MacroEconomics Unit 4 exam

balanced budget

A ______________________ means that government spending and taxes are equal.

sustained pattern of large budget deficits

A ___________________________________ can lead to disruptive economic patterns and heavy strains on a country�s banking and financial system.

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 tariff differs from a quota in that a tariff is:

contractionary

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

crowd out private investment in physical capital.

An increase in government borrowing can:

increase.

An increase in the national debt will cause the interest rate to:

comparative; comparative

As international trade increases, it contributes to a shift in jobs away from industries where that economy does not have a(n) __________ advantage and toward industries where it has a(n) ___________ advantage.

aggregate demand curve will shift to the right.

During a recession, if a government uses an expansionary fiscal policy to increase GDP, the:

the tools of demand and supply

Exchange rates are an effective way to analyze the price of one currency in terms of another currency with _________________________.

taking a management responsibility

Foreign direct investment is the term used to describe purchases of firms in another country that involve ______________________.

government borrowing

From a macroeconomic point of view, which of the following is a source of demand for financial capital?

the dollar depreciated against the yen.

If 112 Japanese yen purchased $1.00 U.S. in 2008 and 83 Japanese yen purchased $1.00 U.S. in 2009, then:

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

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:

increase

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.

increase or decrease

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.

expansionary

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

progressive.

If government tax policy requires Jane to pay $25,000 in taxes on annual income of $200,000 and Mary to pay $10,000 in tax on annual income of $100,000, then the tax policy is:

the central bank might react with an expansionary monetary policy.

If the U.S. government's budget deficits are increasing aggregate demand, and the economy is producing at a level that is substantially less than potential GDP, then:

higher interest rates; largely offset by the lower interest rates

If the government�s budget deficit increases while the economy is producing substantially less then potential GDP and expansionary monetary policy is implemented, then any ________________ from government borrowing would be _____________________________ from that monetary policy.

2010: .12 U.S. dollars; 2012: .15 U.S. dollars

In 2010, $1.00 U.S. bought 8.24 Chinese yuan and in 2012 it bought 6.64 Chinese yuan. How many U.S. dollars could 1 Chinese yuan purchase in 2010 and 2012?

2010: 113.6 yen, 2013: 107.5 yen

In 2010, 100 Japanese yen purchased .88 U.S. dollars and in 2013, it purchased .93 U.S. dollars. How much was 1 U.S. dollar worth in Japanese yen, in 2010 and 2013?

the trade deficit.

In the national savings and investment identity framework, an inflow of savings from abroad is, by definition, equal to:

win-win situation

International trade is fundamentally a ________________________.

National Interest Argument

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 _______________.

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

Low-wage U.S. workers suffer from protectionism in all the industries that they don�t work in, because:

aggregate demand

Movements in exchange rates can have a powerful effect on incentives to export and import, and thus on ________________ in the economy as a whole.

imported products

Tariffs are taxes imposed on _________________.

private savings from U.S. households and firms; inflows of foreign financial investment.

The U.S. economy has two main sources for financial capital; _______________________ and ____________________________.

euro

The _____________ is an example of a large-scale common currency.

foreign exchange market

The _____________________________ is the largest market in the world economy.

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

The infant industry argument for protectionism suggests that an industry must be protected in the early stages of its development so that:

They are all subject to government excise taxes.

What do goods like gasoline, tobacco, and alcohol typically share in common?

soft peg

When a government uses a ______________ exchange rate policy, it usually allows the exchange rate to be set by the market.

central bank prints more money

When governments are borrowers in financial capital markets, which of the following is least likely to be a possible source of the funds from a macroeconomic point of view?

discretionary fiscal policy.

When the government passes a new law that explicitly changes overall tax or spending levels, it is enacting:

a decrease in the government's budget surplus or an increase in its budget deficit.

When the interest rate in an economy increases, it is likely the result of either:

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 ____________________.

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

Which of the following would be expected if the tariff on foreign-produced automobiles were increased?

Dumping

____________ means selling goods below their cost of production.

Purchasing power parity

________________________ equalizes the prices of internationally traded goods across countries.