Macroeconomics Unit 4 Test

In 2009, 1 U.S. dollar purchased 1400 Korean won and in 2013 it purchased 900 Korean won. How much did 1000 Korean won cost in U.S. dollars in 2009 and 2013? 2009: .84 dollars, 2013: 1.09 dollars 2009: .72 dollars, 2013: 1 dollar 2009: .83 dollars, 2013: 1.12 dollars 2009: .71 dollars, 2013: 1.11 dollars

2009: .71 dollars 2013: 1.11 dollars

If the government for the state of Washington collects $65.8 billion in tax revenues in 2013 and total spending in the same year is $74.8 billion, the result will be: an increase in payroll tax. an increase in excise tax. a budget surplus. a budget deficit.

a budget deficit

If government policy allows a country's currency to be determined in the exchange rate market, then that currency will be subject to: a hard peg policy. purchasing power parity. depreciation. a floating exchange rate.

a floating exchange rate

A tariff differs from a quota in that a tariff is: A. levied on imports, whereas a quota is imposed on exports. B. levied on exports, whereas a quota is imposed on imports. C. a tax levied on exports, whereas a quota is a limit on the number of units of a good that can be exported. D. a tax imposed on imports, whereas a quota is an absolute limit to the number of units of a good that can be imported.

a tax imposed on imports, whereas a quota is an absolute limit to the number of units of a good that can be imported

During a recession, if a government uses an expansionary fiscal policy to increase GDP, the: aggregate supply curve will shift to the right. aggregate supply curve will shift to the left. aggregate demand curve will shift to the left. aggregate demand curve will shift to the right.

aggregate demand curve with shift to the right

A ______________________ means that government spending and taxes are equal. fiscal budget balanced budget contractionary fiscal policy discretionary fiscal policy

balanced budget

If the state of Washington's government collects $75 billion in tax revenues in 2013 and total spending in the same year is $74.8 billion, the result will be a: budget deficit. budget surplus. decrease in payroll tax. decrease in proportional taxes.

budget surplus

A typical ____________________________ fiscal policy allows government to decrease the level of aggregate demand, through increases in taxes. expansionary contractionary discretionary standardized

contractionary

When the government passes a new law that explicitly changes overall tax or spending levels, it is enacting: discretionary fiscal policy. progressive fiscal policy. regressive fiscal policy. fiscal policy.

discretionary fiscal policy

The infant industry argument for protectionism suggests that an industry must be protected in the early stages of its development so that: A. firms will be protected from subsidized foreign competition. B. domestic producers can attain the economies of scale to allow them to compete in world markets. C. there will be adequate supplies of crucial resources in case they are needed for national defense. D. it will not be subjected to a takeover from a foreign competitor.

domestic producers can attain the economies of scale to allow them to compete in world markets

Which of the following terms is used to describe the set of policies that relate to government spending, taxation, and borrowing? financial policies monetary policies fiscal policies economic policies

fiscal policies

People or firms use one currency to purchase another currency at the _______________________. international currency exchange foreign exchange market foreign currency exchange international parity market

foreign exchange market

_____________ are numerical limitations on the quantity of products that can be imported. Tariffs Import quotas Taxes Nontariff barriers

import quotas

If a country's GDP increases, but its debt also increases during that year, then the country's debt to GDP ratio for the year will _______________ in proportion to the magnitude of the changes. decrease because GDP increased increase because its debt increased increase increase or decrease

increase or decrease

It is sometimes argued that nation should not depend too heavily on other countries for supplies of certain key products. This argument is commonly known as the _______________. National Interest Argument Import Limitation Argument Anti-Dumping Argument Buy-American Argument

national interest argument

If government tax policy requires Bill to pay $20,000 in taxes on annual income of $200,000 and Paul to pay $10,000 in tax on annual income of $100,000, then the tax policy is: regressive. progressive. proportional. optional.

proportional

________________________ equalizes the prices of internationally traded goods across countries. The foreign exchange rate A floating exchange rate Purchasing power parity An international parity rate

purchasing power parity

If government tax policy requires Peter to pay $15,000 in tax on annual income of $200,000 and Paul to pay $10,000 in tax on annual income of $100,000, then the tax policy is: optional. progressive. proportional. regressive.

regressive

When the share of individual income tax collected by the government from people with higher incomes is smaller than the share of tax collected from people with lower incomes, then the tax is ____________________. optional proportional progressive regressive

regressive

When a government uses a ______________ exchange rate policy, it usually allows the exchange rate to be set by the market. PPP soft peg hard peg currency

soft peg

For firms engaged in international trade, ____________________ can have an enormous effect on profits. swings in exchange rates trade-offs and risks foreign portfolio investment foreign direct investment

swings in exchange rates

If $1.00 U.S. bought $1.40 Canadian dollars in 2006 and in 2010 it bought $1.00 Canadian dollar, then; the U.S. dollar appreciated against the Canadian dollar. the Canadian dollar weakened against the Canadian dollar. the U.S. dollar strengthened against the Canadian dollar. the Canadian dollar appreciated against the U.S. dollar.

the Canadian dollar appreciated against the U.S. dollar

________________________ is theoretically possible, even sensible: give an industry a short-term indirect subsidy through protection, and then reap the long-term economic benefits of having a vibrant healthy industry. Opportunity cost The infant industry argument Dumping Import quotas

the infant industry argument

Tariffs result in a decrease in consumer surplus because: the price and the quantity consumed of the protected good increases. the price and the quantity consumed of the protected good decreases. the price of the protected good increases and quantity consumed decreases. the price of the protected good decreases and quantity consumed increases.

the price of the protected good increases and the quantity consumed decreases

Which of the following would be expected if the tariff on foreign-produced automobiles were increased? A. The domestic price of automobiles would fall. B. The supply of foreign automobiles to the domestic market would be reduced, causing auto prices to rise. C. The number of unemployed workers in the domestic automobile industry would rise. D. The demand for foreign-produced automobiles would increase, causing the price of automobiles to increase in other nations.

the supply of foreign automobiles to the domestic market would be reduced, causing auto prices to rise

One of the following groups is not participating in the foreign exchange markets. Which one? Boston business firms trading goods and services with firms in France international investors buying bonds issued by a German car manufacturing firm an Iowa travel firm that arranges vacation tours for local seniors to Hawaii international investors buying part-ownership of a mining operation in Afghanistan

an Iowa travel firm that arranges vacation tours for local seniors to Hawaii

If Japan does not have a comparative advantage in producing rice, the consequences of adopting a Japanese policy reducing or eliminating imports of rice into the country would include: A. Japan will be able to consume a combination of rice and other goods beyond their domestic production possibilities curve. B. the real incomes of Japanese rice producers would rise, but the real incomes of Japanese rice consumers would fall. C. the real incomes of Japanese rice consumers would rise, but the real incomes of Japanese rice producers would fall. D. the price of rice in Japan will fall.

the real incomes of Japanese rice producers would rise, but the real incomes of Japanese rice consumers would fall.

In 2010, 1 Canadian dollar cost .56 British pounds and in 2012 it cost .63 British pounds. How much would 1 British pound purchase in Canadian dollars in 2010 and 2012? 2010: 1.78 dollars, 2012: 1.57 dollars 2010: 1.79 dollars, 2012: 1.59 dollars 2010: 1.87 dollars, 2012: 1.65 dollars 2010: 1.97 dollars, 2012: 1.75 dollars

2010: 1.79 dollars 2012: 1.59 dollars

A rule that every imported product must be opened by hand and inspected with a magnifying glass, by one of just three government inspectors available at any given time might be referred to as __________________. a non-tariff barrier a quota a government bureaucracy an import quota

a non-tariff barrier

If a government reduces taxes in order to increase the level of aggregate demand, what type of fiscal policy is being used? discretionary contractionary standardized expansionary

expansionary

The _____________________________ is the largest market in the world economy. international exchange market foreign exchange market foreign currency market international currency market

foreign exchange market

An import quota or tariff on French wine that raises the prices for wine will probably: A. hurt domestic wine drinkers but help domestic wineries, which will gain from the higher prices. B. hurt both domestic wine drinkers and domestic wineries, but this will be more than offset by a reduction in driving fatalities. C. hurt both domestic wine drinkers and domestic wine producers because of a reduction in competition. D. hurt domestic wineries, which will lose business as a result of the higher prices.

hurt domestic wine drinkers but help domestic wineries, which will gain from the higher prices

If a country's GDP decreases, but its debt increases during that year, then the country's debt to GDP ratio for the year will _______________ in proportion to the magnitude of the changes. decrease increase or decrease increase decrease because GDP decreased

increase

"Tariffs and other trade restrictions increase the domestic scarcity of products from abroad. Such policies benefit domestic producers of the restricted products at the expense of domestic consumers." This statement: A. contains one error; the trade restraints do not increase the scarcity of foreign-produced goods. B. contains one error; domestic producers gain at the expense of foreign producers rather than domestic consumers. C. contains two errors; trade restraints do not increase the domestic scarcity of product and neither do they harm domestic consumers. D. is essentially correct.

is essentially correct

If the Canadian dollar is strengthening, then: it has been unpegged from other currencies. Canada has adopted a hard peg policy. Canada has purchasing power parity. it has appreciated in terms of other currencies.

it has appreciated in terms of other currencies

A ________________________________ is calculated as a flat percentage of income earned, regardless of level of income. progressive tax regressive tax proportional tax estate and gift tax

proportional tax

Low-wage U.S. workers suffer from protectionism in all the industries that they don't work in, because: A. protectionism provides a barrier to entry to the job markets that the low-wage earners want entry to. B. protectionism forces them to pay higher prices for basic necessities like clothing and food. C. protectionism will encourage foreign workers to apply for American jobs. D. protectionism will prevent them from applying for those jobs in other industries.

protectionism forces them to pay higher prices for basic necessities like clothing and food

If 20 Mexican pesos could buy $2.00 U.S. dollars in 2006 and $1 U.S. dollar in 2010, then: the dollar depreciated against the peso. the peso appreciated against the dollar. the dollar strengthened against the peso. the peso strengthened against the peso.

the dollar strengthened against the peso

A depreciating U.S. dollar is ________________ because it is worth ___________ in terms of other currencies. strengthening; more weakening; less a problem for exporters; less beneficial to importers; more

weakening; less