Macro 17-19

6. In Sub-Saharan Africa, the population is 910 million and the average GDP per capita is: A. $5,399. B. $2,733. C. $1,415. D. $7,308.

$1,415.

5. If a country's economic data shows that private savings equal $300 million, government spending equals $400 million, taxes equal $300, and the trade surplus equals $100 million, then what does investment equal? A. $150 million B. $175 million C. $200 million D. $100 million

$100 million

6. If a country's economic data shows that private savings equal $350 million, government spending equals $375 million, taxes equal $300, and the trade surplus equals $125 million, then what does investment equal? A. $50 million B. $150 million C. $425 million D. $600 million

$150 million

32. If an economy has a budget surplus of 400, private savings of 1,200, and investment of 1,600, what will the balance of trade in this economy equal? A. 0 B. deficit of 1,600 C. deficit of 1,200 D. deficit of 400

0

14. A government annually collects $320 billion in tax revenue and allocates $42 billion to education spending. What percentage of this government's budget is spent on education? A. 24.50% B. 12.31% C. 30.13% D. 13.12%

13.12%

12. A government collects $700 billion annually in tax revenue. Each year it allocates $70 billion to the justice system and $130 billion for its own administrative costs. What percentage of annual tax revenue is allocated to these two categories of government spending? A. 37.15% B. 28.57% C. 17.51% D. 27.58%

28.57%

13. A government annually collects $230 billion in tax revenue and allocates $70 billion to military spending. What percentage of this government's budget is spent on its military? A. 27.50% B. 36.63% C. 30.43% D. 41.90%

30.43%

31. Identify and briefly describe some practical difficulties of discretionary fiscal policy.

Discretionary fiscal policy faces some practical difficulties: (a) expansionary fiscal policy can raise interest rates, which tends to reduce the expansionary impact of the policy; (b) there are long and variable time lags in enacting fiscal policy and waiting for it to have an effect; (c) the impact of temporary fiscal policy is smaller than the impact of permanent fiscal policy; (d) fiscal policy cannot push economic output above the potential GDP level of output; (e) it may be hard to persuade politicians of the merits of countercyclical fiscal policy.

27. Despite many negative feelings, a number of governments have decided that reducing barriers to trade is at least potentially beneficial to their economy. Which of the following is an example of countries reducing barriers through free trade? A. NAFTA B. NATO C. G20 D. GTO

NAFTA

27. Which of the following is least likely to benefit the civilian economy? A. R&D carried out in government laboratories B. R&D aimed at producing new weapons C. direct private sector R&D spending D. tax policy promoting civilian R&D spending

R&D aimed at producing new weapons

9. When a government records a trade surplus, the national savings and investment identity is written as: A. S = (G - T) + (X - M) - I B. S - (G - T) = I - (X - M) C. S = I + (G - T) + (X - M) D. S + (G - T) = I - (X - M)

S = I + (G - T) + (X - M)

6. 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.

They are all subject to government excise taxes.

13. Policies that provide governments with economic controls should be evaluated on their ________________, not on the basis of the promises of their supporters or the theories of economists. A. ability to be dismantled quickly over time B. acceptance by market-oriented economists C. actual effects, which can be positive or negative D. ability to act as a critical ingredient for faster growth

actual effects, which can be positive or negative

1. In what way is each and every one of the economies of the more than 200 countries of the world similar? A. all use the same macroeconomic policies B. each focuses on a Keynesian perspective C. all have their own distinctive characteristics D. each focuses on a neoclassical perspective

all have their own distinctive characteristics

14. When the interest rate in an economy decreases, it is most likely as a result of: A. an increase in the government budget surplus or 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. a decrease in the government budget surplus or an increase in its budget deficit.

an increase in the government budget surplus or a decrease in its budget deficit.

23. If an economy moves into a recession, causing that country to produce less than potential GDP, then: A. automatic stabilizers will cause tax revenue to decrease and government spending to increase. B. automatic stabilizers will cause tax revenue to increase and government spending to decrease. C. tax revenue and government spending will be higher because of automatic stabilizers. D. tax revenue and government spending will be lower because of automatic stabilizers.

automatic stabilizers will cause tax revenue to decrease and government spending to increase.

3. 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

budget deficit

10. 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

contractionary

18. It is sometimes necessary for a _________________ economy to live with a degree of uncertainty over _______________ that would be politically unacceptable in the high income economies. A. developing; unemployment B. converging; inflation C. disconnected; fundamentals of growth D. converging; trade imbalances

converging; inflation

12. An increase in government borrowing can: A. allow private investment to expand. B. crowd out private investment in physical capital. C. increase the incentive to invest in technology. D. cause a substantial decrease in interest rates.

crowd out private investment in physical capital.

17. If the government initiates an expansionary monetary policy at the same time that its budget deficit decreases, then the interest rate will ______________________. A. increase B. either increase or decrease C. decrease D. remain unchanged

decrease

15. An increase in the government's budget surplus will cause the interest rate to: A. either increase or decrease. B. remain the same. C. increase. D. decrease.

decrease.

8. By about 2050, the ___________ populations in _____________ are expected to boom. A. elderly; high income countries B. youth; high income countries C. youth; low income countries D. elderly; low-income countries

elderly; low-income countries

10. The main public policies of technological leading countries are _______________ focused on investment, including investment in human capital, in technology, and in physical plant and equipment. A. market-orientated policies B. monetary policies C. economic policies D. fiscal policies

fiscal policies

13. 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.

give private investment an opportunity to expand.

15. Unemployment rates in the nations of Europe have typically been ____________ than in the United States. A. higher B. lower C. the same D. better

higher

19. If a country's GDP increases, but its debt decreases during that year, then the country's debt to GDP ratio for the year will _______________ in proportion to the magnitude of the changes. A. increase or decrease B. decrease because its debt decreased C. increase because GDP increased D. decrease

increase or decrease

24. 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

investment in physical capital; fiscal policy

26. When a country's economy is producing at a level that exceeds its potential GDP, the standardized employment budget will show a _______________ than the actual budget. A. larger surplus B. larger deficit C. smaller deficit D. surplus

larger deficit

7. The U.S. economy has two main sources for financial capital; __________________ and ____________________________. A. private savings from U.S. households and firms; inflows of foreign financial investment. B. private sector investment; government borrowing C. private savings from U.S. households and firms; government borrowing D. private sector investment; inflows of foreign financial investment from abroad

private savings from U.S. households and firms; inflows of foreign financial investment.

9. If government tax policy requires Bill to pay $20,000 in taxes 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. regressive. B. progressive. C. proportional. D. optional.

proportional

4. A ________________________________ is calculated as a flat percentage of income earned, regardless of level of income. A. progressive tax B. regressive tax C. proportional tax D. estate and gift tax

proportional tax

23. 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. 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

public physical capital; lower government spending

If South Dakota's governor reports a budget surplus in 2011, state government likely: A. received more in taxes than it spent in that year. B. increased the proportional tax level. C. equalized spending and taxes in that year. D. increased the corporate income tax rate.

received more in taxes than it spent in that year.

16. In low and middle-income countries, workers who are not connected to a labor market are often unable to: A. collect old-age payments. B. receive social benefits. C. be "officially" employed. D. specialize very much.

specialize very much.

22. When increasing oil prices cause aggregate supply to shift to the left, then: A. unemployment and inflation decrease. B. unemployment decreases and inflation increases. C. unemployment and inflation increase. D. unemployment increases and inflation decreases.

unemployment and inflation increase.

3. If a country's economic data shows private savings of $400 million, government spending of $250 million, tax revenue of $400 million, and a trade surplus of $175 million, then what does investment equal? A. $550 million B. $425 million C. $800 million D. $375 million

$375 million

4. 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? A. $50 million B. $75 million C. $450 million D. $350 million

$50 million

20. If a country's GDP decreases, but its debt increases during that year, then the country's debt to GDP ratio for the year will _______________ in proportion to the magnitude of the changes. A. decrease B. increase or decrease C. increase D. decrease because GDP decreased

. increase

18. Which of the following is the percentage of annual US government spending allocated to foreign aid? A. 21% B. 10% C. 1% D. 17%

1%

11. 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%

84.29%

31. A government deficit has increased from 30 to 50. The country's trade deficit is 100 and private savings equal 65 and investment equal 90. If Ricardian neutrality holds true, after this change in the government's budget, private savings will equal: A. 40. B. 105. C. 95. D. 85.

85.

5. North American and the European Union have about _________% of the world's population and their combined economic statistics show that they produce and consume about _________% of the world's GDP. A. 70, 16 B. 80, 70 C. 16, 16 D. 9, 70

9, 70

38. Identify the negative macroeconomic outcomes that a government risks when it continues a sustained pattern of large budget deficits over time.

A sustained pattern of large budget deficits over time risks causing several negative macroeconomic outcomes: a shift to the right in aggregate demand that causes an inflationary increase in the price level; crowding out private investment in physical capital in a way that slows down economic growth; and creating a dependence on inflows of international portfolio investment which can sometimes turn into outflows of foreign financial investment that can be injurious to a macroeconomy.

19. If a government's budget deficits are increasing aggregate demand when the economy is already producing near potential GDP, causing a threat of an inflationary increase in price levels, then the central bank may react with: A. a contractionary monetary policy. B. an expansionary monetary policy. C. a discretionary monetary policy. D. a loose monetary policy.

a contractionary monetary policy.

28. 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.

changes in private savings offset any changes in the government deficit.

12. Many _____________ countries have a legacy of government economic controls. A. converging B. technologically disconnected C. Sub-Saharan D. high-income

converging

21. In a number of middle to low-income economies around the world, governments may run an expansionary policy of huge and sustained budget deficits. This policy A. uses the central bank as a mechanism for making loans to politically favored firms. B. will begin a cycle of heavy reliance on economic growth from a few exported products. C. counters inflation without regard to the shift to the left in aggregate demand. D. will shift aggregate demand to the right, so that output is beyond the potential GDP level.

will shift aggregate demand to the right, so that output is beyond the potential GDP level.

2. If the government for the state of Washington collects $65.8 billion in tax revenues in 2013 and total spending in the same year is $74.8 billion, the result will be: A. an increase in payroll tax. B. an increase in excise tax. C. a budget surplus. D. a budget deficit.

a budget deficit.

20. If the U.S. economy is producing at a level that is substantially less than potential GDP and the government's budget deficits are increasing aggregate demand, then ____________________________ is not much of a danger. A. a tight monetary policy B. an inflationary increase in the price level C. international financial investment D. the central bank's contractionary monetary policy

an inflationary increase in the price level

21. When inflation begins to climb to unacceptable levels in the economy, the government should: A. use contractionary fiscal policy to shift aggregate demand to the right. B. use contractionary fiscal policy to shift aggregate demand to the left. C. use expansionary fiscal policy to shift aggregate demand to the right. D. use expansionary fiscal policy to shift aggregate demand to the left.

use contractionary fiscal policy to shift aggregate demand to the left.

18. A ____________________________ is one economic mechanism by which government borrowing can crowd out private investment. A. deficit decrease B. smaller trade surplus C. larger trade surplus D. higher interest rate

higher interest rate

22. If the government's budget deficit increases while the economy is producing substantially less then potential GDP and expansionary monetary policy is implemented, then any ______ from government borrowing would be _____ from that monetary policy. A. higher interest rates; largely offset by the lower interest rates B. lower interest rates; largely offset by the higher interest rates C. increase in interest rates; reduced by private sector investment D. inflationary increase in price level; crowding out private investment

higher interest rates; largely offset by the lower interest rates

27. 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

shorter than

11. Because China and the East Asian tigers are _________________________, their economies have all experienced rapid economic growth rates. A. rely on using technology developed by technological leaders B. overly reliant on a legacy of government economic controls C. the highest savers in the world, often saving one-third or more of GDP D. technologically disconnected, they encourage their firms to participate in world markets

the highest savers in the world, often saving one-third or more of GDP

2. 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? A. $600 million B. $500 million C. $700 million D. $900 million

$500 million

15. 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%

12.60%

16. A government collects $600 billion annually in tax revenue. Each year it allocates $35 billion to healthcare and $50 billion for education. What percentage of annual tax revenue is allocated to these two categories of government spending? A. 21.37% B. 14.16% C. 17.51% D. 26.41%

14.16%

17. A government collects $700 billion annually in tax revenue. Each year it allocates $130 billion to interest payments that it must pay on its accumulated debt. What percentage of annual tax revenue is allocated to make these interest payments? A. 17.15% B. 28.75% C. 18.57% D. 27.58%

18.57%

8. When a government records a budget surplus, the national savings and investment identity is written as: A. S = I + (G - T) + (X - M) B. S + (M - X) + (T - G) = I C. S - (G - T) = I - (X - M) D. S + (T - G) = 1 + (X - M)

S + (M - X) + (T - G) = I

4 When GDP per capita is used as a rough measure to compare the economic regions of the World, Latin America and the Caribbean are better off than _________________, but worse off than ___________________. A. Sub-Saharan Africa; South Asia, Eastern Europe and Central Asia B. Eastern Europe and Central Asia; East Asia and the Pacific C. East Asia and the Pacific; the Middle East and North Africa D. South Asia; Eastern Europe and Central Asia

Sub-Saharan Africa; South Asia, Eastern Europe and Central Asia

30. Briefly describe what the "baby boom" affect will be in relation to payroll taxes and indicate what options the government could use to address this issue.

The current level of the payroll taxes that support Social Security and Medicare will fall well short of the projected expenses of these programs; thus, the forecast is for large budget deficits. The current payroll tax levied on workers, which support all of Social Security and the hospitalization insurance part of Medicare, won't be enough to cover the expected costs. Taxes could be raised to fund these programs. Or the government could run very large budget deficits and borrow the money to finance these programs.

17. In the global economy, some nations are open to international trade, while others use tariffs and import quotas to limit the impact of trade. Which of the following is a reasonable conclusion that you can draw from this statement? A. differences in economic institutions exist among nations B. no nation intentionally aims for an unsustainable trade imbalance C. nations have similar priorities and similar economic situations D. economic growth is built on a foundation of trade improvements

differences in economic institutions exist among nations

26. Because of the difference between the discipline imposed by market competition and the discipline imposed by political decisions, which of the following is most likely? A. reduced government borrowing to avoid crowding out private investment B. difficulty managing public investment so it's done in a cost effective way C. government budgets will exactly shadow the rate of private investment D. tax budgets increase without a corresponding drop in private investment

difficulty managing public investment so it's done in a cost effective way

1. A country's economic data indicates that there has been a substantial reduction in the financial capital available to private sector firms. Which of the following most likely had the greatest influence on this economy? A. especially large and sustained household saving B. increased borrowing by private firms C. reduction in influx of funds for foreign financial investors D. especially large and sustained government borrowing

especially large and sustained government borrowing

28. A trade balance can be quickly defined as the gap between _____________, which are also included in the current account balance along with ______________. A. supply and demand; investment income and unilateral transfers B. supply and demand; stocks and bonds C. exports and imports; investment income and unilateral transfers D. exports and imports; stocks and bonds

exports and imports; investment income and unilateral transfers D. exports and imports; stocks and bonds

20. In 2010, many high-income countries will be focused on the short-term economic horizon due to aggressive and often controversial steps governments took to jump-start these economies out of severe recession. Considering the economic challenges that result from these policies, which of the following actions would be most advisable? A. extricate themselves from the recession and the policies adopted in fighting that recession B. to continue to temporarily disregard the foundations for future long-term growth C. find niches that they are well-suited to fill in the global networks of economic production D. build upon or copy technologies and industries developed by other technology leaders

extricate themselves from the recession and the policies adopted in fighting that recession

24. 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

income tax is a progressive tax

16. A decrease in the government's budget surplus will cause the interest rate to: A. decrease. B. increase. C. either increase or decrease. D. remain the same.

increase.

35. When government policy moves from a budget surplus to a budget deficit and the trade deficit remains constant: A. savings will decrease no matter what happens to investment. B. savings will decrease if investment remains constant. C. investment will increase if savings also remains constant. D. investment will decrease if savings also remains constant.

investment will decrease if savings also remains constant.

29. The current level of US government accumulated debt, when measured in nominal dollars: A. has reached higher levels in the past. B. is higher than it has ever been. C. is lower than it has ever been. D. has remained steady for the past decade.

is higher than it has ever been.

28. Currently, the US government accumulated debt to GDP ratio: A. is lower than its historical high point. B. is higher than it has ever been. C. is lower than it has ever been. D. has remained relatively steady for the past decade.

is lower than its historical high point.

10. A prolonged period of budget deficits may lead to ___________________. A. outflows of financial capital abroad B. lower inflation C. lower economic growth D. increasing exchange rates

lower economic growth

2. What do growth in standard of living, low unemployment, low inflation, and a sustainable balance of trade all share in common? A. main universal goals of macroeconomic policy B. lack of diversity in undeveloped countries in the World C. microeconomic policy goals of developed countries D. microeconomic policy goals of undeveloped countries

main universal goals of macroeconomic policy

9. Countries have strong differences in economic institutions: the U.S. is extremely _________________, Cuba has a ________________ and Canada is a mixture of both. A. high-income; low-income B. technological; shortage of technology C. market-oriented; command economy D. regulated; lack of regulation

market-oriented; command economy

37. A moderate increase in a budget deficit that leads to a _____________________ is not necessarily a cause for concern. A. combination of less foreign capital and banks that are bankrupt B. moderate increase in a trade deficit and a moderate appreciation of the exchange rate C. a series of large budget deficits D. shift in aggregate demand so far to the right that it causes high inflation

moderate increase in a trade deficit and a moderate appreciation of the exchange rate

30. Suppose you are analyzing data for an economy in which Ricardian neutrality holds true. If the budget surplus increases by 100, then: A. private savings will increase by 100. B. private savings will decrease by 100. C. investment will increase by 100. D. investment will decrease by 100.

private savings will decrease by 100.

29. Suppose you are analyzing data for an economy in which Ricardian neutrality holds true. If the budget deficit increases by 50, then: A. investment will increase by 50 B. investment will decrease by 50 C. private savings will decrease by 50 D. private savings will increase by 50

private savings will increase by 50

8. 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: A. regressive. B. progressive. C. proportional. D. optional.

progressive.

19. In the U.S., international trade raises many _______________ that are the same as issues raised by ________________________ in the domestic economy. A. monetary policy issues; real productivity gains B. fiscal policy issues; trade-offs that control inflation C. public policy issues; competitive market forces D. public policy issues; workers' demands for long-term benefits

public policy issues; competitive market forces

5. 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

regressive

22. Most contracts, wage levels, and interest rates are either indexed to inflation, or involve using the currency of another country to sidestep the problem of inflation in some converging economies. Following these policies caused A. the net flow of foreign investment in and out of the economy reached zero B. solid levels of economic growth for sustained periods of time with 10-30% inflation C. a moderate but substantial current account trade imbalance to control inflation D. indexed inflation policy trade-offs that led to substantial restrictions on trade

solid levels of economic growth for sustained periods of time with 10-30% inflation

24. In any economy functioning at potential GDP, there are occasions when the short term aggregate supply curve unexpectedly shifts, causing inflationary pressures. Which of the following is considered to be a common cause of this type of shift? A. overoptimistic lending by banks B. sudden rise in input prices C. a surge of export sales D. a wave of government spending

sudden rise in input prices

33. If an economy has a budget surplus of 1,500, private savings of 3,000, and investment of 5,000, what will the balance of trade in this economy equal? A. deficit of 500 B. surplus of 500 C. surplus of 1,500 D. deficit of 1,500

surplus of 500

34. If an economy has a budget deficit of 600, private savings of 2,000, and investment of 800. What is the balance of trade in this economy? A. deficit of 600 B. deficit of 2000 C. surplus of 2000 D. surplus of 600

surplus of 600

11. 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

sustained pattern of large budget deficits

7. Growth policies that mainly focus on both finding appropriate technology and on getting connected through communications and transport infrastructure are generally associated with: A. technologically disconnected nations. B. nations that are technology leaders. C. neoclassical economic theory D. Keynesian economic theory

technologically disconnected nations.

3. When per capita GDP is used as a rough measure to compare the economic regions of the World, the richest region is ____________ and the poorest region is ___________. A. East Asia and the Pacific; South Asia B. the United States, Western Europe and Japan; South Asia C. the United States, Western Europe and Japan; Sub-Saharan Africa D. East Asia and the Pacific; Sub-Saharan Africa

the United States, Western Europe and Japan; Sub-Saharan Africa

21. If the U.S. government's budget deficits are increasing aggregate demand, and the economy is producing at a level that is substantially less than potential GDP, then: A. higher interest rates will crowd out private investment. B. government borrowing is likely to crowd out private investment. C. an inflationary increase in the price level is a real danger. D. the central bank might react with an expansionary monetary policy.

the central bank might react with an expansionary monetary policy.

25. When a business firm makes an investment in physical capital, what is that investment subject to? A. state and local government incentives B. economic output and productivity C. political orientated incentives D. the discipline of the market

the discipline of the market

36. A government began 2013 with a budget surplus and a trade deficit. Due to the onset of recession, the government changed its policy and is now running a budget deficit. If all other factors hold constant, this change in policy will cause: A. the exchange rate and the trade deficit to increase. B. the exchange rate and the trade deficit to decrease. C. the exchange rate to decrease and the trade deficit to increase. D. the exchange rate to increase and the trade deficit to decrease.

the exchange rate and the trade deficit to increase.

14. A foreign aid donor has provided technology to help farmers in an undeveloped country to be more productive. If that country's government reacts to political pressure by urban food consumers by imposing price ceilings on farm products, A. foreign investors will be more likely to provide funds for profitable activities. B. it will create a reasonably stable market-oriented macroeconomic climate. C. it will prove technologically disconnected countries need a full economic growth agenda. D. the farmers receiving the technology will still be unable to make a living.

the farmers receiving the technology will still be unable to make a living.

23. Of all the arguments for placing limitations on trade, which of the following would most likely be characterized as being the most controversial among economists? A. bank/financial sector regulation argument B. floating currency argument C. the infant industry argument D. quantitative easing argument

the infant industry argument

25. If the economy is producing less than its potential GDP, _____________________ will show a smaller deficit than the actual budget. A. discretionary fiscal policy B. the automatic stabilizers C. the standardized employment budget D. expansionary fiscal policy

the standardized employment budget

26. Why do smaller economies around the world typically face more volatile inflation? A. they can be unsettled by international movements of capital and goods B. they address inflation concerns without restricting trade and thus lose benefits C. businesses are distracted from focusing on real productivity gains D. the fundamentals of growth are the same in every country

they can be unsettled by international movements of capital and goods

25. With regard to the major issues involving trade imbalances, which of the following explains why smaller countries around the world should take some steps to limit flows of international capital? A. to counter cyclical unemployment B. to reduce susceptibility to economic whiplash C. to maintain the natural rate of unemployment D. to achieve real productivity gains

to reduce susceptibility to economic whiplash