MACRO Unit 4 test review

In 2010, $1.00 U.S. bought 8.24 Chinese yuan and in 2012 it bought 6.64 Chinese yuan. How many U.S. dollars could 1 Chinese yuan purchase in 2010 and 2012?

2010: 0.12 U.S. dollars; 2012: 0.15 U.S. dollars

A ______ means that government spending and taxes are equal.

Balanced budget

______ means selling goods below their cost of production.

Dumping

If 112 Japanese yen purchased $1.00 U.S. in 2008 and 83 Japanese yen purchase $1.00 U.S. in 2009, then:

the dollar depreciated against the yen.

Movements in exchange rates can have a powerful effect on incentives to export and import, and thus on ____________ in the economy as a whole.

Aggregate demand

____________ are a form of tax and spending rules that can affect aggregate demand in the economy without any additional change in legislation.

Automatic stabilizers

A _____ is created each time the federal government spends more than it collects in taxes in a given year.

Budget deficit

Tariffs are taxes imposed on _____.

Imported products

If a country's GDP increases, but its debt also increases during that year, then the country's debt to GDP ratio for the year will _______________ in proportion to the magnitude of the changes.

Increase or decrease

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

When a government uses a ___________ exchange rate policy, it usually allows the exchange rate to be set by the market.

Soft peg

Which of the following would be expected if the tariff on foreign-produced automobiles were increased?

The supply of foreign automobiles to the domestic market would be reduced, causing auto prices to rise.

Exchange rates are an effective way to analyze the price of one currency in terms of another currency with ___________.

The tools of demand and supply

What do goods like gasoline, tobacco, and alcohol typically share in common?

They are all subject to government excise taxes.

A depreciating U.S. dollar is ____ because it is worth ____ in terms of other currencies.

Weakening; less

International trade is fundamentally a _______.

Win-win situation

If the government for the state of Washington collects $65.8 billion in tax revenues in 2013 and total spending in the same year is $74.8 billion, the result will be:

a budget deficit

If government policy allows a country's currency to be determined in the exchange rate market, then that currency will be subject to:

a floating exchange rate

People or firms use one currency to purchase another currently at the __________.

foreign exchange market

An import quota or tariff on French wine that raises the prices for wine will probably:

hurt domestic wine drinkers but help domestic wineries, which will gain from the higher prices

"Tariffs and other trade restrictions increase the domestic scarcity of products from abroad. Such policies benefit domestic producers of the restricted products at the expense of domestic consumers." This statement:

is essentially correct

If government tax policy requires Jane to pay $25,000 in taxes on annual income of $200,000 and Mary to pay $10,000 in tax on annual income of $100,000, then the tax policy is:

progressive

Low-wage U.S. workers suffer from protectionism in all the industries that they don't work in, because:

protectionism forces them to pay higher prices for basic necessities like clothing and food.

If government tax policy requires Peter to pay $15,000 in tax on annual income of $200,000 and Paul to pay $10,000 in tax on annual income of $100,000, then the tax policy is:

regressive

If $1.00 U.S. bought $1.40 Canadian dollars in 2006 and in 2010 it bought $1.00 Canadian dollar, then:

the Canadian dollar appreciated against the U.S. dollar.

Tariffs results in a decrease in consumer surplus because:

the price of the protected good increases and quantity consumed decreases

In 2009, 1 U.S. dollar purchased 1400 Korean won and in 2013 it purchased 900 Korean won. How much did 1000 Korean won cost in U.S. dollars in 2009 and 2013?

2009: 0.71 dollars; 2013: 1.11 dollars

It is sometimes argued that nation should not depend too heavily on other countries for supplies of certain key products. This argument is commonly known as the _______________.

National Interest Argument

A tariff differs from a quota in that a tariff is:

a tax imposed on imports, whereas a quota is an absolute limit to the number of units of a good that can be imported.

During a recession, if a government uses an expansionary fiscal policy to increase GDP, the:

aggregate demand curve will shift to the right