Econ 4th Edition by William McEachern

Exercise 6

Identify some pitfalls of economic analysis (Pitfalls of Economic Analysis) Review the discussion of pitfalls in economic thinking in this chapter. Then identify the fallacy, or mistake in thinking, in each of the following statements:
a. Raising taxes always increases government revenues.
b. Whenever there is a recession, imports decrease. Therefore, to stop a recession, we should increase imports.
c. Raising the tariff on imported steel helps the U.S. steel industry. Therefore, the entire economy is helped.
d. Gold sells for about $1,200 per ounce. Therefore, the U.S. government could sell all the gold in Fort Knox at $1,300 per ounce to reduce the national debt.