ECON 202 Exam 4
A _____________ is created each time the federal government spends more than it collects in taxes in a given year. A. budget deficit B. budget surplus C. corporate tax D. regressive tax
A
A tariff differs from a quota in that a tariff is: A. a tax imposed on imports, whereas a quota is an absolute limit to the number of units of a good that can be imported B. levied on imports, whereas a quota is imposed on exports C. levied on exports, whereas a quota is imposed on imports D. a tax imposed on exports, whereas a quota is an limit to the number of units of a good that can be exported
A
An import quota or tariff on French wine that raises the prices for wine will probably: A. hurt domestic wine drinkers, but help domestic wineries, which will gain from the higher prices B. hurt both domestic wine drinkers and domestic wineries, but this will be more than offset by a reduction in driving fatalities C. hurt both domestic wine drinkers and domestic wine producers because of a reduction in competition. D. hurt domestic wineries, which will lose business as a result of the higher prices
A
A new American import quota on imported steel would be likely to: A. increase the production of steel- using American firms B. increase American production of steel C. generate tax revenue to the government D. reduce the cost of production to steel-using American firms
B
A typical ____________________________ fiscal policy allows government to decrease the level of aggregate demand, through increases in taxes. A. expansionary B. contractionary C. discretionary D. standardized
B
After the USA introduces a tariff in the market for gigastraps, the price of gigastraps in the USA will: A. decrease B. increase C. stay the same D. change in an indeterminate manner
B
Economists would say tariffs: A. protect domestic producers of exported goods B. limit voluntary exchanges C. protect foreign producers of goods D. protect domestic consumers of goods
B
If individual income tax accounts for more total revenue than the payroll tax in the U.S., why would over half the households in the country pay more in payroll taxes than in income taxes? A. income tax is a proportional tax B. income tax is a progressive tax C. payroll tax is a regressive tax D. payroll tax is a progressive tax
B
The membership of the WTO includes about __________ nations. A. 15 B. 150 C. 700 D. 1500
B
The time lag for monetary policy is typically _______________ the time lag for fiscal policy. A. longer than B. shorter than C. about the same as D. the same as
B
A _____________ policy will cause a greater share of income to be collected from those with high incomes than from those with lower incomes. A. proportional tax B. regressive tax C. progressive tax D. excise tax
C
A prolonged period of budget deficits may lead to _________________. A. outflows of financial capital abroad B. lower inflation C. lower economic growth D. increase exchange rates
C
By June, 2010, the U.S. government owed $13.6 trillion dollars ________________ that, over time, has remained unpaid. A. from decreases in excise tax B. from decreases in income tax C. in accumulated government debt D. from decreases in corporate tax
C
In the national savings and investment identity framework, an inflow of savings from abroad is, by definition, equal to: A. private sector investment B. the trade surplus C. the trade deficit D. domestic household savings
C
There are nontariff barriers in the form of _______________ regulations, in which certain textiles are made in the United States, shipped to other countries, combined in making apparel with textiles made in those other countries—and then re-exported back to the United States at a lower tariff rate. A. import quota B. export quota C. "rules of origin" D. dumping
C
A ________________ is one economic mechanism by which government borrowing can crowd out private investment. A. deficit increase B. smaller trade surplus C. larger trade surplus D. higher interest rate
D
A reduction in government borrowing can: A. decrease the incentive to invest. B. increase the interest rate. C. crowd out private investment in human capital. D. give private investment an opportunity to expand.
D
From a macroeconomic point of view, which of the following is a source of demand for financial capital? A. savings by households and firms B. foreign financial investment C. domestic household private savings D. government borrowing
D
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: A. optional B. progressive C. proportional D. regressive
D
In a market oriented economy, private firms will undertake most of the ____________, and _____________ should seek to avoid a long series of large budget deficits that might crowd out such investment. A. economic growth activities; monetary policy B. economic growth activities; fiscal policy C. investment in human capital; monetary policy D. investment in physical capital; fiscal policy
D
A ________________ often results in an outflow of financial capital leaving the domestic economy and being invested in the global economy? A. trade surplus B. trade deficit C. fiscal deficit D. twin surplus
A
When governments are borrowers in financial capital markets, which of the following is least likely to be a possible source of the funds from a macroeconomic point of view? A. central bank prints more money B. increase in household savings C. decrease in borrowing by private firms D. foreign financial investors
A
When the government passes a new law that explicitly changes overall tax or spending levels, it is enacting: A. discretionary fiscal policy B. progressive fiscal policy C. regressive fiscal policy D. fiscal policy
A
An import quota does which of the following? A. decreases the price of the imported good to consumers B. increases the price of the domestic good to consumers C. redistributes income away from domestic producers of those products toward domestic producers of exports D. both A and C
B
An import quota does which of the following? A. decreases the price of the imported goods to consumers B. increases the price of the domestic goods to consumers C. redistributes income away from domestic producers of those products toward domestic producers of exports D. both a) and c)
B
If the quantity of financial capital supplied is equal to the quantity of financial capital demanded then, the national savings and investment identity is written as: A. (M-X) - S = (G+T) - I B. S + (M-X) = I + (G-T) C. S + (G-T) = I - (X-M) D. S = (X-M) - (G-T)
B
If the state of Washington's government collects $75 billion in tax revenues in 2013 and total spending in the same year is $74.8 billion, the result will be a: A. budget deficit B. budget surplus C. decrease in payroll tax D. decrease in proportional taxes
B
In most developed countries, the government plays a large role in society's investment in human capital through __________________. A. direct spending B. the education system C. tax incentives D. private sector R&D
B
The infant industry argument for protectionism suggests that an industry must be protected in the early stages of its development so that: A. firms will be protected from subsidized foreign competition B. domestic producers can attain the economies of scale to allow them to compete in world markets C. there will be adequate supplies of crucial resources in case they are needed for national defense D. it will not be subjected to a takeover from a foreign competitor
B
________________ means selling goods below their cost of production. A. Protectionism B. Dumping C. Import Quotas D. Non-tariff barriers
B
Despite interlocking import quotas, tariffs, and nontariff barriers, the share of apparel sold in the United States that is imported rose from about _________ in 1999 to about ________ today A. 10%;25% B. 25%;50% C. 50%;75% D. 75%;90%
C
If a country's economic data shows private savings of $300 million, government spending of $350 million, tax revenue of $400 million, and a trade surplus of $75 million, then what does investment equal? A. $775 million B. $475 million C. $275 million D. $700 million
C
Tariffs result in a decrease in consumer surplus because: A. the price and quantity consumer of the protected good increases B. the price and quantity consumer of the protected good decreases C. the price of the protected good increases and the quantity consumed decreases D. the price of the protected good decreases and quantity consumed increases
C
What do goods like gasoline, tobacco, and alcohol typically share in common? A. a progressive tax is imposed on each of them B. a regressive tax is imposed on each of them C. they are all subject to government excise taxes D. they are all subject to government fiscal taxes
C
A ___________________________________ can lead to disruptive economic patterns and heavy strains on a country's banking and financial system. A. prolonged period of trade surpluses B. sustained pattern of large trade deficits C. prolonged period of budget surpluses D. sustained pattern of large budget deficits
D
During a recession, if a government uses an expansionary fiscal policy to increase GDP, the: A. aggregate supply curve will shift to the right B. aggregate supply curve will shift to the left C. aggregate demand curve will shift to the left D. aggregate demand curve will shift to the right
D
From a macroeconomic point of view, which of the following is a source of demand for financial capital? A. savings by households and firms B. foreign financial investment C. domestic household private savings D. government borrowing
D
When the share of individual income tax collected by the government from people with higher incomes is smaller than the share of tax collected from people with lower incomes, then the tax is ____________________. A. optional B. proportional C. progressive D. regressive
D
"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: A. contains one error; the trade restraints do not increase the scarcity of foreign-produced goods B. contains one error; domestic producers gain at the expense of foreign producers rather than domestic consumers C. contains two errors; trade restraints do not increase the domestic scarcity of product and neither do they harm domestic consumers D. is essentially correct
A
A government collects $70 billion quarterly in tax revenue. Each year it allocates $15 billion to the justice system and $29 billion for the administrative costs. What percentage of its total annual tax revenue is left for allocation to the remaining categories of government spending? A. 84.29% B. 15.71% C. 62.85% D. 37.15%
A
A rule that every imported product must be opened by hand and inspected with a magnifying glass, by one of just three government inspectors available at any given time might be referred to as __________________. A. a nontariff barrier B. a quota C. a government bureaucracy D. an import quota
A
When the interest rate in an economy increases, it is likely the result of either: A. a decrease in the government's budget surplus or an increase in its budget deficit. B. a decrease in the government budget surplus or its budget deficit. C. an increase in the government budget surplus or a decrease in its budget deficit. D. an increase in the government budget surplus or its budget deficit.
A
Which of the following is the best example of a quota? A. a tax placed on all small cars sold in the domestic market B. a limit imposed on the number of men's suits that can be imported from a foreign country C. a subsidy from the American government to domestic manufacturers of men's suits so that they can compete more effectively with foreign producers of men's suits D. a $100 per-car fee imposed on all small cars imported
B
___________________ are a form of tax and spending rules that can affect aggregate demand in the economy without any additional change in legislation. A. Standardized employment budgets B. Discretionary fiscal policies C. Automatic stabilizers D. Budget Expenditures
C
___________________ are ways that a nation can draw up regulations, inspections, and paperwork to make it costly or difficult to import products. A. tariffs B. quotas C. nontariff barriers D. import ceilings
C
Assume that laws have been passed that require the federal government to run a balanced budget. During a recession, the government will want to implement _____________________, but may be unable to do so because such a policy would ____________________________. A. contractionary fiscal policy; lead to a budget deficit B. discretionary fiscal policy; lead to a budget surplus C. contractionary fiscal policy; lead to a budget surplus D. expansionary fiscal policy; lead to a budget deficit
D
A government annually collects $230 billion in tax revenue and allocates $29 billion to its universal healthcare spending. What percentage of this government's budget is spent on healthcare? A. 12.60% B. 26.63% C. 16.43% D. 21.90%
A
Ricardian Equivalence means that: A. changes in private savings offset any changes in the government deficit B. changes in exports offset any changes in the government deficit C. changes in imports offset any changes in the government deficit D. changes in investment offset any changes in the government deficit.
A
The government can use ________________ in the form of ________________to increase the level of aggregate demand in the economy. A. an expansionary fiscal policy; an increase in government spending B. a contractionary fiscal policy; a reduction in taxes C. a contractionary fiscal policy; an increase in taxes D. an expansionary fiscal policy; an increase in corporate taxes
A
The government levies __________ on people who pass assets _______________, either after death or during life. A. an estate and gift tax; to the next generation B. a regressive tax; to non-family members C. an excise tax; to their children D. a progressive tax; to non-family members
A
If a government decides to finance an investment in ________________ with higher taxes or _____________________ in other areas, it need not to worry that it is crowding out private investment. A. roads and bridges; increased borrowing B. water supply and sewers; by raising capital spending C. public physical capital; lower government spending D. hydroelectric dams and windmills, government R&D
C
When governments are borrowers in financial capital markets, which of the following is least likely to be a possible source of the funds from a macroeconomic point of view? A. central bank prints more money B. increase in household savings C. decrease in borrowing by private firms D. foreign financial investors
A
________________ can set the stage for international financial investors first to send their funds to a country and cause an appreciation of its exchange rate and then to pull their funds out and cause a depreciation of the exchange rate and a financial crisis as well. A. Trade balance B. Twin deficits C. Trade deficits D. Crowding out
A
