Chapter 16,17,31,32 Slavin
The extremely low savings rate in the U.S. has forced us to borrow more than $_____ billion a day to finance our federal budget deficit and trade deficit.
1
If Bill painted 5 walls in the first hour of work, and then switched to doing 5 outlets in the second hour of work, what was the opportunity cost of each of those outlets?
1
For a country in the process of development, a high saving rate is generally
helpful, because it makes resources available for investment.
An essential difference in the impact of import quotas as opposed to tariffs is that
import quotas generate no revenue for the government, whereas tariffs do.
We devote a larger portion of our GDP to transportation than most developed countries because of
inadequate rail transportation.
Mass production of automobiles, electrical machinery, and steel was a feature of the _____ phase of the Industrial Revolution.
second
The age of mass production, which began in the U.S. during the early years of the 20th century, was the _____ phase of the Industrial Revolution.
second
Rapid population growth ______ the economic development of LDCs.
severely hampers
The opportunity cost of an extra unit of oil in the U.S. expressed in terms of forgone coal is
1/2.
The opportunity cost of producing one bushel of coffee in Brazil is
2 bushels of hot dogs.
The opportunity cost of an extra unit of coal in Australia expressed in terms of forgone oil is Multiple Choice
5.
An increase in consumer income will cause an outward shift in the demand Correct for donuts (a normal good.
A change in income will lead consumers to demand more or fewer donuts at each and every price -- a change in demand.
A reduction in the price of donuts will cause a movement down the demand curve Correct for donuts.
A change in the price of a donuts will lead to a movement along the demand curve -- a change in quantity demanded.
Which of the following will NOT shift the supply curve for gadgets?
A change in the price of gadgets
A decrease in supply can be brought about by _________.
A decrease in supply cannot be caused by a change in demand or a change in price. But a hurricane or an earthquake can cause there to be less of a good or service supplied at every price.
Which statement is true? multiple choiceA rise in income will increase the demand for normal goods. CorrectA change in demand is the same thing as a change in the quantity demanded.The law of demand is no longer valid.The supply curve moves upward to the left.
A rise in income will increase the demand for normal goods
If the demand of U.S. dollars drops sharply
All of these are true.
Which of the following slowed the rate of economic growth in the U.S. in the 1970s?
All of these slowed the rate of economic growth in the U.S. in the 1970s.
Which statement is true? Multiple Choice The U.S. education system is second to none. The economies of most of the NICs are growing very slowly. Almost one-half of the world's population lives in less-developed countries. Correct The output of the U.S. today is smaller than it was in 1990.
Almost one-half of the world's population lives in less-developed countries.
If the exchange rate changes such that fewer euros, the French currency, are required to buy one dollar, then
Americans will buy fewer goods and services from France.
If the exchange rate changes so that more Swiss francs are required to buy a dollar, then
Americans will buy more Swiss goods and services.
Which of the following can cause a change in supply?
Changes in technology
For nearly three decades, which of these countries has had the fastest rate of economic growth?
China
According to the 2018 Big Mac index, the country with the most undervalued currency relative to the U.S. dollar was
China.
Country A can produce both wheat and oranges using fewer resources than country B. Which of the following statements is true? Multiple Choice
Country A has an absolute advantage in producing both goods.
How will the development of the hybrid automobile, a car powered by both a gasoline engine and a battery, affect the market for gasoline?
Demand will decrease.
Who does not gain when a tariff is imposed?
Domestic consumers of the good
The nation whose workers work less hours per year than any other industrial nation is
Germany.
Which of the following statements is FALSE? Multiple Choice None of these is false. Incorrect For most of the 20th century we had a positive balance of trade. In international trade some countries are winners and others are losers. Correct When two countries trade, both gain from the trade.
In international trade some countries are winners and others are losers.
Amy and Bill are fixing up their house by painting walls and installing electrical outlets. In one hour, Amy can paint 8 walls, or install 6 outlets. In one hour, Bill can paint 5 walls, or install 5 outlets
In order to maximize their work per hour, Amy should just paint walls, and Bill should just install outlets
What was the most important means that China used to acquire the technology needed for rapid economic development?
It acquired it from multinational corporations that wanted to do business in China.
What did the U.S. import the most of in 2018?
Machinery
A shift in the supply curve for gasoline in the U.S. would result if
None of these is true.
Which of President Trump's three main concerns about trade is the most valid?
Our most advanced technology has been transferred to our largest trading partners.
Which is the most accurate statement? Multiple Choice Our trade problems with China are very similar to our trade problems with Japan. We import most of our oil from Japan and China. Japan is the dominant trading partner with the U.S. Our trade deficit with China in the 1990s grew much faster than our trade deficit with Japan. Correct
Our trade deficit with China in the 1990s grew much faster than our trade deficit with Japan.
A decrease in the price of seed (an input to corn) will cause a shift out Correct in the Supply Curve for corn.
Seed is an input for corn. A decrease in the price of seed will change the cost of production at every price for corn, leading to a shift out in the Supply Curve for corn.
Suppose that the tastes of U.S. beer drinkers shift from domestic brands toward more expensive brands imported from Germany. If this change is large enough, it will cause the _____ for foreign currencies to increase, and the dollar to _____.
Suppose that the tastes of U.S. beer drinkers shift from domestic brands toward more expensive brands imported from Germany. If this change is large enough, it will cause the _____ for foreign currencies to increase, and the dollar to _____.
According to the 2018 Big Mac index, the country with the most overvalued currency relative to the U.S. dollar was
Switzerland.
Which of the following statements is true? Multiple Choice The basis for international trade is specialization. Correct Every nation should try to be completely self-sufficient. International trade lowers our standard of living. Importing consumer products increases our prices.
The basis for international trade is specialization.
If the price of Pepsi were to increase, which of the following would NOT happen?
The demand for Pepsi would fall.
Which of the following statements is FALSE? Multiple Choice The dollar value of assets held by Americans in foreign countries has been declining since 1985. Correct Americans have assets of over $1 trillion in foreign countries. None of these is false. Incorrect Foreigners own a much greater percentage of the assets in the U.S. then they did in the early 1980s.
The dollar value of assets held by Americans in foreign countries has been declining since 1985.
Which statement is false? Multiple Choice Productivity is output per unit of input. In the 1950s, 1960s, and 1970s, Americans managed to save about 7 to 8 percent of disposable income. The only way to build up capital is to consume more and save more. Correct Technological change is the key to productivity growth.
The only way to build up capital is to consume more and save more.
Which statement is true? Multiple Choice The only way to industrialize is to build up capital in the form of new plant and equipment. Correct We find GDP per capita by dividing GDP into population. Because of their large populations, India and China have relatively high per capita GDPs. The NICs have the highest per capita GDPs in the world.
The only way to industrialize is to build up capital in the form of new plant and equipment.
A rise in the price of corn will cause a move-along upwards Correct in the Supply Curve for corn.
The price of corn is on the Y axis of a market graph, so a rise in price causes a move-along upwards . The number of producers, their efficiency, and the prices of inputs have not changed, so the Supply Curve does not shift.
Which of the following is NOT a complement for automobiles?
The price of the car
Which of the following objectives is NOT a basis for international trade?
To increase Treasury reserves of gold bullion.
Higher domestic interest rates encourage
U.S. investors to withdraw their funds from foreign investment.
Which statement is false? Multiple Choice No nation will engage in trade with another nation unless it will gain by that trade. Incorrect Economists dislike both tariffs and import quotas. If the U.S. can produce rice more efficiently than Japan can, the U.S. enjoys an absolute advantage. Under the law of comparative advantage, total output is greatest when each product is made by the country that produces it most efficiently.
Under the law of comparative advantage, total output is greatest when each product is made by the country that produces it most efficiently.
Which one of the following interest groups would gain from the imposition of a quota on U.S. steel imports?
Which one of the following interest groups would gain from the imposition of a quota on U.S. steel imports?
A move from H to I is the result of
a change in price and a change in demand.
Using the information in the graph below, a move from K to L shows ___________.
a change in quantity demanded
If you were going to go on a vacation to Italy, you would prefer
a strong dollar against the euro.
A nation can finance a deficit on its current account with
a surplus on its capital account.
When the demand for books rises, buyers will purchase more books at
all prices.
If Germany can make compact cars more efficiently than Russia, it enjoys
an absolute advantage.
A move from F to G represents
an increase in demand.
If the market moves from one supply curve to another curve that lies entirely to the right of the original supply curve, this would represent
an increase in supply.
A drop in the price of oil will result in
an increase in the quantity of oil demanded.
The exchange rate between the U.S. dollar and the Japanese yen changes
at times from one minute to the next.
The exchange rate between the U.S. dollar and the Japanese yen changes Multiple Choice
at times from one minute to the next.
Dumping occurs when a producer
attempts to bankrupt foreign competitors by selling below cost.
If a nation's exports are $55 billion, while its imports are $50 billion, we can conclude with certainty that this nation is experiencing a
balance of trade surplus.
Using the information in the graph below, answer the following question. Equilibrium price is ________.
below $8
The equilibrium quantity in this market is
between 15 and 16.
When country X imports goods from country Y,
both country X and country Y benefit.
Suppose it was discovered that the consistent consumption of chocolate raised IQ by 10 points. As a result, in the market for chocolat
both equilibrium price and quantity will rise.
Americans demand British pounds so they can
buy British goods.
An increase in the dollar price of the English pound will
cause a decrease in the pound price of the dollar.
Our health care system ________. multiple choice
costs more per capita than the systems of virtually all other rich nations
An increase in the price of gasoline will cause a
decrease in the quantity of gasoline demanded.
From 1970 to 1997, the federal government ran a _____ and the state and local governments combined ran a _____.
deficit; surplus
An increase in demand is defined as an increase in the quantity that people are willing and able to purchase at
different prices.
Depreciation of the dollar relative to the yen means that the
dollar prices of imported goods from Japan have increased.
The majority of American's trade deficit with China has been caused by
excessive spending and inadequate savings in the U.S.
A surplus in a country's balance of trade occurs whenever the country
exports more goods than it imports.
It is _____ that in international trade, when one country gains, another loses; it is _____ that to try to ensure prosperity for its citizens, a nation should do all it can to promote exports and keep out imports. Multiple Choice
false; false
The _____ our productivity grows, the _____ our real GDP grows.
faster; faster
The gold standard
fell apart as the Great Depression spread, as nation after nation devalued its currency.
Floating exchange rates
float according to the laws of supply and demand.
Under a gold standard, a country with a trade deficit should expect
gold to flow out of the country to other countries.
From 2007 to 2017 our current account deficit
has been reduced dramatically.
Suppose the exchange rate between the U.S. and Argentina is initially set at 20 pesos per dollar and increases to 25 pesos per dollar. In the U.S. economy this would be expected to
increase imports and decrease exports.
A reduction in the price of the dollar in terms of the euro, Germany's currency, will
increase the demand for U.S. products exported to Germany.
Computers and computer software are complements. A decrease in the price of computers is likely to
increase the demand for computer software.
Suppose the TV news programs report that oat bran can lower one's cholesterol. As a result, the equilibrium price of oat bran would _____, and the equilibrium quantity of oat bran would _____.
increase; increase
A tariff
is a special tax applied only to internationally traded goods.
Most of the LDCs find it difficult to accumulate capital goods because
it is very difficult to restrict consumption in order to free resources for capital goods production.
Frederic Bastiat's, "A Petition From the Candlemakers," presents a satirical view of protectionism because
it pictures the sun as an unfair foreign competitor.
If the dollar appreciates with respect to the euro, this means that
it takes fewer dollars to buy the same amount of euros.
Each of the following has been an important reason for China's recent economic growth except ________.
its rapidly rising population
Prior to the Industrial Revolution
life remained the same from one generation to the next.
The most effective way to reduce our current account deficit would be to
lower our merchandise trade deficit.
If more foreign tourists visited the U.S., this would
lower our overall trade imbalance.
The gross savings rate for the U.S., compared with that of other industrial nations is
lower.
If demand falls and supply rises, then equilibrium quantity ______.
may rise, fall, or remain the same
A deficit in a country's current account balance occurs whenever
money outflows from the country exceed its money inflows.
Under a gold standard in which France defined one franc to be worth 1/50th of an ounce of gold and the U.S. defined one dollar to be worth 1/10th of an ounce of gold, then
one U.S. dollar would exchange for five French francs.
Because of the Great Recession of 2008, the trade deficit in 2009 was about _____ what it was in 2006.
one-half.
The root cause of our selling off piece after piece of our country can be traced to
our large trade deficits.
Despite the long-term mutual gains from international trade, in the short run
particular firms, industries, and groups of workers can be harmed substantially by imports.
If you were going to spend time in Great Britain, you would be paying for goods and services with Multipl
pounds.
The exchange rate is the
price of one currency in terms of another.
If the price of a "snob good" falls, the quantity demanded will ________.
probably fall
Leaders in underdeveloped countries can enhance development by
producing capital goods while meeting basic necessities.
As price rises ________.
quantity supplied rises
One of the most important things we might do to lower our trade deficit is
raise the excise tax on gasoline.
Suppose the exchange rate between the dollar and the Swiss franc is $1 = 4 francs and the price of an imported box of Swiss chocolates is $5. If the exchange rate changes to $1 = 2 francs, the dollar price of the Swiss chocolates
rises to $10.
A tariff shifts the _____ curve to the _____.
supply; left
The country with the largest current account surplus as a percentage of GDP in 2017 was
the Netherlands.
A comparative advantage in the production of coal is held by
the U.S.
The country with the largest current account deficit as a percentage of GDP in 2017 was
the United Kingdom.
The summary of the flows of goods, services, assets, and currency in and out of a country in a particular year is
the balance of payments.
If butter and margarine are substitutes and the price for margarine increases, all of the following will happen EXCEPT
the demand for margarine will fall.
Which of the following is NOT a contributing cause to the U.S. trade imbalance?
the high-quality U.S. education system
according to Thomas Robert Malthus, the wage rate would be depressed to the subsistence level because of
the natural tendency of population to grow more rapidly than the production of food.
Frederic Bastiat formulated
the petition of the candlemakers to shut out the sun.
As the key component in gasoline production, an increase in the price of crude oil would cause
the supply of gasoline to decrease, and its price to increase.
The first Industrial Revolution
was confined to Europe, the U.S., Canada, Australia, New Zealand, and Japan until the mid-20th century.
The "Big Mac index" was created by The Economist magazine to determine
whether or not the dollar was overvalued or undervalued.
If demand rises and supply falls, then equilibrium price ______.
will rise
Under the gold standard, an outflow of gold from the U.S.
would decrease the U.S. money supply.
if we go from point R on demand curve D1 to point S on demand curve D2, then we may conclude that there was
an increase in demand.
A move from F to G is the result of
an increase in supply and a decrease in demand.
Graphically, an increase in demand is represented by
an outward shift of the demand curve.
For the third hour, if he switches back to painting 5 walls, what was the opportunity cost of each of those walls?
1
Amy and Bill are fixing up their house by painting walls and installing electrical outlets. In one hour, Amy can paint 8 walls, or install 6 outlets. In one hour, Bill can paint 5 walls, or install 5 outlets
Amy has the absolute advantage in BOTH, while Bill has the absolute advantage in NEITHER Amy has the comparative advantage in painting. Bill has the comparative advantage in outlets.
Which of the following statements is true? Multiple Choice None of these is true. Frederic Bastiat's "Petition of the Candlemakers to Shut Out the Sun" was a plea for free trade. Correct Dollars are used for all international transactions. Frederic Bastiat's "Petition of the Candlemakers to Shut Out the Sun" was a plea for protection.
Frederic Bastiat's "Petition of the Candlemakers to Shut Out the Sun" was a plea for free trade.
During the 1980s, significant growth, largely through foreign investment, occurred in
Hong Kong, Taiwan, South Korea, and Singapore.
Connect the Dots- long-run growth
Human workers - the doctor, teacher, and stockbroker - are considered "Labor". Structures, machines, and vehicles that are used to produce an ongoing stream of output - the oven in the restaurant, the movie theater, and the airliner - are considered "Capital"
Which one of these would be considered an LDC?
Malawi
On net, does a natural disaster create jobs?
No, because money spent repairing damage can't be spent on other goods.
Which of the following statements is FALSE? Multiple Choice None of these is true. Compared to 30 years ago, there is more sentiment in the U.S. for protection against the import of foreign goods. The basis for international trade is specialization. Our balance of trade has been negative since the early 1900s.
Our balance of trade has been negative since the early 1900s.
A decrease in the local number of grocery stores will cause a shift in Correct in the Supply Curve for corn.
The Supply Curve is the sum of supplies from all the grocery stores. Fewer grocery stores will change the supply of corn at every price of corn, leading to a shift in in the Supply Curve for corn.
Which statement is the most accurate? multiple choiceThe sharp increase in productivity growth since 1995 proves that Baumol's disease has been cured.The productivity of many workers in the service sector cannot be increased. CorrectWilliam Baumol believes that the expansion of the health care industry will greatly increase our productivity growth rate in the coming decades.Baumol's disease explains most of our loss of manufacturing jobs to foreign competitors.
The productivity of many workers in the service sector cannot be increased.
Using the information in the graph below, a move from O to P shows ___________.
a change in the quantity supplied
An increase in the supply of running shoes will—assuming demand is unchanged—lead to ______.
a decrease in equilibrium price and an increase in equilibrium quantity
A move from E to F represents
a decrease in supply.
Our gross savings as a percentage of GDP has declined from over 20 percent in the mid-1960s to _____ percent in 2009.
a little over 10
The number of hours worked per year by Americans is
about 400 hours more than German workers.
Malthus may have been correct in his predictions for ______.
at least some LDCs but no industrial countries
As income falls, the demand for normal goods _____ and the demand for inferior goods _____.
falls; rises
The Malthusian theory said that population tended to grow in a(n) _____ progression, while the food supply tended to grow in a(n) _____ progression.
geometric; arithmetic
Raising U.S. tariffs will NOT
help the U.S. win the international trade competition.
Each of the following has been a drag on our economic growth, EXCEPT
immigration
Most of the LDCs are
located primarily in Africa.
The Law of Demand states that when the price of a good rises, the Quantity Demanded will fall. The Law of Demand states that when the price of a good falls, the Quantity Demanded will rise.
lod
The Law of Supply states that when the price of a good rises, the Quantity Supplied will rise. b. The Law of Supply states that when the price of a good falls, the Quantity Supplied will fall.
los
Rising productivity could be each of these except ______.
more units of output from more units of input
In general, real GDP and productivity growth Multiple Choice
move in the same direction, but at different rates.
Over the last 30 years, our rate of economic growth was ________.
much slower than China's
Thomas Robert Malthus said that
our population is growing faster than our food supply.
If quantity supplied increased by 4 units at each price, you would conclude that
supply had increased.
The second phase of the Industrial Revolution
tarted in America in the 1920s with the mass production of cars and electrical machinery.
A great burst of unprecedented, sustained economic growth occurred during
the Industrial Revolution.
The theory of comparative advantage implies that
the world gains from trade since it allows production to move to the countries where their opportunity cost is lowest.
One way to increase productivity is to
allow more high skilled immigrants to enter the country.
For the third hour, if she switches back to painting 8 walls, what was the opportunity cost of each of those walls?
0.75
If Amy painted 8 walls in the first hour of work, and then switched to doing 6 outlets in the second hour of work, what was the opportunity cost of each of those outlets?
1.33
The following increase the Labor Force, Capital Stock, or efficiency, which raises potential output: parents returning to work (labor force), investment in fiber-optic capacity (capital), computerized navigation for delivery trucks (efficiency).
A surge in the stock market, a cut in taxes, or a rise in unemployment may affect actual output, but will not affect potential output since these don't change the Labor Force, Capital Stock, or efficiency.
Line A is the typical trend in actual output
Actual output can fluctuate above and below potential output.
A shift in the supply curve for gasoline in the U.S. would result if
All of these are true.
Which statement is false? Multiple Choice The number of paid holidays enjoyed by American workers has increased since the 1950s. American workers get more vacation time than workers in other industrialized nations. Correct Americans work more hours per year than workers in most other industrial nations.
American workers get more vacation time than workers in other industrialized nations.
What is meant by "conspicuous consumption"?
People sometimes buy expensive goods to display their wealth.
Line B is the typical trend in potential output
Potential output follows a fairly smooth path, growing gradually with labor force, capital stock, and efficiency.
Statement 1: As the world's largest market for cars, high-speed rail lines, and other major goods, China has used its strong bargaining power to convince multinational corporations to share their technology. Statement 2: China will continue to be primarily a manufacturer of low-end, low-tech goods until at least midcentury.
Statement 1 is true and statement 2 is false.
Which statement is true? multiple choiceAmerica's immigration policies are much less restrictive today than they were 100 years ago.The fewer immigrants we let into the United States, the better off we'll be.The United States and Canada have virtually identical immigration policies.The colleges in the United States graduate fewer engineers than those in China, India, and Japan.
The colleges in the United States graduate fewer engineers than those in China, India, and Japan.
An increase in a nation's capital per worker ratio will tend to increase its:
output per worker.