macroeconomic set 3

Suppose Ms. Sanchez has a total income of $200,000, has a taxable income of $120,000, and pays $40,000 in taxes. Considering the information, what is Ms. Sanchez's effective tax rate?

20 percent

If the data collected by policy makers overstate inflation, this is an example of

A measurement problem.

A growth recession is characterized by

A positive growth rate below 3 percent annually.

When the overall trade balance is zero:

All of the above.

What is the best argument in favor of free trade?

All participants in international trade gain a higher standard of living

A tax is said to be efficient if it:

Allows producers to be rewarded according to their value in production.

Which of the following statements is true?

American poverty is less severe than global poverty.

The fact that the president must ask Congress for the authority to cut taxes is an example of

An implementation problem.

In the 1800's Thomas Malthus predicted that the world would run out of food and people would starve. What was he lacking in his forecast?

An improvement in technology over time.

Which of the following would increase labor productivity, ceteris paribus?

An increase in the quantity and quality of capital.

During a severe recession, appropriate economic policy might include

An open market purchase by the Fed, a decrease in the discount rate, or a decrease in government regulation.

What are the main products that the U.S. exports?

Capital intensive goods

The process of economic growth is

Cumulative, whereby gains made in one year accumulate in future years.

Income taxes are an automatic stabilizer because when income falls, ceteris paribus, tax receipts

Fall because taxes are computed on the basis of income.

When compared to those in poor countries, poor people in the U.S. receive:

Far more goods and services.

The best measure of living standards is

GDP per capita

Which of the following measures productivity?

GDP per worker

Public housing is an example of:

In-Kind program

A tax is said to be more equitable if: Group of answer choices

It allows incomes after taxes to be more equitable.

The natural rate of unemployment is the

Long-term rate determined by structural forces in labor and product markets.

If income is distributed equally, the:

Lorenz curve is a straight line.

A graphic illustration of the cumulative size distribution of income is known as the:

Lorenz curve.

The argument against greater equality in the distribution of income in the United States hinges basically on:

Loss of incentives.

Economists define economic growth in terms of changes in

Nominal GDP.

The only lasting way for poor countries to rise up out of poverty is to have:

Policies that will lead to economic growth.

Which of the following would shift the long-run aggregate supply curve to the right?

Political and economic stability.

The exchange rate is the

Price of one currency in terms of another.

What best explains why the U.S. economy continues to grow year after year?

Productivity

Economic growth also implies a

Rightward shift of the long-run aggregate supply curve.

How does the World Bank call categorize poverty at less than ABOUT $3 per day?

Severe

Long-run macroeconomic growth

Shifts the production possibilities curve outward.

Which of the following groups believe that lower tax rates will increase the incentives to work, invest, and produce?

Supply-siders.

Which of the following is not true about macroeconomic models?

They tend to agree with each other about how the economy works.

The depreciation of the dollar means

U.S. citizens can buy less of a foreign currency.

When the dollar appreciates, which of the following is true?

U.S. exports become more expensive to our trading partners.

Which of the following would create a demand for dollars?

When foreign countries buy U.S. exports

Changes in the value of the euro only affects the European economies.

false

Comparative advantage is whan a country can produce goods at a lower absolute cost in terms of dollar expenditures.

false

Export competing industries are the primary group who oppose free trade.

false

Tarriffs are a tax on exports.

false

The U.S. Government counts both cash and in-kind income transfers when calculating poverty statistics.

false

The foreign exchange rates are set by the banks in each respective country.

false

In-kind benefits are a way of correcting:

inequity

American citizens planning a vacation in Japan would welcome a depreciation of the yen.

true

An embargo is a prohibition on trade.

true

Before a country can begin to move out of poverty, they first need to take care of the basic needs of the people.

true

By global poverty standards and definitions, no American would be considered poor. Group of answer choices

true

Currently, the official U.S. poverty threshold for a family of four in the U.S. is ABOUT $25,000.

true

The key to reducing or eliminating global poverty is economic growth spurred by increasing resources and technology.

true

The most important thing you can learn form this chapter is that free trade benefits everyone.

true

The primary determinant of currency exchange rates is the volume of exports and imports.

true

The purchase of U.S. real estate from foreign sources would create a supply of a foreign currency.

true

The world bank defines extreme poverty as living on less than ABOUT $2 per day.

true

When a currency is devalued, it can mean an economic disaster for a country dependant on imports.

true

When free trade is disrupted by trade barriers, the gains from trade are lost.

true

Policy tools to influence the macroeconomy include

Tax policy, government spending, and the availability of money.

The trade surplus is:

The amount by which exports exceed imports.

Which of the following statements regarding the distribution of money income is most correct?

The distribution of money income overstates the extent of poverty in the United States.

Tax incidence most accurately refers to:

The distribution of the real burden of a tax.

Which of the following is an accurate statement concerning the macroeconomy of the United States?

The economy continues to experience the ups and downs of the business cycle.