Econ Midterm #3 45

Appreciation of the dollar refers to

A fall in the dollar price of a foreign currency.

Which of the following is a gain from trade?

A higher standard of living for all trading countries

A quota is

A limit on the quantity of a good that may be imported.

Which of the following might cause a depreciation of the U.S. dollar versus the Japanese yen?

A recession in Japan

Long-run economic growth can be achieved with:

A rightward shift in the long-run aggregate supply curve.

The U.S. desire for foreign currency represents:

A supply of U.S. dollars.

A tax imposed on imported goods is:

A tariff.

Long-run economic growth can occur as the result of:

A technological advance.

Expansionary monetary and fiscal policies are designed to move the economy in Figure 17.1, in the short run, from point:

A to point D.

A change in the exchange rate for a country's currency alters the prices of:

Both exports and imports.

A tax cut can best be characterized as:

Both fiscal and supply-side policy.

Which of the following is not a reason to restrict trade?

Concern about high prices for consumers

The process of economic growth is:

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

Monetary and fiscal policies that encourage the long-run growth of net investment and increase labor productivity are designed to move the economy in Figure 17.1 from point:

D to point C.

In a recession, Monetarists believe:

Fiscal policy is ineffective.

The demand for U.S. dollars originates from all of the following

Foreign demand for U.S. exports. Speculation in U.S. dollars. Foreign demand for U.S. investments.

The capital-account balance is equal to the

Foreign purchases of U.S. assets minus U.S. purchases of foreign assets

The capital account includes:

Foreign purchases of U.S. assets.

Which measurement is most useful for comparing the standard of living in different countries?

GDP per capita

The best measure of net investment is:

Gross investment less depreciation.

Comparative advantage in production is achieved by:

Having a lower opportunity cost of producing a good relative to that of other countries.

When a country imposes tariffs, it is likely to cause:

Higher prices for the import-competing goods.

Goods and services purchased from international sources are:

Imports

Increased opportunities for trade increase production by:

Improving efficiency through specialization

Which of the following is a Keynesian approach for dealing with a recession?

Increase government expenditure

In a recession Keynesians emphasize the need to ________ government spending or ________ taxes, which will cause a multiplier reaction.

Increase; decrease

Which of the following is a supply-side policy action to eliminate a recession?

Increased investment in infrastructure

In recent decades, a primary source of growth in U.S. output has been:

Increased productivity per worker.

The belief that monetary policy can be effective in changing aggregate demand and that interest rates are the critical monetary variable is associated with:

Modern Keynesians.

The belief that monetary policy can be effective in changing aggregate demand and that the money supply is the critical monetary variable is associated with:

Monetarists.

From a consumer's viewpoint, which of the following policies would be least desirable?

No trade

Which of the following is a monetary policy action?

Open market operations

The exchange rate is the

Price of one country's currency expressed in terms of another country's currency

Which of the following has made the greatest contribution to economic growth over time?

R&D

An economy experiences economic growth whenever:

Real GDP rises.

The elimination of import restrictions will:

Redistribute income from import-competing industries to export industries.

Increased trade restrictions:

Reduce total consumption possibilities.

If exports are being excluded unfairly from a market, the World Trade Organization (WTO) may authorize:

Retaliatory tariffs.

Rising employment rates imply:

Rising per capita GDP.

If the U.S. dollar depreciates, in the long run the United States should experience a:

Smaller deficit in the U.S. trade balance.

Which of the following is an example of supply-side policy?

Tax incentives for business investment

Policy tools include:

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

Which does not determine fiscal policy? (which ones do determine fiscal policy?)

The Federal Reserve (congress and the president)

A movement from point A to point D in Figure 17.6, indicates that:

The capacity of the economy has increased.

The trade balance for the United States equals:

The difference between the dollar value of exports and the dollar value of imports

Human capital is:

The knowledge and skills possessed by the labor force.

Monetarists believe that:

The money supply should be expanded at a steady, predictable rate.

For much of the 1970s and 1980s, the average yearly change in productivity:

Was significantly less than the average yearly change in productivity for 1995-2000.

If a country does not engage in trade with other countries, it is known as:

a closed economy

Over a given period of time if imports are greater than exports, the result is:

a trade deficit

If a country engages in trade with other countries, it is known as:

an open economy

Alternating periods of economic growth and contraction are referred to as:

business cycle

Goods and services sold to foreign buyers are:

exports

An agreement to reduce the volume of trade in a specific good is:

A voluntary restraint agreement.

Tariffs and quotas on imported goods shift the:

AS curve to the left.

Which of the following supply-side efforts did the Clinton administration embrace?

Additional investment in education and skills training

Which of the following also occurs as the production possibilities curve shifts outward?

Aggregate supply increases

The supply of U.S. dollars originates from:

American demand for imported goods.

The supply of U.S. dollars is determined by all of the following

American demand for imports. American investments in foreign nations. Speculation.

In 2009, the U.S. poverty threshold was:

An annual income of less than $22,000 for a family of four.

An increase in the U.S. trade deficit could be caused by

An appreciation of the dollar in terms of other currencies.

The appreciation of the U.S. dollar can be caused by:

An increase in the demand for dollars.

Which of the following policy options would tend to offset each other?

An increase in the discount rate and a decrease in the tax rate

Depreciation of the dollar refers to

An increase in the dollar price of foreign currency.

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.

Import-competing industries in the United States are likely to resist:

Appreciation of the dollar

American citizens planning a vacation abroad would welcome:

Appreciation of the dollar.

Suppose China can produce either 600 telephones or 400 DVD players, and Japan can produce either 400 telephones or 200 DVD players. Implicitly, China has:

Both an absolute and a comparative advantage in DVD players.

Which of the following generates demand for foreign currencies?

Expenditures by Americans traveling abroad

Which of the following measures productivity?

GDP per worker

Tariffs tend to reduce the volume of imports by

Making them more expensive to domestic consumers.

Suppose that Brazil has a comparative advantage in coffee and Mexico has a comparative advantage in tomatoes. Which of the following groups would be worse off if these countries specialize and trade?

Mexican coffee producers

Trade restrictions:

Reduce the gains from trade for the country as a whole.

Generally speaking, a country whose currency appreciates will experience, as a result:

Reduced aggregate demand because of a decrease in exports.

Which of the following supply-side efforts were embraced by the second Bush administration?

Reduction in marginal tax rates

Using Figure 17.6, long-run economic growth implies a:

Shift from LRAS1 to LRAS2.

Long-run economic growth can be illustrated in Figure 17.1 by a:

Shift outward of the production-possibilities curve.

As trade restrictions are eliminated, increased imports:

Shift the allocation of resources away from import-competing industries.

Supply-side policy is designed to:

Shift the production possibilities curve outward and shift the aggregate supply curve to the right.

Which of the following statements about U.S. trade is true?

The U.S. typically has a substantial trade surplus in services.

When foreign residents increase their demand for U.S. dollars, ceteris paribus

The dollar will appreciate in value.

When foreigners buy U.S. dollars because it is a more stable currency than the currency in their country, they are generating a

Demand for U.S. dollars and a supply of a foreign currency.

Improvements in output per worker:

Depend in large part on increases in the quantity of capital equipment and the quality of capital equipment.

The demand for dollars in the foreign-exchange market

Depends in part on the foreign demand for U.S. goods

Which of the following policy levers definitely enhances productivity?

Development of human capital

When tariffs are imposed, the losers include:

Domestic consumers and foreign producers

Which group is most likely to be adversely affected by the importation of foreign steel?

Domestic steel workers

Additional capital makes its best contribution to economic growth by:

Enhancing labor productivity.

What should happen to the equilibrium price and quantity in a market as a result of a quota on imports?

Equilibrium price should go up, and equilibrium quantity should go down

What should happen to the equilibrium price and quantity in a market as a result of a tariff on imports?

Equilibrium price should go up, and equilibrium quantity should go down

An increase in the price of the U.S. dollar in terms of Euros will cause, ceteris paribus:

European goods to be cheaper to residents of the United States.

Fiscal policy includes all of the following except:

Interest rate increases

The "new growth theory" of economic growth emphasizes the importance of:

Investing in ideas.

When one country can produce a given amount of a good using fewer inputs than any other country:

It has an absolute advantage in producing the good.

Which of the following could impede productivity improvements?

Lack of savings

Without trade, a country's consumption possibilities are:

Limited to its domestic production possibilities.

The natural rate of unemployment is the:

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

The current-account balance is equal to:

The trade balance plus unilateral transfers

Which of the following generates a demand for dollars in the foreign-exchange market?

Travel by foreign visitors in the United States

The U.S. demand for foreign currency arises from speculation and the:

U.S. demand for foreign goods, services, and financial assets