econ midterm meyers

Debt is measured relative to GDP because: A. the ability to pay off a country's debt depends on its productive capacity. B. the ability to produce output depends on the size of the nation's debt. C. GDP is always used as a reference point in economics. D. as long as this ratio remains high, the government will have no trouble repaying the debt.

the ability of a country to pay off its debt depends on its productive capacity.

The WTO authorized several countries to impose about $150 million in trade sanctions against the United States in retaliation for a U.S. import law that the WTO ruled to be illegal. The organization that issued this ruling against the United States is known as the: 1. Wage Tariff Objective. 2. World Trade Organization. 3. Wealth Technology Order. 4. Welfare Tax Order.

2. World Trade Organization.

Production Possibility Schedules for Two South Pacific Island Nations Refer to the table shown. In Kiribati, the opportunity cost of producing one mango (in terms of coconuts) is:

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Which of the following groups would be most likely to benefit from a tariff on Japanese-manufactured light trucks (i.e., pickup trucks)? A. U.S. domestic pickup truck manufacturers b. Japanese auto workers c. U.S. consumers of pickup trucks d. U.S. firms that export products to Japan

A. U.S. domestic pickup truck manufacturers

A budget deficit is defined as: A. a shortfall of revenues compared to expenditures. B. a shortfall of expenditures compared to revenue. C. accumulated deficits minus accumulated surpluses. D. accumulated surpluses minus accumulated deficits.

A. a shortfall of revenues compared to expenditures.

External government debt is: A. government debt owed to its own citizens. B. government debt owed to individuals in foreign countries. C. government debt owed by one branch of the government to another. D. debt that individuals in foreign countries owe to the U.S. government.

B. government debt owed to individuals in foreign countries.

One of the reasons government debt is different from individual debt is: A. government does not pay interest on its debt. B. government never really needs to pay back its debt. C. all government debt is owed to other government agencies or to its own citizens. D. the ability of a government to pay off is debt is unrelated to income.

B. government never really needs to pay back its debt.

Government debt is defined as: A. a shortfall of incoming revenue under outgoing payment. B. a shortfall of outgoing payments under incoming revenue. C. accumulated deficits minus accumulated surpluses. D. accumulated surpluses minus accumulated deficits.

C. accumulated deficits minus accumulated surpluses.

If the government runs a budget deficit and uses it to finance the purchase of productive assets, the economy will: A. always be worse off. B. be better off only if output is beneath potential output. C. be better off if the return on the assets is sufficiently high. D. always be better off.

C. be better off if the return on the assets is sufficiently high.

Economists generally agree that: A. trade restrictions will increase the welfare of a large country even if other countries retaliate. B. trade between two nations generally benefits one at the expense of the other. C. infant industry protection, although justified in theory, often becomes permanent because infant industries fail to grow up. D. trade embargoes are not an effective way of achieving international political objectives.

C. infant industry protection, although justified in theory, often

The foreign exchange rate is the rate at which: a. taxes are imposed on foreign imports. b. foreign good are traded between domestic consumers. C. one country's currency can be traded for another country's currency. D. immigrants are exchanged between countries.

C. one country's currency can be traded for another country's currency.

If the national debt increases in any given year, it follows that the government: A. sold bonds in that year to finance a budget surplus. B. bought bonds in that year to finance a budget surplus. C. sold bonds in that year to finance a budget deficit. D. bought bonds in that year to finance a budget deficit.

C. sold bonds in that year to finance a budget deficit.

Retirement of the baby boomers: A. does not pose a threat to the Social Security system. B. might have posed a threat to the Social Security system if the baby boomers had had fewer children. C. threatens the Social Security system because the number of retirees will be relatively large compared to the number of workers remaining by 2020. D. will cause the Social Security system to collapse in 2020.

C. threatens the Social Security system because the number of retirees will be relatively large compared to the number of workers remaining by 2020.

All of the following fiscal policies contributed to the large and increasing budget deficits experienced in 2003 and 2004 except: A. tax cuts. B. increases in defense expenditures. C. increases in Social Security payments to the elderly and disabled. D. cuts in aid to farmers.

D. cuts in aid to farmers.

Debt service refers to: A. how much debt a country incurs each year. B. the interest rate a country pays on its debt. C. the fraction of a country's debt that comes due each year. D. the interest payments a country makes on its debt each year.

D. the interest payments a country makes on its debt each year.

An import quota does which of the following? a. Decreases the price of the imported good for the consumer b. Increases the price of the domestic good for the consumer c. Redistributes income from domestic producers to domestic consumers d. Decreases the price received by foreign producers

Increases the price of the domestic good for the consumer

Which of the following exchange rates between the dollar and the peso would a Mexican buyer of American goods most prefer? a. $0.25 = 1 peso b. $0.20 = 1 peso c. $0.15 = 1 peso d. $0.05 = 1 peso

a. $0.25 = 1 peso

The balance of trade measures the: a. difference between the value of imports and that of exports. b. share of U.S. imports coming from various regions of the world. c. share of U.S. exports going to various regions of the world. d. exchange rate needed to make imports equal exports.

a. difference between the value of imports and that of exports.

The loss of jobs due to international trade is often: a. more visible than the decline in consumer prices due to international trade. b. less visible than the decline in prices due to international trade. c. greater than the benefit of trade in the form of decline in prices. d. spread across all sectors while decline in prices is concentrated in one sector.

a. more visible than the decline in consumer prices due to international trade.

Threats to put tariffs on a nation in an attempt to get that nation to reduce its restrictions on trade are called: a. strategic trade policies. b. trade adjustment assistance programs. c. learning by doing. D. inertia and cachet.

a. strategic trade policies.

The United States has limits on Chinese textile imports. Such limits are an example of: a. a tariff. b. a quota. c. a regulatory trade restriction. d. an embargo.

b. a quota.

Most economists: A. oppose free trade. b. favor free trade. c. have no opinion on free trade. d. would prefer to have no trade with other nations.

b. favor free trade.

Countries can expect to gain from international trade as long as they: a. keep production diversified b. specialize according to their comparative advantage. c. produce only those goods for which they have a relatively high opportunity cost. D. use trade restrictions to reduce competition for domestic producers.

b. specialize according to their comparative advantage.

One reason trade restrictions exist is that: a. workers can be shifted easily from one industry to another. b. workers cannot be shifted easily from one industry to another. c. the long-run gains from free trade are small relative to the short-run costs. d. the short-run gains from free trade are small relative to the long-run costs.

b. workers cannot be shifted easily from one industry to another.

The text mentions 10 sources of U.S. comparative advantage. Which of the following is not one of them? a. Wealth from past production b. The fact that English is the international language of business c. A high ratio of lawyers to the population d. Extensive natural resources

c. A high ratio of lawyers to the population

Germany restricts the use of nonrefillable bottles and cans. The European Union argues that the rules aren't just protecting the environment; they also are protecting German beverage makers from competition. The EU sees Germany's environmentalism as: a. a tariff. b. a quota. c. a regulatory trade restriction. d. an embargo.

c. a regulatory trade restriction.

Economists: a. are not concerned with the distributional effects of trade. b. cannot measure the distributional effects of trade. c. do not generally include the distributional effects of trade in their models. D. disagree with laypeople that the distributional effects of trade are important.

c. do not generally include the distributional effects of trade in their models.

The appreciation of a currency will: a. balance a trade surplus. b. have no impact on a country's comparative advantages. c. worsen a country's comparative advantages. d. improve a country's comparative advantages.

c. worsen a country's comparative advantages.

If the U.S. dollar appreciates against the Japanese yen: a. U.S. goods will be cheaper for Japanese consumers. b. Japanese goods will be more expensive in the United States. c. the U.S. dollar will buy fewer Japanese yen. d. Japanese goods will be cheaper in the United States.

d. Japanese goods will be cheaper in the United States.

Becoming better at a task the more often you perform is referred to as: inherent advantage. economies of scope. learning by doing. economies of performance.

learning by doing.