ACC ECON Final

Which of the following is NOT included in the M1 measure of money? A) currency held outside banks B) currency held in bank vaults C) checking deposits at commercial banks D) checking deposits at credit unions

B) currency held in bank vaults

The real wage rate equals A) (money wage rate)/(price level). B) (price level)/(money wage rate). C) (money wage rate) × (price level). D) (money wage) + (number of hours worked)/(price level).

A) (money wage rate)/ (price level)

Agriculture Secretary Ed Schafer today announced that Chile's Livestock and Agricultural Service approved the U.S. inspection, control and certification systems for poultry, allowing these products to enter the Chilean market effective immediately. What is NOT an effect of this change in Chilean policy on the Chilean poultry market? A) Chile's tariff revenue will increase. B) The quantity of poultry consumed in Chile will increase. C) The quantity of Chilean imports will increase. D) The price for poultry in Chile will decrease.

A) Chile's tariff revenue will increase.

Which of the following statements is TRUE? A) Dumping is illegal under the rules of the WTO. B) Dumping occurs when a foreign firm sells its exports at a higher price than its cost of production. C) Both statements are true. D) Neither of the statements is true.

A) Dumping is illegal under the rules of the WTO.

In 2009, Germany's capital account was -$135 million. This implies that A) Germany invested more in other countries than those countries invested in Germany. B) Germany's currency must have appreciated during 2009. C) Germany imported more goods from its trading partners than it exported. D) Germany's official settlements account in 2009 must have been positive.

A) Germany invested more in other countries than those countries invested in Germany.

Which of the following is included in a nation's current account? I. the import of services II. a change of foreign currency holdings III. net transfers, such as foreign aid payments A) I and III B) I and II C) II and III D) III only

A) I and III

When considering rent seeking, which of the following is TRUE? A) The anti-free trade group generally will lobby more than the pro-free trade group. B) The pro-free trade group generally will lobby more than the anti-free trade group. C) Usually only the anti-free trade group is concerned about what is best for society at large. D) Only the pro-free trade group is concerned about the government's revenue from tariffs.

A) The anti-free trade group generally will lobby more than the pro-free trade group.

Which of the following is NOT included in the U.S. current account? A) U.S. investment abroad B) net interest income C) net transfers D) imports of goods and services

A) U.S. investment abroad

If net interest and net transfers are zero, and a country's exports exceed its imports, the country definitely has ________. A) a current account surplus B) a current account deficit C) a capital and financial account surplus D) an official settlements account surplus

A) a current account surplus

An example of "investment" in the national income accounts is the purchase of A) a new van by a potter, who packs it with his wares and travels to art shows. B) 100 shares of Intel stock on the New York Stock Exchange. C) a 100-year-old house that was just put on the protected historic sites list in the year in question. D) a U.S. government bond.

A) a new van by a potter, who packs it with his wares and travels to art shows.

When a country has a negative current account, that country is A) borrowing from the rest of the world. B) lending to the rest of the world. C) running a government budget surplus. D) None of the above is correct.

A) borrowing from the rest

All of the following are sources of loanable funds EXCEPT A) business investment. B) private saving. C) government budget surplus. D) international borrowing.

A) business investment

If the real interest rate is above the equilibrium real interest rate A) lenders will be unable to find borrowers willing to borrow all of the available funds and the real interest rate will fall. B) borrowers will be unable to borrow all of the funds they want to borrow and the real interest rate will rise. C) lenders will be unable to find borrowers willing to borrow all of the available funds and the real interest rate will rise. D) borrowers will be unable to borrow all of the funds they want to borrow and the real interest rate will fall.

A) lenders will be unable to find borrowers willing to borrow all of the available funds and the real interest rate will fall.

The most direct way in which money eliminates the need for a double coincidence of wants is through its use as a A) medium of exchange. B) standard of deferred payment. C) store of value. D) unit of account.

A) medium of exchange.

If a country is currently borrowing more from the rest of the world than it is lending to the rest of the world, the country is a A) net borrower. B) debtor nation. C) net lender. D) creditor nation.

A) net borrower.

When we export goods to foreign countries, we A) receive payments from the rest of the world. B) make payments to the rest of the world. C) increase our inflation rate. D) decrease our inflation rate.

A) receive payments from the rest of the world.

When a group lobbies for the prevention of free trade, the most likely reason is A) rent seeking. B) tariff revenue. C) defense against expensive domestic labor. D) preservation of the environment.

A) rent seeking.

If an economy is operating at a point inside the production possibilities frontier, then A) society's resources are being inefficiently utilized. B) the PPF curve will shift inward. C) society's resources are being used to produce too many consumer goods. D) economic policy must retard further growth of the economy.

A) society's resources are being inefficiently utilized.

During the first 6 months of 2008, the United States imported 1,655,740,870 pounds of coffee. Suppose the United States is considering placing trade restrictions on the importation of coffee. If the United States has a goal of raising tax revenue from coffee imports, what policy should they pursue? A) tariff on imported coffee B) subsidy on imported coffee C) quota on imported coffee D) voluntary export restraints on coffee

A) tariff on imported coffee

In developing countries, there is more reliance on ________ as opposed to ________ for government revenue. A) tariffs; tax collection B) quotas; tariffs C) tax collection; tariffs D) tariffs; quotas

A) tariffs; tax collection

) People know that the inflation rate will decrease from 7 percent to 3 percent. As a result A) the nominal interest rate falls by 4 percentage points. B) the nominal interest rate is constant. C) the nominal interest rate rises by 4 percentage points. D) the nominal interest rate equals 3 percent.

A) the nominal interest rate falls by 4 percentage points.

Which of the following is a microeconomic topic? A) the reasons why Kathy buys less orange juice B) the reasons for a decline in average prices C) the reasons why total employment decreases D) the effect of the government budget deficit on inflation

A) the reasons why Kathy buys less orange juice

The reason tariffs and quotas are imposed is that A) their costs are spread among many people and their benefits are concentrated. B) their costs are concentrated and their benefits are spread among many people. C) they create net benefits in the long run. D) they reduce import dependence.

A) their costs are spread among many people and their benefits are concentrated.

International trade is restricted because A) there is an uneven distribution of benefits and costs of free trade. B) free trade creates an inefficient use of resources. C) free trade leads to higher costs. D) free trade stifles diversity and stability.

A) there is an uneven distribution of benefits and costs of free trade.

In September 2014, the official U-3 unemployment rate dropped from 6.1 percent to 5.9 percent. This change could have been caused by A) unemployed workers giving up looking for a job. B) part-time workers getting a full-time job. C) full-time workers becoming part-time workers. D) workers who had previously given up looking for a job starting to look again.

A) unemployed workers giving up looking for a job.

The reason that average labor costs are higher in the United States than in Haiti is that A) workers are more productive in the United States. B) U.S. workers have a comparative advantage. C) Haitian workers have a comparative advantage. D) Haitian workers do not have union representation.

A) workers are more productive in the United States.

Of the groups listed below, which is most likely to lobby for protection? A) workers in the import industry B) workers in the export industry C) consumers in the import industry D) producers in the export industry

A) workers in the import industry

In 2011, Armenia had a real GDP of approximately $4.21 billion and a population of 2.98 million. In 2012, real GDP was $4.59 billion and population was 2.97 million. Armenia's real GDP per person in 2012 was A) $1,545. B) $380. C) $1,413. D) $132.

A)$1,545

When a country decides to produce fewer bombers and more public housing projects, it is answering the ________ part of one of the two big economic questions. A) "how" B) "what" C) "defense" D) "for whom"

B) "what"

The gains from free trade are enjoyed by a ________ number of people and the costs of free trade are imposed by a ________ number of people. A) small; large B) large; small C) small; small D) large; large

B) Large: small

Which of the statements about the gains from international trade is CORRECT? A) Everyone gains from international trade. B) Some people gain from international trade and some lose, though overall the gains exceed the losses. C) Some people gain from international trade and some lose; though overall the losses exceed the gains. D) Everyone loses from international trade.

B) Some people gain from international trade and some lose, though overall the gains exceed the losses.

In October 2008, Iceland's central bank increased its lending rate to 18% in an "effort to prop up the country's frozen current and markets." (www.nytimes.com, October, 29, 2008) As a result, there was ________, holding all else the same. A) a movement upward along the supply curve for krona B) a leftward shift in the supply curve for krona C) a rightward shift in the supply curve for krona D) an increase in the quantity supplied of krona

B) a leftward shift in the supply curve for krona

The study of economics A) focuses mainly on individual consumers. B) arises from the fact that our wants exceed available resources. C) recognizes that scarcity does not affect rich nations. D) deals mainly with microeconomics

B) arises from the fact that our wants exceed available resources.

Which of the following is NOT a function of money? A) medium of exchange B) barter C) unit of account D) store of value

B) barter

In the circular flow diagram, aggregate expenditure includes the sum of A) saving and investment. B) consumption and investment. C) consumption, investment, and saving. D) income and saving.

B) consumption and investment.

If a nation during its entire history has borrowed more from the rest of the world than it has lent to the rest of the world, the country is a A) net borrower. B) debtor nation. C) net lender. D) creditor nation.

B) debtor nation.

When a foreign firm sells its exports at a lower price than its cost of production, the firm is A) imposing an economies of scale cost. B) dumping. C) avoiding a tariff. D) competing in an infant industry.

B) dumping.

The percentage of people employed aged 16 years and older divided by the working-age population is known as the A) employment rate. B) employment-to-population ratio. C) labor force participation rate. D) working-age population ratio.

B) employment-to-population ratio.

Real GDP per person in the country of Flip is $10,000, and the growth rate is 10 percent a year. Real GDP per person in the country of Flap is $20,000 and the growth rate is 5 percent a year. When will real GDP per person be greater in Flip than in Flap? A) in 2 years B) in 15 years C) never D) in 10 years

B) in 15 years

Suppose that the country of Pacifica imposes a quota on bananas. The reason that the government imposed this trade restriction could be A) that the government of Pacifica needs to increase its revenue. B) lobbying from banana farmers in Pacifica. C) comparative advantage. D) Both answers A and B are correct.

B) lobbying from banana farmers in Pacifica.

As the relative price of a good falls, the substitution effect implies that people buy A) less of that good and more of its substitutes. B) more of that good and less of its substitutes. C) less of that good and less of its substitutes. D) more of that good and more of its substitutes.

B) more of that good and less of its substitute

The account that records changes in the U.S. government's holdings of foreign currency is the A) capital and financial account. B) official settlements account. C) current account. D) U.S. official reserves account.

B) official settlements account.

The opportunity cost of a good is the same as its A) money price. B) relative price. C) price index. D) none of the above.

B) relative price

An increase in disposable income ________. A) has no effect on the supply of loanable funds curve B) shifts the supply of loanable funds curve rightward C) shifts the supply of loanable funds curve leftward D) results in movement up the supply of loanable funds curve

B) shifts the supply of loanable funds curve rightward

If the U.S. current account balance is -$500 billion and the capital and financial account balance is +$510 billion A) the U.S. official settlements account balance is $10 billion. B) the U.S. government's holdings of foreign currency increases by $10 billion. C) foreign investment in the United States is smaller than the U.S. investment abroad. D) U.S. exports are greater than U.S. imports.

B) the U.S. government's holdings of foreign currency increases by $10 billion.

The nominal interest rate approximately equals which of the following? A) the real interest rate minus the inflation rate B) the real interest rate plus the inflation rate C) the real interest rate minus the growth rate of real GDP D) the real interest rate plus the growth rate of real GDP

B) the real interest rate plus the inflation rate

Selling a product in a foreign nation at a price less than its cost of production is called A) infant-industry exploitation. B) absolute advantage. C) dumping. D) net exporting.

C) dumping.

On the island country of Sunshine where the unit of currency is fish, net exports are 50 fish, saving is 250 fish, net taxes are 100 fish, and the government budget deficit is 175 fish. What is the value of investment? A) 375 fish B) -375 fish C) 25 fish D) -25 fish

C) 25 fish

In an economy, 42 million people are in the labor force, 38 million are employed, and 47 million are of working age. How many people are not in the labor force? A) 19 percent B) 9 million C) 5 million D) 4 million

C) 5 million

Suppose the population is 220 million people, the labor force is 150 million people, the number of people employed is 130 million and the working-age population is 175 million people. What is the labor force participation rate? A) 0.68 percent B) 68 percent C) 85.7 percent D) 86.7 percent

C) 85.7 percent

Which of the following reasons explains why rich countries persistently restrict textile imports from poor countries? A) The trade restrictions make textile consumers better off. B) The trade restrictions make workers in poor countries better off. C) The trade restrictions benefit an organized visible special interest in rich countries. D) Rich countries have a strong need for the revenue from these trade restrictions.

C) The trade restrictions benefit an organized visible special interest in rich countries.

In 2013 the U.S. government removed its tariff on imported ethanol. Removing the tariff benefited ________ of ethanol, each of whom gained a ________. A) U.S. producers; little B) U.S. producers; lot C) U.S. consumers; little D) U.S. consumers; lot

C) U.S. consumers; little

A tradeoff is A) represented by a point inside a PPF. B) represented by a point outside a PPF. C) a constraint that requires giving up one thing to get another. D) a transaction at a price either above or below the equilibrium price.

C) a constraint that requires giving up one thing to get another.

Since the mid-1980s, the United States has been a net ________ and a ________ nation. A) borrower; creditor B) lender; creditor C) borrower; debtor D) lender; debtor

C) borrower; debtor

Which of the following is NOT money? A) currency B) checking deposits C) checks in the checkbook D) All of the above are money.

C) checks in the checkbook

A consumer might consider in-line skates and elbow-pads to be A) products with upward sloping demand curves. B) unrelated goods. C) complements. D) substitutes.

C) complements

A new financial innovation results in people switching their funds from checking deposits to savings accounts. The quantity of M1 ________ and the quantity of M2 ________. A) decreases; decreases B) increases; decreases C) decreases; does not change D) decreases; increases

C) decreases; does not change

The demand for labor curve is A) upward sloping at potential GDP and downward sloping elsewhere. B) vertical at potential GDP. C) downward sloping. D) upward sloping because firms demand labor.

C) downward sloping.

Using calculations of the cost to Americans per job saved in protected industries, it can be concluded that A) import quotas are an efficient way to redistribute income. B) each job saved is worth more than the cost imposed on consumers per job saved. C) each job saved is worth less than the cost imposed on consumers per job saved. D) tariffs are an efficient way to redistribute income to disadvantaged groups.

C) each job saved is worth less than the cost imposed on consumers per job saved.

A small country is an international borrower and its domestic demand for loanable funds increases. Consequently, the equilibrium quantity of loanable funds used in the country ________ and the country's international borrowing ________. A) does not change; increases B) does not change; does not change C) increases; increases D) increases; does not change

C) increases; increases

When money is accepted as payment in a market transaction, it is functioning as a A) store of value. B) unit of accounting. C) medium of exchange. D) unit of investment.

C) medium of exchange.

During most of the 1980s, 1990s, and 2000s the U.S. has had a ________ current account balance and a ________ capital and financial account balance. A) positive; positive B) positive; negative C) negative; positive D) negative; negative

C) negative; positive

A country that borrows more from the rest of the world than it lends to it in a year is called a ________, and a country that lends more to the rest of the world than it borrows from it in a year is called a ________. A) borrower; lender B) importer; exporter C) net borrower; net lender D) gross borrower; gross lender

C) net borrower; net lender

The main item in the current account balance is A) net interest income. B) net transfers. C) net exports. D) net taxes.

C) net exports

Cigarettes served as money in some POW camps during World War II. Given this fact, we would expect to observe A) no one ever smoking a cigarette. B) people usually resorting to barter rather than using cigarettes as money. C) prices of other goods expressed in terms of cigarettes. D) only government-issued cigarettes being accepted as money.

C) prices of other goods expressed in terms of cigarettes.

The aggregate production function shows how ________ varies with ________. A) leisure time; labor B) labor; leisure time C) real GDP; labor D) labor; capital

C) real GDP; labor

The largest part of the U.S. current account consists of A) Fed transfers of U.S. dollars to other central banks. B) net transfer payments between the United States and Mexico. C) receipts from exports and payments for imports. D) net borrowing between the United States and other countries.

C) receipts from exports and payments for imports.

Japan was accused of dumping in the steel industry within the United States when it A) negotiated an illegal agreement to raise prices with U.S. steel industries. B) prohibited imports of U.S. steel into Japan. C) sold steel in the United States at a price below its cost of production. D) negotiated an illegal trade deal with Canada.

C) sold steel in the United States at a price below its cost of production.

17) The ________ is the total number of people aged 16 years and older (and not in jail, hospital or institutional care) while the ________ is the number of people employed and the unemployed. A) labor force; working-age population B) labor force participation rate; labor force C) working-age population; labor force D) working-age population; labor force participation rate

C) working-age population; labor force

Which of the following are valid reasons advanced by almost all economists? Protectionism A) saves jobs. B) prevents rich countries from exploiting poorer countries. C) is a good way for governments in developed nations to raise revenue. D) Economists would not support any of the above reasons.

D) Economists would not support any of the above reasons.

Which of the following is a TRUE statement? A) Everyone benefits from free trade. B) Only exporters benefit from trade. C) All producers benefit from trade and but not all consumers benefit. D) Free trade harms domestic producers of goods that face import competition.

D) Free trade harms domestic producers of goods that face import competition.

An unusually warm winter shifts the A) supply curve of gloves rightward. B) supply curve of gloves leftward. C) demand curve for gloves rightward. D) demand curve for gloves leftward.

D) demand curve for gloves leftward.

In poorer countries, free trade ________ the demand for labor in these countries and ________ the wages paid in these countries. A) decreases; lowers B) decreases; raises C) increases; lowers D) increases; raises

D) increases; raises

Liquidity ________. A) is the property of money being instantly convertible into assets B) increases when a consumer has more credit cards C) is how quickly an asset loses its worth D) is the property of assets being instantly convertible into money

D) is the property of assets being instantly convertible into money

According to the law of diminishing returns, an additional unit of A) capital produces more output than an additional unit of labor. B) labor decreases output. C) labor produces more output than the previous unit. D) labor produces less output than the previous unit.

D) labor produces less output than the previous unit.

Gross domestic product (GDP) measures the A) number of final goods and services produced in the economy in a given time period. B) number of final goods and services sold in the economy in a given time period. C) market value of old and new final goods and services sold in the economy in a given time period. D) market value of final goods and services produced in the economy in a given time period.

D) market value of final goods and services produced in the economy in a given time period.

The capital stock increases whenever A) gross investment is exceeds net investment. B) net investment exceeds gross investment. C) gross investment is negative. D) net investment is positive.

D) net investment is postive

In 2013, Ozzie purchased a 2010 Ford Escort from his neighbor for his son, purchased a 2009 "one owner" Camry from Larchmont Toyota for his wife, bought a 2013 new Ford for himself, and sold his 2002 Dodge Caravan to his teenage nephew. Which, if any, of these transactions will be included in GDP in 2013? A) all four transactions B) all three purchases but not the sale C) the purchase of the Ford and the Caravan D) only the purchase of the Ford

D) only the purchase of the Ford

The argument that protection ________. A) penalizes poor environmental standards is true B) allows us to compete with cheap foreign wages is true C) is necessary for infant industries is true D) saves jobs is flawed

D) saves jobs is flawed

GDP can be computed as the sum of A) all sales that have taken place in an economy over a period of time. B) the total expenditures of consumers and business over a period of time. C) the total expenditures of consumption, investment, and government expenditure on goods and services over a period of time. D) the total expenditures of consumption, investment, government expenditure on goods and services, and net exports over a period of time.

D) the total expenditures of consumption, investment, government expenditure on goods and services, and net exports over a period of time.

True or False Most economists would agree that "saving jobs" is a valid reason for restricting trade.

False

True or False "Currency appreciation" means the price of the currency is decreasing.

False

True or False A movement along the demand curve shows a change in demand.

False

True or False Quotas are less damaging to an economy than are tariffs.

False

True or False Scarcity affects only those who are in need.

False

True or False Suppose that nominal interest rates double. As a result, the quantity of money doubles as well.

False

True or False The demand curve for labor shows how many hours workers demand to work

False

True or False The nominal interest rate is approximately equal to the real interest rate minus the inflation rate.

False

True or False The lower the exchange rate, the cheaper are foreign-produced goods and services.

Flase

True or False A depository institution receives deposits from lenders and makes loans to borrowers.

True

True or False A recession occurs when real GDP decreases for at least 6 months.

True

True or False An exchange rate is the price of one country's currency in terms of another country's currency.

True

True or False As the purchasing power of wealth increases, saving decreases.

True

True or False If the exchange rate falls from 120 yen per dollar to 110 yen per dollar, the dollar has depreciated.

True

True or False In neoclassical growth theory, technological progress is the key to continuous growth in labor productivity.

True

True or False Over the past 80 years, the United States has reduced its average tariff rate so today it is less than 5 percent.

True

True or False Tariffs and quotas both decrease the amount of a good consumed and raise the price paid by domestic residents for the good.

True

True or False The absence of cyclical unemployment means the economy is at the natural unemployment rate.

True

True or False The fact that prices for similar goods differ across nations complicates comparisons of real GDP across countries.

True

True or False The most powerful individual in the Federal Reserve is the Chairman of the Board of Governors.

True