Exam 4
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.
"rules of origin"
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?
12.60%
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?
12.60%
The membership of the WTO includes about __________ nations
150
The membership of the WTO includes about __________ nations.
150
If a country's economic data shows that private savings equal $250 million, government spending equals $400 million, taxes equal $350, and the trade surplus equals $150 million, then what does investment equal?
50 million
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?
84.29%
_____________________ are a form of tax and spending rules that can affect aggregate demand in the economy without any additional change in legislation.
Automatic stabilizers
What do goods like gasoline, tobacco, and alcohol typically share in common?
They are all subject to government excise taxes
When the interest rate in an economy increases, it is likely the result of either:
a decrease in the government's budget surplus or an increase in its budget deficit.
During a recession, if a government uses an expansionary fiscal policy to increase GDP, the:
aggregate demand curve will shift to the right.
The federal government levies _____________________________ on people who pass assets ____________________________ , either after death or during life.
an estate and gift tax; to the next generation
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:
budget surplus
A reduction in government borrowing can:
give private investment an opportunity to expand.
From a macroeconomic point of view, which of the following is a source of demand for financial capital?
government borrowing
From a macroeconomic point of view, which of the following is a source of demand for financial capital?
government borrowing
A ____________________________ is one economic mechanism by which government borrowing can crowd out private investment
higher interest rate
An import quota or tariff on French wine that raises the prices for wine will probably:
hurt domestic wine drinkers but help domestic wineries, which will gain from the higher prices.
By June, 2010, the U.S. government owed $13.6 trillion dollars ________________ that, over time, has remained unpaid.
in accumulated government debt
A new American import quota on imported steel would be likely to:
increase American production of steel
An import quota does which of the following?
increases the price of the domestic goods to consumers
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.
investment in physical capital; fiscal policy
"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:
is essentially correct
If government tax policy requires Jane to pay $25,000 in taxes on annual income of $200,000 and Mary to pay $10,000 in tax on annual income of $100,000, then the tax policy is:
progressive
policy will cause a greater share of income to be collected from those with high incomes than from those with lower incomes.
progressive tax
If a government decides to finance an investment in ________________ with higher taxes or ____________________ in other areas, it need not worry that it is crowding out private investment.
public physical capital; lower government spending
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:
regressive
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 ____________________
regressive
The time lag for monetary policy is typically ________________ the time lag for fiscal policy.
shorter than
can lead to disruptive economic patterns and heavy strains on a country's banking and financial system.
sustained pattern of large budget deficits
In most developed countries, the government plays a large role in society's investment in human capital through _________________________.
the education system
Tariffs result in a decrease in consumer surplus because:
the price of the protected good increases and quantity consumed decreases.
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?
275 million
If a country's economic data shows private savings of $500 million, government spending of $300 million, tax revenue of $400 million, and a trade surplus of $100 million, then what does investment equal?
500 million
__________ means selling goods below their cost of production.
Dumping
. __________________ are ways that a nation can draw up regulations, inspections, and paperwork to make it more costly or difficult to import products
Nontariff barriers
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:
S + (M - X) = I + (G - T)
When a government records a trade surplus, the national savings and investment identity is written as:
S = I + (G - T) + (X - M)
______________________________ 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.
Trade balance
Which of the following is the best example of a quota?
a limit imposed on the number of men's suits that can be imported from a foreign country
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 non-tariff barrier
A tariff differs from a quota in that a tariff is:
a tax imposed on imports, whereas a quota is an absolute limit to the number of units of a good that can be imported
A tariff differs from a quota in that a tariff is:
a tax imposed on imports, whereas a quota is an absolute limit to the number of units of a good that can be imported
The government can use _____________ in the form of ____________________ to increase the level of aggregate demand in the economy.
an expansionary fiscal policy; an increase in government spending
A _______ is created each time the federal government spends more than it collects in taxes in a given year.
budget deficit
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:
budget surplus.
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?
central bank prints more money
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?
central banks print more money
A typical ____________________________ fiscal policy allows government to decrease the level of aggregate demand, through increases in taxes
contractionary
When the government passes a new law that explicitly changes overall tax or spending levels, it is enacting:
discretionary fiscal policy
The infant industry argument for protectionism suggests that an industry must be protected in the early stages of its development so that:
domestic producers can attain the economies of scale to allow them to compete in world markets.
The infant industry argument for protectionism suggests that an industry must be protected in the early stages of its development so that:
domestic producers can attain the economies of scale to allow them to compete in world markets.
. 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 ____________________________.
expansionary fiscal policy; lead to a budget deficit
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?
income tax is a progressive tax
Economists would say tariffs:
limit voluntary exchanges.
A prolonged period of budget deficits may lead to ___________________.
lower economic growth
In the national savings and investment identity framework, an inflow of savings from abroad is, by definition, equal to:
the trade deficit
. In the national savings and investment identity framework, an inflow of savings from abroad is, by definition, equal to:
the trade deficit.
A __________________ often results in an outflow of financial capital leaving the domestic economy and being invested in the global economy?
trade surplus
A government annually allocates $5 billion of its total tax revenue to weather related disaster relief, $21 billion to healthcare and $11 billion to education. If the government's quarterly tax revenue is $33 billion, what percentage of its budget is allocated annually to healthcare?
15.90%
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.
50%; 75%
Ricardian equivalence means that:
changes in private savings offset any changes in the government deficit
After the USA introduces a tariff in the market for gigastraps, the price of gigastraps in the USA will:
increase
A new American import quota on imported steel would be likely to:
increase American production of steel.