Quiz 9
A __________________ often results in an outflow of financial capital leaving the domestic economy and being invested in the global economy?
trade surplus
From a macroeconomic point of view, which of the following is a source of demand for financial capital?
government borrowing
An additional investment in human capital, especially for the low-income nations of the world, will likely directly increase which of the following?
productivity and economic growth
A __________________________ policy will cause a greater share of income to be collected from those with high incomes than from those with lower incomes.
progressive tax
A ________________________________ is calculated as a flat percentage of income earned, regardless of level of income.
proportional tax
A central bank that desires to reduce the quantity of money in the economy can:
raise the reserve requirement.
A ___________________________________ can lead to disruptive economic patterns and heavy strains on a countryÕs banking and financial system.
sustained pattern of large budget deficits
If Brent uses his credit card to purchase a new television, then the money to pay the retailer is taken from:
the credit card company's M1 funds.
A ______________________ means that government spending and taxes are equal.
balanced budget
A ______________________ is created each time the federal government spends more than it collects in taxes in a given year.
budget deficit
Atlantic Bank is required to hold 10% of deposits as reserves. If the central bank increases the discount rate, how would Atlantic Bank respond?
by increasing its reserves
An increase in government borrowing can:
crowd out private investment in physical capital.
An increase in the government's budget surplus will cause the interest rate to:
decrease.
A reduction in government borrowing can:
give private investment an opportunity to expand.
A ____________________________ is one economic mechanism by which government borrowing can crowd out private investment.
higher interest rate
A government will likely ____________________________ to encourage investment in technology R&D by private firms?
implement fiscal policy establishing tax incentives
A decrease in the government's budget surplus will cause the interest rate to:
increase
Currently, the US government accumulated debt to GDP ratio:
is lower than its historical high point.
A prolonged period of budget deficits may lead to ___________________.
lower economic growth
A moderate increase in a budget deficit that leads to a _____________________ is not necessarily a cause for concern.
moderate increase in a trade deficit and a moderate appreciation of the exchange rate