Unit 14

Of the statements listed, which best characterizes the potential impact of factors occurring outside our domestic economy and markets? A) Factors outside the United States can have immediate and prolonged impact on our securities and trade markets and thus our domestic economy. B) Factors outside the United States never have immediate impact on our securities and trade markets, but over time can impact our domestic economy. C) Factors outside the United States can impact our securities and trade markets, but the effects are always short term and thus impact our domestic economy very little. D) Factors outside the United States have little impact on our securities and trade markets and thus our domestic economy.

A) Factors outside the United States can have immediate and prolonged impact on our securities and trade markets and thus our domestic economy.

If the U.S. dollar is relatively strong against the Japanese yen, it can be assumed that A) the U.S. dollar will buy more goods produced in Japan, while the Japanese yen buys fewer goods produced in the United States. B) the U.S. dollar will buy more goods produced in Japan and the Japanese yen will also buy more goods produced in the United States. C) the U.S. dollar will buy fewer goods produced in Japan and the Japanese yen will also buy fewer goods produced in the United States. D) the U.S. dollar will buy fewer goods produced in Japan, while the Japanese yen buys more goods produced in the United States.

A) the U.S. dollar will buy more goods produced in Japan, while the Japanese yen buys fewer goods produced in the United States.

Match the following statement to the best expression: Government should allow market forces to determine prices of all goods and that the federal government should reduce government spending as well as taxes. A) Socialism B) Supply-side Economic Theory C) Keynesian Theory D) Monetarist Theory

B) Supply-side Economic Theory

To grow or expand the economy, U.S. fiscal policy should be to A) raise taxes and government spending for programs and development. B) cut taxes and increase government spending for programs and development. C) cut taxes and government spending for programs and development. D) raise taxes and cut all government spending for programs and development.

B) cut taxes and increase government spending for programs and development.

If the U.S. dollar is weak against foreign currency, A) U.S. currency buys less foreign goods; therefore, U.S. imports will increase. B) foreign currency buys more U.S. goods; therefore, U.S. exports will increase. C) foreign currency buys more U.S. goods; therefore, U.S. imports will increase. D) U.S. currency buys more foreign goods; therefore, U.S. exports will increase.

B) foreign currency buys more U.S. goods; therefore, U.S. exports will increase.

A surplus in the balance of payments is best described by A) the United States importing more than it exports. B) more money flowing into the United States than out. C) other countries exporting more to the United States. D) more money flowing out of the United States than into the United States.

B) more money flowing into the United States than out.

A strong U.S. dollar leads to more A) U.S. exports and a balance of payments surplus. B) U.S. imports and a balance of payments surplus. C) U.S. imports and a balance of payments deficit. D) U.S. exports and a balance of payments deficit.

C) U.S. imports and a balance of payments deficit.

Which of the following is a true statement with regard to either U.S. securities laws or the description of international economic factors? A) A tombstone advertisement may be used in lieu of a prospectus in the distribution and sale of corporate securities. B) When a company files for bankruptcy, claims of preferred shareholders are settled before all others. C) When the U.S. dollar is strong, foreign currency buys fewer U.S. goods. D) The Securities Act of 1933 regulates secondary markets and trading on exchanges.

C) When the U.S. dollar is strong, foreign currency buys fewer U.S. goods.

The federal government could use which of the following to stimulate the economy? A) Buy Treasury securities from banks B) Raise taxes C) Raise the federal funds rate D) Increase government spending

D) Increase government spending

Match the following statement to the best term: Government intervention in the economy is a significant force in creating prosperity by engaging in activities that affect aggregate demand. A) Monetarist Theory B) Balance of payments C) Socialism D) Keynesian Theory

D) Keynesian Theory

The federal government could use which of the following to slow the economy? A) Raise the federal funds rate B) Increase government spending C) Buy Treasury securities from banks D) Raise taxes

D) Raise taxes

The U.S. balance of payments deficit would decrease in all of the following scenarios except A) a decrease in dividend payments by U.S. companies to foreign investors. B) an increase in exports of domestic goods from the United States. C) a decrease in imports of foreign goods into the United States. D) a decrease in purchases of U.S. securities by foreign investors.

D) a decrease in purchases of U.S. securities by foreign investors.

Deflationary periods are characterized by all of the following except A) coinciding with recessions. B) rising unemployment. C) a decline in prices. D) increased consumer demand.

D) increased consumer demand.

A deficit in the U.S. balance of payments can occur if I. interest rates in foreign countries are higher than U.S. domestic rates. II. interest rates in foreign countries are lower than U.S. domestic rates. III. U.S. consumers are purchasing (importing) foreign goods. IV. foreign consumers are purchasing (importing) U.S. goods.

I and III

Exports from the United States would likely increase if I. the Japanese yen strengthened against the dollar. II. the U.S. dollar strengthened against the euro. III. the U.S. dollar weakened against the British pound. IV. the Swiss franc weakened against the dollar.

I and III

Which of the following are considered tools used to implement fiscal policies? I. Government spending II. Operations of the Federal Open Market Committee (FOMC) III. Changing the reserve requirements IV. Taxation

I and IV

Fiscal policy I. is the most efficient means for solving short-term economic issues. II. is not considered the most efficient means to solve short-term economic issues. III. is reflected in the budget decisions enacted by our president and Congress. IV. s reflected in the money supply decisions enacted by the Federal Reserve Board (FRB).

II and III

A surplus in the U.S. balance of payments can occur if I. interest rates in foreign countries are higher than U.S. domestic rates. II. interest rates in foreign countries are lower than U.S. domestic rates. III. U.S. consumers are purchasing (importing) foreign goods. IV. foreign consumers are purchasing (importing) U.S. goods.

II and IV.

What is the economic theory that says the government can and should effect individual spending by adjusting taxes and government spending?

Keynesian

Select the two distinctive types of policies that impact the U.S. economy.

Monetary and fiscal

The country's annual economic output of all of the goods and services produced within the nation, is known as

gross domestic product.

There are two distinctive types of policies implemented to shape and mold the U.S. economy. They are

monetary and fiscal.

To contract or slow economic growth U.S. fiscal policy should be to

raise taxes and cut government spending for programs and development.

The flow of money between the United States and other countries is known as

the balance of payments.

The largest component of the U.S. balance of payments is

the balance of trade.