QUESTIONS - ECON EXAM 3
True of Bretton Woods Agreement
- the US negotiator was a Russian spy -made the US dollar the key currency in the wolrd -created a bank and a fund that are both still operating today
UNLV is located in
Paradise
interest on the national debt
Paying money into taxes but you eventually get some back (those that own the federal bonds) Low income ppl don't get this money back, but high and middle class gets some Interest INCREASES
What is specifically named in the constitution as something the federal govnt can pay for?
Post office, army, state militias (enumerated power)
mandatory spending
Required govt spending by permanent laws BIGGEST
who increased the debt by triple?
Ronald Raegan
Appreciation
Supply and Demand (the market) cause a currency to rise in value
An export from the US requires that money enter the US, it does not require that a good leaves the US
True
federal trade commission
Unfair or Deceptive Practices (must tell the truth to consumers and they agree) Truth in advertising (must tell the truth) Ex: Listerine (used to say that it cured the common cold, but there was no proof of it) Bait and Switch
The general agreement on tariffs and trade has become the
WTO (world trade organization)
Mergers
When companies want to merge with another company, the government can stop it
International Monetary Fund
a bank for countries - if a country needs a loan they would come here
an oligopoly is an industry that has
a few companies
Mercantilist philosophy we make our country stronger by
exporting a lot, but limiting imports (more money coming in then out)
trade balance
exports=imports
When 1 person takes an action that causes another person to pay a cost is called?
externality
An increase in supply causes the equilibrium price to
fall
If the dollar appreciates against the yuan, prices of Chinese goods in theUS will
fall
Since he is the commander in chief, the prez decides on the amount the defense budget and what its spent on
false
The US does not impose quotas on goods, nor does it restrict foreign ownership of US companies in general
false
The constitution says the prez must submit a proposed budget to congress at their requiem after the state of the union address
false
an increase in imports to the US from China should raise the value of the dollar against the yuan
false (it should fall)
the sale of amc theaters to a Chinese investor would show up in what account of the balance of payment?
financial (permanent)/capital (buying assets in another counter)account
modern exchange rates are supposed to be
floating
What does big countries get rich from and small/middle countries don't really
free trade
According to the constitution, the govn't must publish a statement of its account
from time to time
Globalization is
high levels of trade between nations economic integration of nations permanent trade connections between nations created winners and losers
where do all spending bills start?
in the house
name of the redevelopment fund that was created in Bretton woods
international monetary system
If the US has a trade deficit with China, what happens to the value of the dollar compared to the yuan
it should fall
why did ppl argue for tariffs?
it would create jobs in the country, which means workers r paid more and prices increase instead of having clothes be cheap (Ex: when its made in another country for less money)
Factors of production used by entrepreneurs to produce goods?
land, labor and capital
the average tariff the US imposes on goods today is
less than 5%
The Bretton Woods Agreement
made the US dollar the key currency in the world
an economic good is something that
makes no one unhappy
what is the largest category of federal spending
mandatory spending
US has a trade deficit
most years
a decrease in the price of bread will
move the demand curve for bread to the right
in the constitution the prez has the power to
negotiate treaties
There are advantages to a company when all of its employees use the same word processor and other software (lowering training costs, ease of sharing files, etc.). These advantages are collectively known as:
network externalities
The constitution requires congress to plan ahead for budgets over how many years?
none - constitution doesn't mention it
OPEC/Oil
oil profits r at a record high oil companies colluding so prices r relatively the same and they still make a lot of money OPEC broke the contract and pumped more oil
Who is exempt from truth in advertising laws?
politicians
how is the budget set?
prez sets up the budget and sends it to congress. congress then looks through it and sends it back to him to see if he passes it or vetos it
What did the 3 laws - Sherman act, Clayton act and federal trade commission come from
progressive movement
The scientific method properly applied can
prove and disprove theories
the anti-trust laws are constitutional bc they r based on the power to
regulate interstate commerce
The primary tactic a monopoly will employ to use its power is to
restrict output
why r monopolies bad
restricts output and raises the prices - causing consumers to fight over it some monopolies making more than they should =effect on the economy lack of competition
When the value of the dollar rises against the yen, Japanese tourists going to Hawaii will find the hotel rooms have
risen in price
You operate a restaurant chain (say, Taco Bell). Your food is so good that every other restaurant in the world goes out of business. You have not violated the Sherman Act because of the:
rule of reason
What best describes the economic problem?
scarcity
congress has the power to
set tariffs handset the value of the dollar
in comparative advantage philosophy we make out country stronger by
specializing and trading
What was the first big company broken up the govnt for being a monopoly?
standard oil
Depreciation
supply and Demand (the market) cause a currency to fall in value
trade deficits
the amount by which the cost of a country's imports exceeds the value of its exports. Funded by going into debt and or selling your assets to the other country imports>exports
In socialism_____ answers the 3 economic questions
the government -govnt ownership of capital -planning as the allocation mechanism
If the US has a trade deficit, how will it be corrected if markets are free to work?
the government must correct the exchange rate, markets won't work
In capitalism ____ answers the 3 economic questions
the market - capitalism -self-interest -guiding motivation
Adam Smith stated
the most important thing for a free market to work is that there needs to be competition (the founding fathers didn't put this into the constitution)
Opportunity cost of buying a good includes
the value of everything giving up to obtain it -includes money and time
exchange rates (value of our currency internationally) ...
translate to domestic prices of foreign goods and services affected by imports and exports Value of the dollar changes the prices of the things we buy Becomes more expensive or cheaper depending if the value of the dollar goes up or down
Comparative Advantage theory argues that everyone gains from an exchange of a good for money, while Mercantilists believe the person who gets the money "wins" the exchange.
true
Efficiency is maximizing the amount of output from the inputs used to produce it.
true
Tariffs constitutionally require passage by Congress, but President Trump put all his tariffs on by declaring that there was a national security issue with each country and not getting Congress to pass them.
true
The Sherman Act makes it illegal to be a monopoly, try to become a monopoly, or conspire to become a monopoly.
true
The US overall has a trade deficit in goods, but a trade surplus in services?
true
When China pegs its currency to keep the dollar from falling, it acquires dollars, which it then uses to buy assets in the United States.
true
When the US dollar falls relative to the Chinese currency, goods we buy from China would become more expensive for US consumers.
true
When the US has a trade deficit with China, it will go into debt to china to fund that deficit
true
did Britain follow mercantilist philosophy in its dealings with American colonies?
true
economists believe that the best decisions are made when consumers only consider the benefits of their actions, and businesses consider the costs in the transaction.
true
Term that economists use that means happiness
utility
What is the 3 basic questions asked in microeconomics?
what to produce? how to produce? who benefits?
all of the part of the balance of payments must add up to?
zero
The license fees paid by a US book publisher to publish Harry Potter show up in the ______ account of the Balance of Payments.
current
When a restaurant gives 10 % off that is a _____ degree price discrimation
3rd
in the past 40 years, how many times did congress follow the agreed budget process?
4 times
The sale of corn from the US to Japan would appear in what account of the Balance of Payments?
current account
If $1 equals 0.5 pounds than 1 pound is equal to
$2
The sale of raisins from cali to Japan would show up in what account of the balance of payment?
current account
The _____ Act permits the government to approve or disapprove corporate mergers
Clayton act
who was the only person on the plus side (adding surplus - aging more money than spending) in a budget deficit?
Clinton (after him was bush and then there was a recession)
section 232
Congress can place tariffs, but a law that the prez can pass tariffs for security reasons President can place tariffs on goods if necessary for national security
World Bank
Development fund Helps with infrastructure (helps u build bridges, roads, etc) Most of funding for this comes from the US
why do we care?
Export = Demand Import = supply Scare currency is valuable currency Export raise the value of a currency Imports lower the value of a currency Imports and exports changes the value of our money When we export = our money becomes more valuable When we import = our money becomes less valuable US is the greatest importer on earth, so the dollar should be becoming less valuable, however, this isn't this case at all Countries bring their money here, bc its the place to invest
World Trade Organization (WTO)
Formally the general agreement on tariffs and trade (GATT)
Fixed Exchange Rate
Government deciding what their currency of money is going to be except for the US
Bretton Woods
Town in new hampshire where harry, john and other countries gathered together to figure out what to do when the war ended
John Maynard Keynes
In charge of england Knew what was going to happen during this war and what led to it Doesn't like americans Said to let the government decide what their currency is going to be Tie the money to the British power Stated we needed 2 things (A bank for the whole world and a development fund)
Harry Dexter Woods
In charge of the US #2 person in the treasury department, but also a russian spy (spilling secrets and tea) Believed in communism Ok with John's idea of tying the money together, but it should be towards the american dollar and not the british pound
Why do economists prefer capitalism to socialism?
Innovation, freedom efficiency etc. Capitalism relies on the market to work, which creates competition, which leads the economy to prosper, while socialism is under govn't control
Most States, including Nevada, have a fiscal year that begins on
July 1st
what is excepted from anti-trust?
Major League Baseball
If economists believe that free trade makes everyone better off, why do some countries still follow Mercantilism?
Mercantilism allows a single nation to prosper over another, restriiting imports while increasing exports.
discretionary spending
Money that is flexible — adjustable by Congress Not required to be anything CUTTING
is there a budget process in the constitution?
No - therefore congress passed a law to see what the budget would be (not followed)
what is the system that created a balanced federal budget in the 1990s
PAYGO
when the dollar goes from $1 = 400 yen in 1970 to $1= 100 yen today, we say this dollar has
depreciated
devaluation
The government causes a currency to fall in value
revaluation
The government causes a currency to rise in value
if the US begins to export more goods to china, ceteris paribus, the dollar should ___ against the yuan
appreciation
US tariffs
are generally low, but may go above 300%
Fiscal year means
budget year
The tourist would appear in what account of the balance of payments?
capital
salary paid to an employee of Wynn resorts who works in china but is paid from Las Vegas
capital
If JK Rowling licenses a publishes to print her boo in the US, the money from that agreement would appear in what account of the balance of payments?
capital account
congress has the power to
collect tariffs, regulate commerce with foreign countries, control exchange rates
The lesson of the prisoner's dilemma is that businesses in an oligopoly should _____ if possible
collude
Invisible hand by Adam Smith means
competition - makes us do the right thing
