Author Question: Refer to the figure above, which shows domestic supply and demand. If P1 is equal to P2 (the world ... (Read 108 times)

ap345 · **on:** Jun 30, 2018

Refer to the figure above, which shows domestic supply and demand. If P1 is equal to P2 (the world price) plus a tariff, then government revenue from the tariff is equal to

A) a + c
B) b
C) P1 ( Q3 - Q2 )
D) P2 (Q2 - Q1 ) + (Q4 - Q3 )
E) a + b + c

Question 2

There is evidence that the string of U.S. bank closings in the early 1930s helped start and worsen the Great Depression. Discuss.

What will be an ideal response?

abctaiwan · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

B

Answer to Question 2

Bank Failure can harm the economy's macroeconomic stability (keep in mind that safeguards intended to reduce the risk of bank failure were put in place after the Great Depression). One bank's problems may spread to sounder banks if they are suspected of having lent to the bank in trouble. This leads to a drastic reduction in the banking system's ability to finance investment and consumer-durable expenditure, so the economy slips into recession (or worse in the case of the Great Depression).