Module 6 - Surpluses, Deficits, Debt, and International Trade Economics

A budget _______ occurs when the government takes in more tax dollars than it spends in a given year

surplus

Most currencies on the foreign exchange markets have their values primarily determined by __________.

the forces of supply and demand.

Payments from the government for which there is no exchange of productive goods or services are called ______ payments and they tend to rise during a recession and fall during an economic expansion.

transfer

The deficit is what occurs in a given year when government spending is greater than tax revenues while the national debt is the accumulation of budget deficits over time.

true

While the balance of trade is often expressed in terms of deficits and surpluses, the balance of trade should always equal zero.

True

When the dollar is able to buy more Japanese yen than a month ago, it has strengthened or _______.

Appreciated

________ is the record of all transactions (in goods, services, physical and financial assets) between individuals, firms and governments of one country with those in all other countries in a given year, expressed in monetary terms(econedlink.org).

Balance of Payments

The amount of exports less the amount of imports of both goods and services is referred to as the ______.

Balance of trade

The ____ is made up of business investment, purchases and sales of stocks and bonds, and short term banking transactions that represent flows into and out of a nation.

Capital account

_______ advantage is the ability to produce a good or service at a lower opportunity cost than some other producer.

Comparative Advantage

The ________ is made up of the balance of trade, interest and dividend payments across borders and transfers, including charitable donations and foreign aid.

Current Account

When the dollar falls in value relative to the Japanese yen it has weakened or __________.

Depreciates

Babe Ruth was able to specialize in hitting with the New York Yankees and his gains were the result of pursuing his absolute advantage.

False

Engaging in protectionism is in everyone's best interest since it protects American industry from foreign competition.

False

The US government faces the same risk of bankruptcy as any American family who has budget deficits year after year.

False

We owe the majority of our national debt to other countries like China and Saudi Arabia.

False

The macroeconomic theory holding that business cycles are caused by changes in aggregate demand and that such cycles can and should be influenced by fiscal and monetary policy undertaken to promote economic stability is the ______ Theory.

Keynesian

If the dollar strengthens against the Russian ruble, then Russian imports become ________ to American consumers.

Less Expensive

If the dollar weakens against the Canadian dollar, then American exports to Canada become _______ to Canadian consumers.

Less expensive

The difference between tax revenues and spending in a given year creates budget deficits or surpluses, the accumulation of deficit spending over time is the __________.

National debt

The account used to balance statistical discrepancies between the two other accounts in the balance of payments is the ______ account.

Official Reserves

Which of the following is NOT considered a gain from trade?

Short term loss of jobs in the economy

The _____ deficit is the deficit at full employment GDP

Structural

A ______ is a tax on imports.

Tariff

. Balance of Payments: Current account + capital account + official reserves account = zero

True

A more meaningful way of analyzing the debt is to consider its percentage of GDP instead of just considering the raw number.

True

The ______ deficit is the difference between the full employment deficit and the actual deficit.

cyclical

A budget _______ occurs when government spends more than it receives in tax revenue.

deficit

The price of one nation's currency relative to another nation's currency is the __________.

exchange rate

Which of the following has NOT been a major contributing factor in the rapid increase over the last several years of our national debt?

increases to the Peace Corps budget

Which of the following is NOT a problem that might be associated with deficit spending during a recession?

moving the AD curve to the right, thus increasing real GDP and eventually lowering the unemployment rate.

There is a _______ relationship between real GDP and tax revenues, which partially explains deficit spending during a recession.

positive

Numerical limits on the quantity of imports are referred to as ______.

quotas