Economics (Module 6)
While the balance of trade is often expressed in terms of deficits and surpluses, the balance of trade should always equal zero.
True
Capital Account are
-Business investment flows in and out of the country -International purchases of stocks and bonds -Represents international investment and borrowing
When the dollar is able to buy more Japanese yen than a month ago, it has strengthened or _______.
Appreciated
________ is the record of all transactions (in goods, services, physical and financial assets) between individuals, firms and governments of one country with those in all other countries in a given year, expressed in monetary terms(econedlink.org).
Balance of Payments
The amount of exports less the amount of imports of both goods and services is referred to as the ______.
Balance of Trade
The ____ is made up of business investment, purchases and sales of stocks and bonds, and short term banking transactions that represent flows into and out of a nation.
Capital Account
The United States owes the most of its national debt to which foreign country?
China
_______ advantage is the ability to produce a good or service at a lower opportunity cost than some other producer.
Comparative
If Country B can produce beans at a lower opportunity cost than Country A, then Country B has a(n) _____________ over Country A in the production of beans.
Comparative Advantage
The ________ is made up of the balance of trade, interest and dividend payments across borders and transfers, including charitable donations and foreign aid.
Current Account
During a _____________ cycle, unemployment occurs because of the cycle of goods and poor economic times.
Cyclical
The ______ deficit is the difference between the full employment deficit and the actual deficit.
Cyclical
Trade Barriers _________.
Decrease gains from trade
A budget _______ occurs when government spends more than it receives in tax revenue.
Deficit
When the dollar falls in value relative to the Japanese yen it has weakened or __________.
Depreciated
The price of one's nation's currency relative to another country's currency is the
Exchange Rate
When a budget deficit occurs, the government borrows by issuing treasury bonds.
True
A ______ is a tax on imports.
Tariff
Balance of Payments: Current account + capital account + official reserves account = zero
True
The United States government cannot file for bankruptcy if they can not pay back its debt.
True
The amount of exports less the amount of imports of both goods and services is referred to as the balance of trade.
True
The deficit is what occurs in a given year when government spending is greater than tax revenues while the national debt is the accumulation of budget deficits over time.
True
When the dollar falls in value relative to the Japanese yen it has weakened or depreciated.
True
The demand for dollars in the foreign exchange market
is related, at least in part, on the demand for US goods by foreigners.
Which of the following is NOT a problem that might be associated with deficit spending during a recession?
moving the AD curve to the right, thus increasing real GDP and eventually lowering the unemployment rate.
Absolute advantage is the fact that some individuals or countries can produce more of a good from given resources than others can.
True
What are some major contributing factors to our national debt?
-Financial Crisis of 2008 -Recession -War Financing
Official Reserves
-Held by a nation's central bank -Used to correct statistical discrepancies
Current Amount
-Includes interest & divided payments into and out of a country -Includes balance of trade (trade surplus or trade deficit) -Includes transfers like foreign aid and charitable donations
Balance Payments are
-Made up of 3 accounts (capital, current, and official reserves) -Includes current account -Broadest measure of international transactions -Always equals zero -Includes the Capital Account
When the dollar is able to buy more Japanese yen than a month ago, it has depreciated.
False
If Country A can produce both beans and sneakers better and in larger numbers than Country B, Country A has a(n) _____________ over Country B in the production of both goods.
Absolute Advantage
A budget _______ occurs when the government takes in more tax dollars than it spends in a given year
Surplus
The United States can increase the ____________ on imports to lessen the amount of goods entering the country.
Tariff
Trade Barriers include
Tariffs, subsidies, and quotas
The price of one nation's currency relative to another nation's currency is the __________.
Exchange rate
Babe Ruth was able to specialize in hitting with the New York Yankees and his gains were the result of pursuing his absolute advantage.
False
Engaging in protectionism is in everyone's best interest since it protects American industry from foreign competition.
False
If the United States increases trade and importing of goods with foreign countries it will create more jobs in the United States.
False
The US government faces the same risk of bankruptcy as any American family who has budget deficits year after year.
False
The accumulation of deficit spending over time by the government will create national deficit.
False
The current account is made up of the balance of trade, interest and dividend payments across borders and transfers, including charitable donations and foreign aid.
False
The cyclical deficit rises during economic expansions.
False
The price of one nation's currency relative to another nation's currency is the balance of trade
False
We owe the majority of our national debt to other countries like China and Saudi Arabia.
False
During a budget deficit the government takes in more tax dollars that it spends in a given year.
True
The macroeconomic theory holding that business cycles are caused by changes in aggregate demand and that such cycles can and should be influenced by fiscal and monetary policy undertaken to promote economic stability is the ______ Theory.
Keynesian
If the dollar strengthens against the Russian ruble, then Russian imports become ________ to American consumers.
Less expensive
If the dollar weakens against the Canadian dollar, then American exports to Canada become _______ to Canadian consumers
Less expensive
If the US dollar strengths, or appreciates, relative to the yen, we could expect US exports to become _____ expensive to Japanese consumers and businesses.
More
You are planning a trip to London and you need to make your currency exchange this week. You read that the dollar has weakened, or depreciated against the British pound. Your trip just became _____ as a result.
More expensive
The difference between tax revenues and spending in a given year creates budget deficits or surpluses, the accumulation of deficit spending over time is the __________.
National Debt
A more meaningful way of analyzing the debt is to consider its percentage of GDP instead of just considering the raw number.
True
The account used to balance statistical discrepancies between the two other accounts in the balance of payments is the ______ account.
Official Reserves
There is a _______ relationship between real GDP and tax revenues, which partially explains deficit spending during a recession.
Positive
If the United States lowers the ________________ of goods allowed in the country then there will be less products entering the country.
Quota
Numerical limits on the quantity of imports are referred to as ______.
Quotas
Which of the following is NOT considered a gain from trade?
Short term loss of jobs in the economy
The _____ deficit is the deficit at full employment GDP
Structural
Most currencies on the foreign exchange markets have their values primarily determined by __________.
The forces of supply and demand
Payments from the government for which there is no exchange of productive goods or services are called ______ payments and they tend to rise during a recession and fall during an economic expansion.
Transfer
Increasing trade can increase production by encouraging
efficiency through specialization.