7.1

Which of the following would reduce a country's economic freedom of the world rating?

• Free trade and low taxes

• high tariffs and trade restrictions

• a legal system that secures private property rights and provides evenhanded enforcement of contract

• competitive markets and minimal government regulation

which of the following economists are almost free

• India and zimbabwe

• Algeria and the democratic republic of the congo

• Hong kong and Singapore

• Argentina and Brazil

trade restrictions such as tariffs and quotas are like a blockade that a nation imposes on its own people" Is this statement true

• Yes, both the trade restrictions and a blockade will reduce the gains from specialization

• no, trade restrictions will help the residents of a nation achieve a higher income level; a blockade will not

• no, a blockade will help the residents of a nation achieve a higher income level; trade restrictions will not.

• uncertain, the statement is true if the gains of the residents exceed those of foreigners; otherwise, it is false

if higher trariffs and more restrictive quotas reduced the imports of the united states,

• U.S. employment would increase

• unemployment in the united states would decline

• U.S. exports would also increase because foreigners would want to buy more from US. producers

• U.S. exports would decline because foreigners would be earning fewer of the dollars needed to purchase goods and services from Americans

The exchange rate of the dollar relative to other currencies is determined by market forces. When equilibrium is present in the exchange rate market,

• The purchase of Americans from foreigners will be equal to the sales of Americans to foreigners

• Americans will gain from international trade only if foreigners lose an equal amount

• the gains of Americans from international trade will be just equal to the gains of foreigners from the trade

• Imports from foreigners will create jobs in other countries by employment in the united states will decline by an equal amount.

Politicians will often be able to gain from support of trade restrictions

• organized interest groups benefiting from the restrictions will make large contributions to political campaigns while most others will not feel strongly about the restrictions

• the restrictions will lead to lower prices and substantial benefits for consumer groups

• foreigners benefiting from the restrictions will be a major source of political contributions

• the restrictions will generate substantial benefits for consumer groups at the expense of well-organized labor and industrial interests

suppose a country that imports sizable quantites of oil passes a law prohibiting the export of oil produced in the country. What will be the effect of this policy

• The supply of domestically produced oil will increase

• oil imports will increase

• gains from trade will be reduced

• energy resources will be used more efficiently

High marginal tax rates will

• increase the incentive of people to earn

• make it expensive for taxpayers to purchase tax-deductible

• cause some people to work and earn less than would be the case if marginal tax rates were lower

• attract workers from other countries where tax rates are lower

An increase in income tax rate will

• makes it more expensive for an entrepreneur to purchase tax-deductible luxury automobiles for business purposes

• make it less expensive for a successful lawyer to attend a tax-deductible

• increase the incentive of the spouse of a highly successful lawyer to work and earn additional income

• improve the efficiency of resource use

Which of the following is true of taxes

• taxes drive a wedge between what buyers pay and what sellers receive

• taxes increase the volume of mutually advantageous exchanges

• increases in taxes are the primary cause of inflation

• business taxes generate government revenue without imposing on consumers and households