Macroeconomics Set 5 Homework

What is the level of private saving in the economy?

$3 trillion

What is the opportunity cost to produce 1 sword in Morocco?

1 belt

What is the opportunity cost to produce 1 belt in Morocco?

1 sword

If the actual terms of trade are 1 belt for 1.5 swords and 50 belts are traded, how many belts will Morocco consume?

70

If consumers decide to be more frugal and save more out of their income, then this will cause

A shift in the supply curve for loanable funds to the right

All of the following are sources of comparative advantage except

A strong foreign currency exchange rate

When the government runs a budget deficit, we would expect to see that

Investment will fall

Members of Congress promising to support each other's legislation is known as

Logrolling

The demand for loanable funds is downward sloping because the ___ the interest rate, the ___ the number of profitable investment projects a firm can undertake, and the ___ the quantity demanded of loanable funds

Lower; Greater; Greater

What is the level of public saving?

Negative $ 1 trillion (a deficit of $1 trillion)

Which of the following is consistent with the graph?

New government regulations decrease the profitability of new investments

International trade

Helps consumers but hurts firms that are less efficient than their foreign competitors

Use the table to select the statement that accurately interprets the data in the table

Rob has a comparative advantage in catching fish

There is a government surplus if

T - TR > G

The US has developed a comparative advantage in digital computers, airlines, and many prescriptions drugs. The source of its comparative advantage in these products is

Technology

An increase in public saving has what impact on the market for loanable funds?

The supply of loanable funds increases

The loanable funds market is given in the figure above. If the current real interest rate is 5 percent, which of the following is true?

There is a surplus of loanable funds in the market

In order to avoid the imposition of other types of trade barriers, foreign producers will sometimes agree to limit their exports to a country. What are these types of agreements called?

Voluntary export restraints (VERs)

Whenever a buyer and seller agree to trade, both must believe they will be made better off

Whether the buyer and seller live in the same (or different) city or country

In a closed economy, private saving is equal to which of the following? (Y = GDP, C = Consumption, G = Government purchases, T = Taxes, and TR = Transfers

Y + TR - C - T

What is the opportunity cost to produce 1 belt in Estonia

1.67 swords

Governments sometimes erect barriers to trade other than tariffs and quotas. Which of the following is not an example of this type of trade barrier?

A requirement that the employees of domestic firms that engage in foreign trade pay income taxes

With trade, what is the total gain in belt production?

20

What is the opportunity cost to produce 1 sword in Estonia?

3/5 of a belt

With trade, what is the total gain in sword production?

40

If the actual terms of trade are 1 belt for 1.5 swords and 50 belts are traded, how many belts will Estonia consume?

50

Which of the following is the best example of a tariff?

A $150 fee imposed on all imported residential air conditioners

When Sophie, a French citizen, purchases a Dell computer in Paris, France that was produced in Texas, the purchase is

A US export and a French import

Which of the following is the most liquid?

A dollar bill

China has developed a comparative advantage in the production of children's toys. The source of this comparative advantage is

A large supply of unskilled workers and relatively little capital

Which of the following is the best example of a quota?

A limit on the quantity of residential air conditioners that can be imported from a foreign country

Which of the following would encourage economic growth through increases in the capital stock?

ALL OF THE ABOVE - A decrease in the government deficit - An increase in household saving - An increase in the profitability of new investment due to technological change

An increase in the demand for loanable funds will occur if there is

An increase in expected profits from firm investment projects

Which of the following will increase investment spending in the economy, holding everything else constant

An increase in the federal government surplus

Which of the following is consistent with the graph depicted?

An increase in the proportion of income after net taxes used for consumption

Over the past several decades there has been rapid growth in international trade. This growth has been due to all but one of the following factors. Which factor has not contributed to the growth of international trade?

An increase in the tariffs charged on many goods

Use the table above to select the statement that accurately interprets the data in the table

Bill has a comparative advantage in picking berries

Use the table to select the statement that accurately interprets the data in the table

Bill has an absolute advantage in picking berries and Rob has an absolute advantage in catching fish

The response of investment spending to an increase in the government budget deficit is called

Crowding out

Trade restrictions are often motivated by a desire to save domestic jobs threatened by competition from imports. Which of the following counter-arguments is made by economists who oppose trade restrictions?

Consumers pay a high cost for jobs saved through trade restrictions

As percentage of imports, the largest product category of US imports from China is

Electronic products

Which of the following will not occur as the result of a decrease in net taxes?

Decreased household saving

Autarky is a situation in which a country

Does not trade with other countries

Use the table to select the statement that accurately interprets the data in the table

Rob has a greater opportunity cost than Bill for picking berries

A financial intermediary's main function is to math ___ with excess funds to ___ with a shortage of funds

Savers; Borrower

Economist Steve Landsburg has pointed out that Ebenezer Scrooge's change in behavior from miser to spender might actually be detrimental to the economy because

Scrooge's misery saving helped contribute to the production of investment goods rather than consumption goods

Textbook examples of trade between two nations are simplified in order to show how two nations both benefit from trade. These examples are misleading because

Some individuals in both countries may be worse off because of trade

Which of the following countries is not one of the top three exporting countries in the world?

South Korea

One difference between stocks and bonds is that

Stocks do not involve a promise to repay a purchase of the stock, while bonds represent a promise to repay the purchase price of the bond

If Sweden exports cell phones to Denmark and Denmark exports butter to Sweden, which of the following would explain this pattern of trade?

Sweden has a lower opportunity cost of producing cell phones than Denmark and Denmark has a comparative advantage in producing butter