount of monetary assets available in an economy at a specific time, including cash, coins, and balances held in checking and savings accounts.

Inflation

Inflation denotes the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.

Capacity Utilization

A measure of how effectively an entity uses its production capacity to produce goods, expressed as a percentage of total potential output.