ECON-40: Ch.18-23: Microeconomics

A bond is

A promise to repay a loan.

When the overall trade balance is zero:

All of the above.

Which of the following are direct income transfers?

All of the above.

What is the best argument in favor of free trade?

All participants in international trade gain a higher standard of living.

A tax is said to be efficient if it

Allows producers to be rewarded according to their value in production.

Which of the following statements is true?

American poverty is less severe than global poverty.

Suppose Ms. Sanchez has a total income of $200,000, has a taxable income of $120,000, and pays $40,000 in taxes. Considering the information, what is Ms. Sanchez's effective tax rate?

20 percent

If the interest rate is 8 percent, then the present discounted value of $100 to be received two years from now is closest to

$86

Social security programs differ from welfare programs in that social security programs:

Are event based.

The supply of loanable funds is determined by all of the following except

Demand for loanable funds.

The risk premium is the

Difference in rates of return on safe and risky investments

Changes in the value of the euro only affects the European economies.

False

Comparative advantage is whan a country can produce goods at a lower absolute cost in terms of dollar expenditures.

False

Export competing industries are the primary group who oppose free trade.

False

Tarriffs are a tax on exports.

False

The U.S. Government counts both cash and in-kind income transfers when calculating poverty statistics.

False

The foreign exchange rates are set by the banks in each respective country.

False

The poverty gap is the shortfall percentage of people living under the poverty threshold.

False

The poverty rate is the difference between the inome of a household in poverty and the average income.

False

Welfare creates a moral hazard by encouraging individuals to help themselves.

False

When compared to those in poor countries, poor people in the U.S. receive:

Far more goods and services.

Food stamps are an example of:

In-kind income.

Public housing is an example of

In-kind income.

In-kind benefits are a way of correcting

Inequity.

A tax is said to be more equitable if

It allows incomes after taxes to be more equitable.

If income is distributed equally, the

Lorenz curve is a straight line.

A graphic illustration of the cumulative size distribution of income is known as the

Lorenz curve.

The argument against greater equality in the distribution of income in the United States hinges basically on

Loss of incentives.

As long as interest-earning opportunities exist, present dollars are worth

More than future dollars.

The only lasting way for poor countries to rise up out of poverty is to have:

Policies that will lead to economic growth.

The exchange rate is the:

Price of one currency in terms of another.

Financial intermediaries make the allocation of resources more efficient by

Reducing search and information costs for savers and investors

How does the World Bank call categorize poverty at less than $2 per day?

Severe

What is the largest federal transfer program?

Social Security

The trade surplus is:

The amount by which exports exceed imports.

Which of the following statements regarding the distribution of money income is most correct?

The distribution of money income overstates the extent of poverty in the United States.

Tax incidence most accurately refers to

The distribution of the real burden of a tax.

The owners of a corporation are

The owners of the corporation's stock.

Which of the following is not a reason to hold stock?

To receive payments on the firm's debt.

American citizens planning a vacation in Japan would welcome a depreciation of the yen.

True

An embargo is a prohibition on trade.

True

Before a country can begin to move out of poverty, they first need to take care of the basic needs of the people.

True

By global poverty standards and definitions, no American would be considered poor.

True

If welfare benefits are reduced a dollar for every dollar earned, this is the same as a 100% marginal tax rate.

True

In 2014, the official U.S. poverty threshold for a family of four in the U.S. is about $23,850.

True

The breakeven level of income is the amount of income that can be earned without a loss of welfare benefits.

True

The key to reducing or eliminating global poverty is economic growth spurred by increasing resources and technology.

True

The most important thing you can learn form this chapter is that free trade benefits everyone.

True

The primary determinant of currency exchange rates is the volume of exports and imports.

True

The purchase of U.S. real estate from foreign sources would create a supply of a foreign currency.

True

The world bank defines extreme poverty as living on less than $1.25 per day.

True

When a currency is devalued, it can mean an economic disaster for a country dependant on imports.

True

When a program is "means tested," it means recipents must have little means to be eligible.

True

When free trade is disrupted by trade barriers, the gains from trade are lost.

True

The depreciation of the dollar means:

U.S. citizens can buy less of a foreign currency.

When the dollar appreciates, which of the following is true?

U.S. exports become more expensive to our trading partners.

Present discounted value refers to the

Value today of future payments adjusted for interest accrual.

Which of the following would create a demand for dollars?

When foreign countries buy U.S. exports

Which of the following is not an example of a financial intermediary?

real estate market

What are the main products that the U.S. exports?

Capital intensive goods.