5.08 module 5 econ exam

If the inflation rate increases faster than their income, people will most likely A. use a higher proportion of their incomes on basic needs B. spend a lower proportion of their incomes on basic needs C. get more goods and services for less money D. obtain less goods and services for less money

A

The United States increases the money supply, deflating the value of the dollar. As a result, people in other countries A. can purchase more U.S. goods for less of their currency B. hoard the U.S. dollar for its potential value increase C. cannot use their currencies to purchase U.S. goods D. must exchange the U.S. dollar for money of higher value

A

Which of the following economic goals focuses on funding technological advances in production? A. Efficiency B. Equity C. Freedom D. Security

A

A nation has a high Human Development Index and a high gross domestic product. Which of the following factors might result in classification of the nation as developing rather than developed? A. A high per capita income B. A command economy C. Mechanization of farms D. A full market economy

B

Look at the map showing the European Union (EU) and countries with which it has free-trade agreements (FTAs). Which is the reason the EU has free-trade agreements with almost every country on the Mediterranean Sea? A. Having a sea border between an FTA country and the EU is more secure than a land border .B. Having a shoreline makes shipment by sea possible, which is less expensive than over land. C. The countries in North Africa and the Middle East are potential members of the European Union. D. The countries in North Africa and the Middle East are less politically volatile than other countries.

B

The United States may have a tariff on cotton products from China in order to A. prevent Chinese manufacturers from losing profit because of low prices B. protect the business of the American cotton growers and manufacturers C. stop trade due to political disagreement on economic policy D. promote sales in the United States of cotton products from China

B

The government institutes a new job-training program to prepare economically disadvantaged citizens for higher-paying, technologically advanced jobs. This action benefits the goal of equity by A. ensuring workers are more productive B. helping minimize the education gap C. raising government spending D. reducing unemployment

B

Which of these would result from high inflation in the United States? A. U.S. goods would be less expensive than before. B. Americans would demand higher wages. C. Income levels in the workforce would fall. D. The Consumer Price Index would be a negative number.

B

Economists warn that the nation is heading for a recession. Which of the following actions would John Maynard Keynes most likely support? A. Increase funds for civic projects to put people to work B. Decrease taxes across the board for individuals and businesses C. Redistribute unemployment and Social Security funds to bail out failing banks D. Reduce the money supply and keep interest rates high

C

U.S. companies have made fewer manufacturing contracts with China in the last few years, preferring other countries in the region. Which of the following is a potential reason? A. China has most-favored-nation trade status with the United States. B. China has large reserves of cheap labor and can produce inexpensive goods. C. China's standard of living has increased, and workers are requesting more pay. D. Shipping costs from China over the Pacific Ocean have decreased.

C

A group of nations establishes a free-trade zone. What is the most likely effect? A. Cost of trade increases B. Exports decrease C. Imports decrease D. Trade increases

D

Globalization increases the interdependency of the world's countries. Inflation in one country would most likely A. not impact inflation in other countries B. cause deflation in other countries C. result in stagflation in other countries D. relate to inflation in other countries

D

If the Consumer Price Index rises then A. unemployment is falling B. unemployment is rising C. deflation is occurring D. inflation is occurring

D

Keynes would most likely support a plan for A. government ownership of most production B. creating a worldwide free trade agreement C. eliminating income taxes on the wealthy D. income taxes based on ability to pay

D

The government determines prices for goods and services in a A. market economy B. traditional economy C. demand economy D. command economy

D

Which of the follow is true of the trade relationship between Country A and Country B? A. Country A has an absolute advantage in producing yarn and fabric B. Country B has an absolute advantage in producing yarn and fabric C. Country B has a comparative advantage to Country A in producing fabric D. Country A has a comparative advantage to Country B in producing fabric

D

Which of the following describes a developing nation? A. A market economy with a high per capita income B. A market economy with a trillion-dollar gross domestic product C. A mixed economy with a very high Human Development Index D. A traditional economy with a low Human Development Index

D

Which position would Adam Smith most likely support during a congressional debate on tax reform?

Income taxes should be reduced to a minimal level and be based on ability to pay.

The United States can manufacture books at a much more rapid pace than manufacturers in Indonesia. Which of the following is a reason?

Indonesia, as a developing country, has a less advanced manufacturing infrastructure.

The cost of fuel is on the rise. In what way will this affect global trade?

Shipping expenses will increase

Look at the map showing the European Union (EU) and its free-trade agreement (FTA) countries. Which is true about most current EU free-trade agreements?

The European Union's free-trade agreements include agreements with both developed and developing nations.

Using the chart, identify an example of comparative advantage for either Country A or B over the United States. Be sure to identify the country with the comparative advantage over the U.S. and product. Explain how the availability and use of a natural resource may impact advantage.

The United States has a comparative advantage over Country B in producing crude oil. The United States only requires 4 worker hours to produce one barrel of crude oil, this means that the United States will produce crude oil more efficiently and make the availability of crude oil increase, plus countries lacking in natural resources must import this product in order to make other products.

Explain the difference between absolute advantage and comparative advantage. Provide an example to illustrate your explanation.

The difference between absolute advantage and comparative advantage is that absolute advantage is when a country requires less physical resources than another country to produce a particular good or service while comparative advantage is when a country has a lower opportunity cost than another country to produce a particular good or service. For example, Florida has an absolute advantage over Canada in production of Orange Juice because we have the correct climate for oranges to thrive in, so we have a lot of them. A comparative advantage would be Country 1 can produce 100 units of a product using 100 workers, while Country 2 can produce the same amount of units but using 80 workers. So, Country 2, has comparative advantage.

Which of these can be a result of inflation?

The price of household items increases

Marcel takes out student loans and works part time to put himself through college. In time, he earns an advanced medical degree and goes to work in an understaffed city hospital. Marcel's economic decisions benefit the goal of efficiency by

contributing to the nation's productivity

Adam Smith would most likely oppose a plan for

government bailouts for failing corporations

A high inflation rate is most difficult for people

living with fixed incomes

Supply and demand determines prices levels for goods and services in a

market economy

Globalization increases the interdependency of the world's countries. Inflation in one country would most likely

relate to inflation in other countries