Macroeconomics test 5 - Assignment Essays

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economics

Macroeconomics test 5

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Posted on 
March 11th, 2023
Home economics Macroeconomics test 5
question
Suppose Venezuela experiences economic expansion in​ 2013, yet its unemployment rate is 15​ percent, and economists have estimated that the natural rate of unemployment in Venezuela is also approximately 15 percent. All else​ equal, if this is the​ case, what will tend to happen in the Venezuelan economy over​ time?
A. Wages and prices will remain close to their current levels.
B. Wages and prices will fall.
C. Wages will rise and prices will fall.
D. Wages and prices will rise.
answer
A. Wages and prices will remain close to their current levels.
question
Assuming an upward−sloping short−run aggregate supply​ curve, a decrease in government spending results in​ ________ in output and​ ________ in prices in the short run.
A. an​ increase; no change
B. a​ decrease; a slight decrease
C. an​ increase; a slight increase
D. no​ change; a decrease
answer
B. a​ decrease; a slight decrease
question
Refer to Figure 15.4. Suppose that the economy is originally in equilibrium at point a. In the short​ run, as the supply of money​ increases, the economy moves to point
A. a.
B. b.
C. c.
D. d.
answer
D. d.
question
In the short run
A. prices are flexible.
B. the economy always operates at full employment.
C. the level of GDP is determined by the demand and supply for​ labor, the supply of​ capital, and technological progress.
D. increases in the money supply increase GDP.
answer
D. increases in the money supply increase GDP.
question
Refer to Figure 15.3 If this economy is initially at full​ employment, a recession would be reflected by movements to point​ ________ in graph​ (A), point​ ________ in graph​ (B), and point​ ________ in graph​ (C).
A. a​; d​; f
B. b​; d​; f
C. a​; c​; e
D. b​; c​; f
answer
C. a​; c​; e
question
Wages and prices throughout an economy will rise above previous inflation rates when
A. fewer goods are exported abroad.
B. unemployment has highs and lows.
C. imports increase dramatically.
D. output exceeds potential output.
answer
D. output exceeds potential output.
question
GDP for the nation of Economia is currently above potential output. If the adjustment to the long−run equilibrium occurs​ slowly, the government of Economia is most likely to pursue a policy of
A. increasing government spending to decrease aggregate demand.
B. taking no action and allowing the economy to adjust naturally.
C. decreasing the money supply to decrease aggregate demand.
D. decreasing government spending to increase aggregate demand.
answer
C. decreasing the money supply to decrease aggregate demand.
question
Refer to Figure 15.2. A movement from point c to point b would be the result of the
A. natural rate being higher than the unemployment​ rate, causing wages to fall.
B. natural rate being higher than the unemployment​ rate, causing wages to rise.
C. unemployment rate being higher than the natural​ rate, causing wages to rise.
D. unemployment rate being higher than the natural​ rate, causing wages to fall
answer
B. natural rate being higher than the unemployment​ rate, causing wages to rise.
question
Suppose that the unemployment rate is​ ________ the natural rate. We would expect prices to​ fall, money demand to​ fall, interest rates to​ fall, and total demand to​ ________.
A. above; fall
B. below; fall
C. above; rise
D. below; rise
answer
C. above; rise
question
The Keynesian view that demand could fall short of production is more likely to hold true if
A. prices, but not​ wages, are fully flexible.
B. wages and prices are fully flexible.
C. wages and prices are not fully flexible.
D. wages, but not​ prices, are fully flexible.
answer
C. wages and prices are not fully flexible.
question
The long−run aggregate supply curve is vertical because
A. in the short​ run, prices are flexible but output is equal to potential output.
B. in the long​ run, prices are flexible but output is equal to potential output.
C. in the long​ run, prices are fixed and output is equal to potential output.
D. in the short​ run, prices are fixed but output may be​ above, below, or equal to potential output.
answer
B. in the long​ run, prices are flexible but output is equal to potential output.
question
Suppose an economy that has been operating at full employment has been experiencing 4 percent annual inflation. If output later falls to a level that is less than potential​ output, prices generally will begin to rise at
A. a rate of 0 percent.
B. a rate of 4 percent.
C. a rate less than 4 percent.
D. a rate greater than 4 percent.
answer
C. a rate less than 4 percent.
question
Suppose GDP​ ________ the level of potential output. We would expect to see​ ________ unemployment, rising​ wages, and rising prices.
A. exceeds; low
B. is​ below; low
C. is​ below; high
D. exceeds; high
answer
A. exceeds; low
question
In the long​ run, an increase in the money supply
A. decreases interest​ rates, increases​ investment, and decreases output.
B. has no effect on interest​ rates, investment or output.
C. decreases interest​ rates, but has no effect on investment or output.
D. increases​ output, but has no effect on interest rates or output.
answer
B. has no effect on interest​ rates, investment or output.
question
If GDP is above potential​ output, then we expect to see
A. falling​ wages, causing the short−run aggregate supply curve to shift down.
B. falling​ wages, causing the short−run aggregate supply curve to shift up.
C. increasing​ wages, causing the short−run aggregate supply curve to shift down.
D. increasing​ wages, causing the short−run aggregate supply curve to shift up.
answer
D. increasing​ wages, causing the short−run aggregate supply curve to shift up.
question
If GDP is above potential​ output, then we expect to see
A. increasing​ wages, causing the short−run aggregate supply curve to shift up.
B. falling​ wages, causing the short−run aggregate supply curve to shift up.
C. increasing​ wages, causing the shorts−run aggregate supply curve to shift down.
D. falling​ wages, causing the short−run aggregate supply curve to shift down.
answer
A. increasing​ wages, causing the short−run aggregate supply curve to shift up.
question
Refer to Figure 15.4. Suppose that the economy is originally in equilibrium at point a. In the long​ run, as the supply of money​ decreases, the economy moves to point
A. a.
B. b.
C. c.
D. d.
answer
D. d.
question
GDP for the nation of Economia is currently below potential output. If the adjustment to the long−run equilibrium occurs​ slowly, the government of Economia is likely to pursue a policy of
A. decreasing government spending to increase aggregate demand.
B. decreasing the money supply to increase aggregate demand.
C. increasing government spending to increase aggregate demand.
D. taking no action and allowing the economy to adjust naturally.
answer
C. increasing government spending to increase aggregate demand.
question
Suppose that GDP is​ ________ potential output. We would expect prices to​ rise, money demand to​ rise, interest rates to​ rise, and total demand to​ ________.
A. below; fall
B. above; rise
C. below; rise
D. above; fall
answer
D. above; fall
question
In the short​ run, ________ in the supply of money​ ________ the level of output.
A. increases; decrease
B. increases; increase
C. increases; do not change
D. decreases; do not change
answer
B. increases; increase
question
The Keynesian view that demand could fall short of production is more likely to hold true if
A. wages and prices are fully flexible.
B. prices, but not​ wages, are fully flexible.
C. wages and prices are not fully flexible.
D. wages, but not​ prices, are fully flexible.
answer
C. wages and prices are not fully flexible.
question
Refer to Figure 15.2. Output is likely to rise and prices are likely to fall if the economy is at point
A. a.
B. b.
C. c.
D. d.
answer
A. a.
question
Suppose an economy that has been operating at full employment has been experiencing 4 percent annual inflation. If output later exceeds potential​ output, prices generally will begin to rise at
A. a rate of 0 percent.
B. a rate of 4 percent.
C. a rate less than 4 percent.
D. a rate greater than 4 percent.
answer
D. a rate greater than 4 percent.
question
Assuming an upward−sloping short−run aggregate supply​ curve, an increase in the money supply results in​ ________ in output and​ ________ in prices in the short run.
A. a​ decrease; a slight decrease
B. no​ change; an increase
C. a​ decrease; no change
D. an​ increase; an increase
answer
D. an​ increase; an increase
question
The short−run aggregate supply curve is relatively flat because
A. in the short​ run, prices do not change very much but output may be​ above, below, or equal to potential output.
B. in the short​ run, prices are flexible but output is equal to potential output.
C. in the long​ run, prices are flexible but output is equal to potential output.
D. in the long​ run, prices are fixed and output is equal to potential output.
answer
A. in the short​ run, prices do not change very much but output may be​ above, below, or equal to potential output.
question
When employees demand higher wages as a result of increases in​ prices, caused by higher wages being paid by​ companies, it is called
A. out of kilter fiscal policies.
B. economic inflation.
C. a recession.
D. the wage−price spiral.
answer
D. the wage−price spiral.
question
Suppose Venezuela experiences economic growth in​ 2013, yet its unemployment rate is 15​ percent, which is above the South American average. This indicates that​ Venezuela's 2013 output is
A. below potential output.
B. below actual output.
C. above potential output.
D. above actual output.
answer
A. below potential output.
question
In the long​ run, a decrease in the money supply
A. has no effect on interest​ rates, investment, or output.
B. decreases interest​ rates, decreases​ investment, and decreases output.
C. increases interest​ rates, decreases​ investment, and decreases output.
D. increases interest​ rates, increases​ investment, and decreases output.
answer
A. has no effect on interest​ rates, investment, or output.
question
Refer to Figure 15.3 If this economy is initially in a​ recession, the change in price level which would bring the economy back to full employment would lead to a change in money​ demand, which is reflected by the movement from
A. f to e.
B. r1 to r0.
C. AS1 to AS0.
D. Md0 to Md1.
answer
D. Md0 to Md1.
question
If GDP is​ ________ potential​ output, the economy is in a​ ________ and prices and wages will tend to decrease.
A. above; boom
B. above; recession
C. below; boom
D. below; recession
answer
D. below; recession
question
Who pays the interest on government debt for the money it borrows​ today?
A. the Federal Reserve
B. the Congressional Budget Office
C. future generations of taxpayers
D. The government does not pay interest on money it borrows.
answer
C. future generations of taxpayers
question
A deficit is defined as
A. the excess of total revenues over total expenditures.
B. government spending plus transfer payments.
C. the excess of total expenditures over total revenues.
D. the sum of all past borrowing by the government.
answer
C. the excess of total expenditures over total revenues.
question
If a government had a debt of​ $300 billion and then ran deficits of​ $200 billion each year for the next three​ years, by the end of the third year its total debt would be
A. −​$300.
B. $300 billion.
C. $600 billion.
D. $900 billion.
answer
D. $900 billion.
question
Complete price stability would be the result of
A. an inflation rate of zero.
B. deflation.
C. hyperinflation.
D. inflation.
answer
A. an inflation rate of zero.
question
The government debt is defined as
A. government spending on goods and services plus transfer payments.
B. the sum of all past deficits and surpluses.
C. the excess of total expenditures over total revenues.
D. the excess of total revenues over total expenditures.
answer
B. the sum of all past deficits and surpluses.
question
A flat tax which does allow deductions for investment spending is a type of
A. excise tax.
B. investment tax.
C. consumption tax.
D. luxury tax.
answer
C. consumption tax.
question
If a government runs a deficit it can cover the gap by
A. increasing transfer payments.
B. lowering the discount rate.
C. purchasing bonds.
D. printing money.
answer
D. printing money.
question
Automatic stabilizers dampen economic fluctuations during recessions because​ ________ decrease while​ ________ increase.
A. tax​ payments; tax revenues
B. tax​ revenues; tax payments
C. unemployment​ rates; inflation rates
D. tax​ payments; transfer payments
answer
D. tax​ payments; transfer payments
question
Arguments against the balanced budget amendment include which of the​ following?
A. A balanced budget amendment would exert fiscal discipline on the federal government.
B. A balanced budget amendment would increase capital formation.
C. A balanced budget amendment would limit​ Congress' ability to use fiscal policy during a recession.
D. A balanced budget amendment would reduce the taxation burden on future generations.
answer
C. A balanced budget amendment would limit​ Congress' ability to use fiscal policy during a recession.
question
Income and revenue from taxes have a specific relationship during recessions. What is​ it?
A. incomes​ fall, tax revenue decreases
B. incomes​ rise, tax revenue decreases
C. incomes​ rise, tax revenue increases
D. incomes​ fall, tax revenue increases
answer
A. incomes​ fall, tax revenue decreases
question
During​ recessions, unemployment​ ________ while the budget deficit as a percentage of GDP​ ________.
A. decreases; increases
B. decreases; decreases
C. increases; decreases
D. increases; increases
answer
D. increases; increases
question
Government debt​ "crowds out" private investment because
A. private firms stop borrowing money when the government enters the market.
B. the​ government's increased demand for loans decreases interest rates.
C. the government can order the public to buy bonds.
D. the government and private firms compete in the same market for savings.
answer
D. the government and private firms compete in the same market for savings.
question
Budget deficits inevitably lead to inflation in
A. budget deficits have no effect on inflation.
B. small nations.
C. nations that can easily borrow from the public.
D. nations that are unable to borrow from the public.
answer
D. nations that are unable to borrow from the public.
question
Capital gains are a type of income earned from
A. the sale of assets.
B. employment in a factory.
C. interest on savings accounts.
D. all of the above
answer
A. the sale of assets.
question
Suppose the​ government's initial debt is​ $425 billion. If for the next three years the government runs deficits of​ $150, $125, and​ $200 billion, the​ government's total debt at the end of the three years will be
A. −​$50 billion.
B. $50 billion.
C. $475 billion.
D. $900 billion.
answer
D. $900 billion.
question
A large government debt can reduce the amount of​ ________ in an economy and reduce future income and real wages for citizens.
A. capital
B. employment
C.government spending
D. social benefit programs
answer
A. capital
question
During​ recessions, unemployment​ ________ while the budget deficit as a percentage of GDP​ ________.
A. increases; decreases
B. decreases; increases
C. increases; increases
D. decreases; decreases
answer
C. increases; increases
question
A surplus is defined as
A. the sum of all past borrowing by the government.
B. the excess of total revenues over total expenditures.
C. the excess of total expenditures over total revenues.
D. government spending plus transfer payments.
answer
B. the excess of total revenues over total expenditures.
question
The sum of all budget deficits and surpluses is known as the
A. government expenditure.
B. government debt.
C. budget balance.
D. fiscal year.
answer
B. government debt.
question
Suppose the federal government implemented a flat tax to replace the income​ tax, and the flat tax saved taxpayers a total of​ $5 billion. A tax change such as this could be viewed as an example of the federal government implementing
A. contractionary monetary policy.
B. expansionary monetary policy.
C. contractionary fiscal policy.
D. expansionary fiscal policy.
answer
D. expansionary fiscal policy.
question
If government spending is​ $650 billion while government revenue is​ $950 billion, the government is said to have a
A. $300 billion budget surplus.
B. $1,600 billion budget balance.
C. $300 billion budget deficit.
D. $950 billion budget deficit.
answer
A. $300 billion budget surplus.
question
Government debt​ ________ the amount of savings available to firms and thus​ ________ the amount of capital in the economy.
A. increases; increases
B. increases; decreases
C. decreases; increases
D. decreases; decreases
answer
D. decreases; decreases
question
To help pull an economy out of a recession and put additional income in the hands of the​ public, a government can force its expenditures to​ ________ its revenues and create a​ ________.
A. exceed; special taxes
B. stimulate; depression
C. exceed; deficit
D. reduce; deficit
answer
C. exceed; deficit
question
Suppose the​ government's initial debt is​ $350 billion and that during the next two years the government runs deficits of​ $90 and​ $40 billion. If during the third year the government has a​ $70 billion​ surplus, the​ government's additional debt at the end of the three years will be
A. $60 billion.
B. $200 billion.
C. $410 billion.
D. $550 billion.
answer
A. $60 billion.
question
An example of a consumption tax is
A. the Social Security tax.
B. a sales tax.
C. an income tax.
D. transfer payments.
answer
B. a sales tax.
question
Which of the following situations will arise in the domestic market following the imposition of a voluntary export​ restraint?
A. imports​ increase, domestic production​ decreases, prices decrease
B. imports​ increase, domestic production​ increases, prices increase
C. imports​ decrease, domestic production​ increases, prices decrease
D. imports​ decrease, domestic production​ increases, prices increase
answer
D. imports​ decrease, domestic production​ increases, prices increase
question
Refer to Table 18.1. The opportunity cost of a glove in Russia is
A. 1/8 of a hat.
B. 1/3 of a hat.
C. 3 hats.
D. 8 hats.
answer
C. 3 hats.
question
Suppose the nation of Arcadia produces only two​ goods, teapots and surfboards. If Arcadia produces only​ teapots, it can make 40 per day. If Arcadia produces only​ surfboards, it can make 60 per day. What is the opportunity cost of 1 teapot in​ Arcadia?
A. 2/3 of a surfboard
B. 1.5 surfboards
C. 40 surfboards
D. 60 surfboards
answer
B. 1.5 surfboards
question
Refer to Figure 18.4. With an import​ ban, what is the equilibrium price of gloves in​ Duckland?
A. $0
B. $8
C. $9
D. $12
answer
D. $12
question
Refer to Figure 18.1. The opportunity cost of hang gliders in Canada is
A. 1/4 of a bicycle.
B. 1/2 of a bicycle.
C. 2 bicycles.
D. 4 bicycles.
answer
C. 2 bicycles.
question
Which of the following groups of countries are members of​ NAFTA?
A. the United​ States, Canada, and Mexico
B. the United​ States, France, and Germany
C. the United​ States, Japan, and Mexico
D. Japan, Canada, and Mexico
answer
A. the United​ States, Canada, and Mexico
question
Refer to Figure 18.4. With free​ trade, what is the equilibrium price of gloves in​ Duckland?
A. $0
B. $8
C. $9
D. $11
answer
B. $8
question
Exporting nations often agree to voluntary export restraints in an attempt to
A. employ more workers in the importing nation.
B. decrease inflation.
C. increase global welfare.
D. avoid more restrictive trade policies.
answer
D. avoid more restrictive trade policies.
question
________ occurs when a firm cuts prices below production costs in a deliberate attempt to drive competitors out of business.
A. Voracious dumping
B. Deliberate dumping
C. Predatory dumping
D. Ravaging dumping
answer
C. Predatory dumping
question
Refer to Table 18.1. Panama has a comparative advantage in
A. hats.
B. gloves.
C. both hats and gloves.
D. neither hats nor gloves
answer
B. gloves.
question
If Italy can produce grapes at a lower opportunity cost than any other​ nation, Italy is said to have​ a(n) ________ in the production of grapes.
A. absolute advantage
B. comparative advantage
C. comparative disadvantage
D. autarky
answer
B. comparative advantage
question
Suppose Panama produces only two​ goods, bananas and hats. If Panama has a comparative advantage in​ bananas, a move toward free trade will
A. harm hat​ workers, harm banana​ workers, but benefit the nation as a whole.
B. benefit hat​ workers, harm banana​ workers, but benefit the nation as a whole.
C. benefit hat​ workers, harm banana​ workers, but harm the nation as a whole.
D. harm hat​ workers, benefit banana​ workers, but benefit the nation as a whole.
answer
D. harm hat​ workers, benefit banana​ workers, but benefit the nation as a whole.
question
Refer to Table 18.1. Mutually beneficial terms of trade between Russia and Panama are
A. 5 gloves for 3 hats.
B. 1 hat for 2 gloves.
C. 1 glove for 6 hats.
D. 1 hat for 1 glove.
answer
D. 1 hat for 1 glove.
question
The slope of the production possibilities curve is
A. positive and increasing.
B. positive.
C. positive and decreasing.
D. the opportunity cost of one good in terms of the other.
answer
D. the opportunity cost of one good in terms of the other.
question
A possible reason a nation might impose a protectionist policy such as a tariff is to
A. increase the level of imports.
B. to slow domestic production.
C. encourage specialization in the good in which the nation has a comparative advantage.
D. protect an infant industry from foreign competitors.
answer
D. protect an infant industry from foreign competitors.
question
Refer to Figure 18.4. With free​ trade, what is the equilibrium quantity of gloves in​ Duckland?
A. 100
B. 80
C. 60
D. 40
answer
A. 100
question
Refer to Figure 18.1. Canada has a comparative advantage in the production of
A. hang gliders.
B. bicycles.
C. both bicycles and hang gliders.
D. neither bicycles nor hang gliders.
answer
B. bicycles.
question
For a nation to have​ ________ in producing a good it must have a lower opportunity cost of producing that good than the other country.
A. a comparative advantage
B. an autarky advantage
C. an absolute advantage
D. both a comparative advantage and an absolute advantage
answer
A. a comparative advantage
question
Refer to Figure 18.4. With a tariff or​ quota, what is the equilibrium quantity of gloves in​ Duckland?
A. 100
B. 80
C. 60
D. 40
answer
B. 80
question
The argument that calls for the trade protection of only newly developing industries is known as the​ ________ argument.
A. predatory dumping
B. learning by doing
C. infant industry
D. developing nation
answer
C. infant industry
question
As a​ whole, nations are better off after trade and specialization because
A. nations experience an inward shift of their production possibilities curve.
B. nations can consume along their consumption possibilities​ curve, which is outside of their production possibilities curve.
C. nations can consume along their consumption possibilities​ curve, which is inside of their production possibilities curve.
D. nations can consume along their production possibilities​ curve, which is outside of their consumption possibilities curve.
answer
B. nations can consume along their consumption possibilities​ curve, which is outside of their production possibilities curve.
question
Which of the following situations will arise in the domestic market following the imposition of an import​ ban?
A. imports​ increase, domestic production​ increases, prices increase
B. imports​ decrease, domestic production​ increases, prices decrease
C. imports​ decrease, domestic production​ increases, prices increase
D. imports​ increase, domestic production​ decreases, prices decrease
answer
C. imports​ decrease, domestic production​ increases, prices increase
question
Suppose the nation of Alphonia was charged with dumping electric lawnmowers in the nation of Omegalon. The charge of dumping electric lawnmowers in the Omegalon market means that Alphonia was accused of
A. selling counterfeits−branded electric lawnmowers in Omegalon.
B. selling electric lawnmowers below cost or below domestic prices.
C. discarding electric lawnmowers which would not sell in their home country.
D. selling faulty electric lawnmowers in Omegalon.
answer
B. selling electric lawnmowers below cost or below domestic prices.
question
Referring to Figure​ 19.1, U.S. goods will become cheaper in Mexico if the exchange rate goes from​ ________ to​ ________ pesos to the dollar.
A. 11; 13
B. 12; 11
C. 10; 14
D. 12; 13
answer
B. 12; 11
question
An appreciation is
A. a decrease in the trade deficit.
B. a decrease in the value of currency.
C. an increase in the value of currency.
D. an increase in the trade surplus.
answer
C. an increase in the value of currency.
question
A market exchange rate which has been adjusted for inflation is called a
A. foreign market price index.
B. domestic exchange factor.
C. nominal exchange rate.
D. real exchange rate.
answer
D. real exchange rate.
question
Suppose iPhones cost 180 euros and 240 dollars in Belgium and the United​ States, respectively, while binoculars cost 60 euros and 75 dollars in Belgium and the United​ States, respectively. If the exchange rate is 0.8​ euros/dollar, the law of one price​ ________ for iPhones and​ ________ for binoculars.
A. holds; does not hold
B. holds; holds
C. does not​ hold; holds
D. does not​ hold; does not hold
answer
C. does not​ hold; holds
question
According to the theory of purchasing power​ parity, the exchange rate between two countries is determined by
A. the interest rates in the two countries.
B. government spending in the two countries.
C. the difference in the overall price levels in the two countries.
D. the unemployment rates in the two countries.
answer
C. the difference in the overall price levels in the two countries.
question
Referring to Figure​ 19.2, the effect of a decrease in Japanese prices is represented by a movement from point
A. c to b.
B. c to d.
C. d to a.
D. d to c.
answer
D. d to c.
question
An increase in Swiss prices will cause
A. an increase in the supply of U.S. dollars and a decrease in the exchange rate of Swiss francs per dollar.
B. an increase in the demand for U.S. dollars and an increase in the exchange rate of Swiss francs per dollar.
C. a decrease in the supply of U.S. dollars and an increase in the exchange rate of Swiss francs per dollar.
D. a decrease in the demand for U.S. dollars and a decrease in the exchange rate of Swiss francs per dollar.
answer
C. a decrease in the supply of U.S. dollars and an increase in the exchange rate of Swiss francs per dollar.
question
If the dollar to euro exchange rate moves from 1.1 to 0.9 dollars per​ euro, then the dollar has​ ________ and the euro has​ ________.
A. depreciated; appreciated
B. appreciated; appreciated
C. depreciated; depreciated
D. appreciated; depreciated
answer
D. appreciated; depreciated
question
If the dollar depreciates against the British​ pound, U.S. goods sold in​ ________ would become less expensive and British goods sold in​ ________ would become more expensive.
A. Great​ Britain; Great Britain
B. Great​ Britain; the United States
C. the United​ States; the United States
D. the United​ States; Great Britain
answer
B. Great​ Britain; the United States
question
If the price of papayas is 12 baht in Thailand and the exchange rate is 30 baht per​ dollar, then what is the dollar price of​ papayas?
A. $0.40
B. $2.50
C. $2.90
D. $26.00
answer
A. $0.40
question
Spending on goods from a country will​ ________ as the value of its currency gets cheaper against the U.S. dollar.
A. reverse
B. increase
C. decrease
D. go to other countries
answer
B. increase
question
Referring to Figure​ 19.2, a depreciation of the dollar is represented by a movement from point
A. a to c.
B. c to a.
C. b to a.
D. c to d.
answer
A. a to c.
question
Referring to Figure​ 19.2, the effect of a decrease in U.S. interest rates is represented by a movement from point
A. d to a.
B. b to c.
C. c to d.
D. c to b.
answer
B. b to c.
question
If the yen to dollar exchange rate is​ 115, the U.S. price index is​ 140, and the Japanese price index is​ 165, what is the U.S. real exchange​ rate?
A. 74.52
B. 97.58
C. 135.55
D. 200.87
answer
B. 97.58
question
If the U.S. real exchange rate​ decreases, U.S. imports will​ _______ and U.S. exports will​ _______.
A. fall; fall
B. rise; fall
C. rise; rise
D. fall; rise
answer
D. fall; rise
1 of 93
question
Suppose Venezuela experiences economic expansion in​ 2013, yet its unemployment rate is 15​ percent, and economists have estimated that the natural rate of unemployment in Venezuela is also approximately 15 percent. All else​ equal, if this is the​ case, what will tend to happen in the Venezuelan economy over​ time?
A. Wages and prices will remain close to their current levels.
B. Wages and prices will fall.
C. Wages will rise and prices will fall.
D. Wages and prices will rise.
answer
A. Wages and prices will remain close to their current levels.
question
Assuming an upward−sloping short−run aggregate supply​ curve, a decrease in government spending results in​ ________ in output and​ ________ in prices in the short run.
A. an​ increase; no change
B. a​ decrease; a slight decrease
C. an​ increase; a slight increase
D. no​ change; a decrease
answer
B. a​ decrease; a slight decrease
question
Refer to Figure 15.4. Suppose that the economy is originally in equilibrium at point a. In the short​ run, as the supply of money​ increases, the economy moves to point
A. a.
B. b.
C. c.
D. d.
answer
D. d.
question
In the short run
A. prices are flexible.
B. the economy always operates at full employment.
C. the level of GDP is determined by the demand and supply for​ labor, the supply of​ capital, and technological progress.
D. increases in the money supply increase GDP.
answer
D. increases in the money supply increase GDP.
question
Refer to Figure 15.3 If this economy is initially at full​ employment, a recession would be reflected by movements to point​ ________ in graph​ (A), point​ ________ in graph​ (B), and point​ ________ in graph​ (C).
A. a​; d​; f
B. b​; d​; f
C. a​; c​; e
D. b​; c​; f
answer
C. a​; c​; e
question
Wages and prices throughout an economy will rise above previous inflation rates when
A. fewer goods are exported abroad.
B. unemployment has highs and lows.
C. imports increase dramatically.
D. output exceeds potential output.
answer
D. output exceeds potential output.
question
GDP for the nation of Economia is currently above potential output. If the adjustment to the long−run equilibrium occurs​ slowly, the government of Economia is most likely to pursue a policy of
A. increasing government spending to decrease aggregate demand.
B. taking no action and allowing the economy to adjust naturally.
C. decreasing the money supply to decrease aggregate demand.
D. decreasing government spending to increase aggregate demand.
answer
C. decreasing the money supply to decrease aggregate demand.
question
Refer to Figure 15.2. A movement from point c to point b would be the result of the
A. natural rate being higher than the unemployment​ rate, causing wages to fall.
B. natural rate being higher than the unemployment​ rate, causing wages to rise.
C. unemployment rate being higher than the natural​ rate, causing wages to rise.
D. unemployment rate being higher than the natural​ rate, causing wages to fall
answer
B. natural rate being higher than the unemployment​ rate, causing wages to rise.
question
Suppose that the unemployment rate is​ ________ the natural rate. We would expect prices to​ fall, money demand to​ fall, interest rates to​ fall, and total demand to​ ________.
A. above; fall
B. below; fall
C. above; rise
D. below; rise
answer
C. above; rise
question
The Keynesian view that demand could fall short of production is more likely to hold true if
A. prices, but not​ wages, are fully flexible.
B. wages and prices are fully flexible.
C. wages and prices are not fully flexible.
D. wages, but not​ prices, are fully flexible.
answer
C. wages and prices are not fully flexible.
question
The long−run aggregate supply curve is vertical because
A. in the short​ run, prices are flexible but output is equal to potential output.
B. in the long​ run, prices are flexible but output is equal to potential output.
C. in the long​ run, prices are fixed and output is equal to potential output.
D. in the short​ run, prices are fixed but output may be​ above, below, or equal to potential output.
answer
B. in the long​ run, prices are flexible but output is equal to potential output.
question
Suppose an economy that has been operating at full employment has been experiencing 4 percent annual inflation. If output later falls to a level that is less than potential​ output, prices generally will begin to rise at
A. a rate of 0 percent.
B. a rate of 4 percent.
C. a rate less than 4 percent.
D. a rate greater than 4 percent.
answer
C. a rate less than 4 percent.
question
Suppose GDP​ ________ the level of potential output. We would expect to see​ ________ unemployment, rising​ wages, and rising prices.
A. exceeds; low
B. is​ below; low
C. is​ below; high
D. exceeds; high
answer
A. exceeds; low
question
In the long​ run, an increase in the money supply
A. decreases interest​ rates, increases​ investment, and decreases output.
B. has no effect on interest​ rates, investment or output.
C. decreases interest​ rates, but has no effect on investment or output.
D. increases​ output, but has no effect on interest rates or output.
answer
B. has no effect on interest​ rates, investment or output.
question
If GDP is above potential​ output, then we expect to see
A. falling​ wages, causing the short−run aggregate supply curve to shift down.
B. falling​ wages, causing the short−run aggregate supply curve to shift up.
C. increasing​ wages, causing the short−run aggregate supply curve to shift down.
D. increasing​ wages, causing the short−run aggregate supply curve to shift up.
answer
D. increasing​ wages, causing the short−run aggregate supply curve to shift up.
question
If GDP is above potential​ output, then we expect to see
A. increasing​ wages, causing the short−run aggregate supply curve to shift up.
B. falling​ wages, causing the short−run aggregate supply curve to shift up.
C. increasing​ wages, causing the shorts−run aggregate supply curve to shift down.
D. falling​ wages, causing the short−run aggregate supply curve to shift down.
answer
A. increasing​ wages, causing the short−run aggregate supply curve to shift up.
question
Refer to Figure 15.4. Suppose that the economy is originally in equilibrium at point a. In the long​ run, as the supply of money​ decreases, the economy moves to point
A. a.
B. b.
C. c.
D. d.
answer
D. d.
question
GDP for the nation of Economia is currently below potential output. If the adjustment to the long−run equilibrium occurs​ slowly, the government of Economia is likely to pursue a policy of
A. decreasing government spending to increase aggregate demand.
B. decreasing the money supply to increase aggregate demand.
C. increasing government spending to increase aggregate demand.
D. taking no action and allowing the economy to adjust naturally.
answer
C. increasing government spending to increase aggregate demand.
question
Suppose that GDP is​ ________ potential output. We would expect prices to​ rise, money demand to​ rise, interest rates to​ rise, and total demand to​ ________.
A. below; fall
B. above; rise
C. below; rise
D. above; fall
answer
D. above; fall
question
In the short​ run, ________ in the supply of money​ ________ the level of output.
A. increases; decrease
B. increases; increase
C. increases; do not change
D. decreases; do not change
answer
B. increases; increase
question
The Keynesian view that demand could fall short of production is more likely to hold true if
A. wages and prices are fully flexible.
B. prices, but not​ wages, are fully flexible.
C. wages and prices are not fully flexible.
D. wages, but not​ prices, are fully flexible.
answer
C. wages and prices are not fully flexible.
question
Refer to Figure 15.2. Output is likely to rise and prices are likely to fall if the economy is at point
A. a.
B. b.
C. c.
D. d.
answer
A. a.
question
Suppose an economy that has been operating at full employment has been experiencing 4 percent annual inflation. If output later exceeds potential​ output, prices generally will begin to rise at
A. a rate of 0 percent.
B. a rate of 4 percent.
C. a rate less than 4 percent.
D. a rate greater than 4 percent.
answer
D. a rate greater than 4 percent.
question
Assuming an upward−sloping short−run aggregate supply​ curve, an increase in the money supply results in​ ________ in output and​ ________ in prices in the short run.
A. a​ decrease; a slight decrease
B. no​ change; an increase
C. a​ decrease; no change
D. an​ increase; an increase
answer
D. an​ increase; an increase
question
The short−run aggregate supply curve is relatively flat because
A. in the short​ run, prices do not change very much but output may be​ above, below, or equal to potential output.
B. in the short​ run, prices are flexible but output is equal to potential output.
C. in the long​ run, prices are flexible but output is equal to potential output.
D. in the long​ run, prices are fixed and output is equal to potential output.
answer
A. in the short​ run, prices do not change very much but output may be​ above, below, or equal to potential output.
question
When employees demand higher wages as a result of increases in​ prices, caused by higher wages being paid by​ companies, it is called
A. out of kilter fiscal policies.
B. economic inflation.
C. a recession.
D. the wage−price spiral.
answer
D. the wage−price spiral.
question
Suppose Venezuela experiences economic growth in​ 2013, yet its unemployment rate is 15​ percent, which is above the South American average. This indicates that​ Venezuela's 2013 output is
A. below potential output.
B. below actual output.
C. above potential output.
D. above actual output.
answer
A. below potential output.
question
In the long​ run, a decrease in the money supply
A. has no effect on interest​ rates, investment, or output.
B. decreases interest​ rates, decreases​ investment, and decreases output.
C. increases interest​ rates, decreases​ investment, and decreases output.
D. increases interest​ rates, increases​ investment, and decreases output.
answer
A. has no effect on interest​ rates, investment, or output.
question
Refer to Figure 15.3 If this economy is initially in a​ recession, the change in price level which would bring the economy back to full employment would lead to a change in money​ demand, which is reflected by the movement from
A. f to e.
B. r1 to r0.
C. AS1 to AS0.
D. Md0 to Md1.
answer
D. Md0 to Md1.
question
If GDP is​ ________ potential​ output, the economy is in a​ ________ and prices and wages will tend to decrease.
A. above; boom
B. above; recession
C. below; boom
D. below; recession
answer
D. below; recession
question
Who pays the interest on government debt for the money it borrows​ today?
A. the Federal Reserve
B. the Congressional Budget Office
C. future generations of taxpayers
D. The government does not pay interest on money it borrows.
answer
C. future generations of taxpayers
question
A deficit is defined as
A. the excess of total revenues over total expenditures.
B. government spending plus transfer payments.
C. the excess of total expenditures over total revenues.
D. the sum of all past borrowing by the government.
answer
C. the excess of total expenditures over total revenues.
question
If a government had a debt of​ $300 billion and then ran deficits of​ $200 billion each year for the next three​ years, by the end of the third year its total debt would be
A. −​$300.
B. $300 billion.
C. $600 billion.
D. $900 billion.
answer
D. $900 billion.
question
Complete price stability would be the result of
A. an inflation rate of zero.
B. deflation.
C. hyperinflation.
D. inflation.
answer
A. an inflation rate of zero.
question
The government debt is defined as
A. government spending on goods and services plus transfer payments.
B. the sum of all past deficits and surpluses.
C. the excess of total expenditures over total revenues.
D. the excess of total revenues over total expenditures.
answer
B. the sum of all past deficits and surpluses.
question
A flat tax which does allow deductions for investment spending is a type of
A. excise tax.
B. investment tax.
C. consumption tax.
D. luxury tax.
answer
C. consumption tax.
question
If a government runs a deficit it can cover the gap by
A. increasing transfer payments.
B. lowering the discount rate.
C. purchasing bonds.
D. printing money.
answer
D. printing money.
question
Automatic stabilizers dampen economic fluctuations during recessions because​ ________ decrease while​ ________ increase.
A. tax​ payments; tax revenues
B. tax​ revenues; tax payments
C. unemployment​ rates; inflation rates
D. tax​ payments; transfer payments
answer
D. tax​ payments; transfer payments
question
Arguments against the balanced budget amendment include which of the​ following?
A. A balanced budget amendment would exert fiscal discipline on the federal government.
B. A balanced budget amendment would increase capital formation.
C. A balanced budget amendment would limit​ Congress' ability to use fiscal policy during a recession.
D. A balanced budget amendment would reduce the taxation burden on future generations.
answer
C. A balanced budget amendment would limit​ Congress' ability to use fiscal policy during a recession.
question
Income and revenue from taxes have a specific relationship during recessions. What is​ it?
A. incomes​ fall, tax revenue decreases
B. incomes​ rise, tax revenue decreases
C. incomes​ rise, tax revenue increases
D. incomes​ fall, tax revenue increases
answer
A. incomes​ fall, tax revenue decreases
question
During​ recessions, unemployment​ ________ while the budget deficit as a percentage of GDP​ ________.
A. decreases; increases
B. decreases; decreases
C. increases; decreases
D. increases; increases
answer
D. increases; increases
question
Government debt​ "crowds out" private investment because
A. private firms stop borrowing money when the government enters the market.
B. the​ government's increased demand for loans decreases interest rates.
C. the government can order the public to buy bonds.
D. the government and private firms compete in the same market for savings.
answer
D. the government and private firms compete in the same market for savings.
question
Budget deficits inevitably lead to inflation in
A. budget deficits have no effect on inflation.
B. small nations.
C. nations that can easily borrow from the public.
D. nations that are unable to borrow from the public.
answer
D. nations that are unable to borrow from the public.
question
Capital gains are a type of income earned from
A. the sale of assets.
B. employment in a factory.
C. interest on savings accounts.
D. all of the above
answer
A. the sale of assets.
question
Suppose the​ government's initial debt is​ $425 billion. If for the next three years the government runs deficits of​ $150, $125, and​ $200 billion, the​ government's total debt at the end of the three years will be
A. −​$50 billion.
B. $50 billion.
C. $475 billion.
D. $900 billion.
answer
D. $900 billion.
question
A large government debt can reduce the amount of​ ________ in an economy and reduce future income and real wages for citizens.
A. capital
B. employment
C.government spending
D. social benefit programs
answer
A. capital
question
During​ recessions, unemployment​ ________ while the budget deficit as a percentage of GDP​ ________.
A. increases; decreases
B. decreases; increases
C. increases; increases
D. decreases; decreases
answer
C. increases; increases
question
A surplus is defined as
A. the sum of all past borrowing by the government.
B. the excess of total revenues over total expenditures.
C. the excess of total expenditures over total revenues.
D. government spending plus transfer payments.
answer
B. the excess of total revenues over total expenditures.
question
The sum of all budget deficits and surpluses is known as the
A. government expenditure.
B. government debt.
C. budget balance.
D. fiscal year.
answer
B. government debt.
question
Suppose the federal government implemented a flat tax to replace the income​ tax, and the flat tax saved taxpayers a total of​ $5 billion. A tax change such as this could be viewed as an example of the federal government implementing
A. contractionary monetary policy.
B. expansionary monetary policy.
C. contractionary fiscal policy.
D. expansionary fiscal policy.
answer
D. expansionary fiscal policy.
question
If government spending is​ $650 billion while government revenue is​ $950 billion, the government is said to have a
A. $300 billion budget surplus.
B. $1,600 billion budget balance.
C. $300 billion budget deficit.
D. $950 billion budget deficit.
answer
A. $300 billion budget surplus.
question
Government debt​ ________ the amount of savings available to firms and thus​ ________ the amount of capital in the economy.
A. increases; increases
B. increases; decreases
C. decreases; increases
D. decreases; decreases
answer
D. decreases; decreases
question
To help pull an economy out of a recession and put additional income in the hands of the​ public, a government can force its expenditures to​ ________ its revenues and create a​ ________.
A. exceed; special taxes
B. stimulate; depression
C. exceed; deficit
D. reduce; deficit
answer
C. exceed; deficit
question
Suppose the​ government's initial debt is​ $350 billion and that during the next two years the government runs deficits of​ $90 and​ $40 billion. If during the third year the government has a​ $70 billion​ surplus, the​ government's additional debt at the end of the three years will be
A. $60 billion.
B. $200 billion.
C. $410 billion.
D. $550 billion.
answer
A. $60 billion.
question
An example of a consumption tax is
A. the Social Security tax.
B. a sales tax.
C. an income tax.
D. transfer payments.
answer
B. a sales tax.
question
Which of the following situations will arise in the domestic market following the imposition of a voluntary export​ restraint?
A. imports​ increase, domestic production​ decreases, prices decrease
B. imports​ increase, domestic production​ increases, prices increase
C. imports​ decrease, domestic production​ increases, prices decrease
D. imports​ decrease, domestic production​ increases, prices increase
answer
D. imports​ decrease, domestic production​ increases, prices increase
question
Refer to Table 18.1. The opportunity cost of a glove in Russia is
A. 1/8 of a hat.
B. 1/3 of a hat.
C. 3 hats.
D. 8 hats.
answer
C. 3 hats.
question
Suppose the nation of Arcadia produces only two​ goods, teapots and surfboards. If Arcadia produces only​ teapots, it can make 40 per day. If Arcadia produces only​ surfboards, it can make 60 per day. What is the opportunity cost of 1 teapot in​ Arcadia?
A. 2/3 of a surfboard
B. 1.5 surfboards
C. 40 surfboards
D. 60 surfboards
answer
B. 1.5 surfboards
question
Refer to Figure 18.4. With an import​ ban, what is the equilibrium price of gloves in​ Duckland?
A. $0
B. $8
C. $9
D. $12
answer
D. $12
question
Refer to Figure 18.1. The opportunity cost of hang gliders in Canada is
A. 1/4 of a bicycle.
B. 1/2 of a bicycle.
C. 2 bicycles.
D. 4 bicycles.
answer
C. 2 bicycles.
question
Which of the following groups of countries are members of​ NAFTA?
A. the United​ States, Canada, and Mexico
B. the United​ States, France, and Germany
C. the United​ States, Japan, and Mexico
D. Japan, Canada, and Mexico
answer
A. the United​ States, Canada, and Mexico
question
Refer to Figure 18.4. With free​ trade, what is the equilibrium price of gloves in​ Duckland?
A. $0
B. $8
C. $9
D. $11
answer
B. $8
question
Exporting nations often agree to voluntary export restraints in an attempt to
A. employ more workers in the importing nation.
B. decrease inflation.
C. increase global welfare.
D. avoid more restrictive trade policies.
answer
D. avoid more restrictive trade policies.
question
________ occurs when a firm cuts prices below production costs in a deliberate attempt to drive competitors out of business.
A. Voracious dumping
B. Deliberate dumping
C. Predatory dumping
D. Ravaging dumping
answer
C. Predatory dumping
question
Refer to Table 18.1. Panama has a comparative advantage in
A. hats.
B. gloves.
C. both hats and gloves.
D. neither hats nor gloves
answer
B. gloves.
question
If Italy can produce grapes at a lower opportunity cost than any other​ nation, Italy is said to have​ a(n) ________ in the production of grapes.
A. absolute advantage
B. comparative advantage
C. comparative disadvantage
D. autarky
answer
B. comparative advantage
question
Suppose Panama produces only two​ goods, bananas and hats. If Panama has a comparative advantage in​ bananas, a move toward free trade will
A. harm hat​ workers, harm banana​ workers, but benefit the nation as a whole.
B. benefit hat​ workers, harm banana​ workers, but benefit the nation as a whole.
C. benefit hat​ workers, harm banana​ workers, but harm the nation as a whole.
D. harm hat​ workers, benefit banana​ workers, but benefit the nation as a whole.
answer
D. harm hat​ workers, benefit banana​ workers, but benefit the nation as a whole.
question
Refer to Table 18.1. Mutually beneficial terms of trade between Russia and Panama are
A. 5 gloves for 3 hats.
B. 1 hat for 2 gloves.
C. 1 glove for 6 hats.
D. 1 hat for 1 glove.
answer
D. 1 hat for 1 glove.
question
The slope of the production possibilities curve is
A. positive and increasing.
B. positive.
C. positive and decreasing.
D. the opportunity cost of one good in terms of the other.
answer
D. the opportunity cost of one good in terms of the other.
question
A possible reason a nation might impose a protectionist policy such as a tariff is to
A. increase the level of imports.
B. to slow domestic production.
C. encourage specialization in the good in which the nation has a comparative advantage.
D. protect an infant industry from foreign competitors.
answer
D. protect an infant industry from foreign competitors.
question
Refer to Figure 18.4. With free​ trade, what is the equilibrium quantity of gloves in​ Duckland?
A. 100
B. 80
C. 60
D. 40
answer
A. 100
question
Refer to Figure 18.1. Canada has a comparative advantage in the production of
A. hang gliders.
B. bicycles.
C. both bicycles and hang gliders.
D. neither bicycles nor hang gliders.
answer
B. bicycles.
question
For a nation to have​ ________ in producing a good it must have a lower opportunity cost of producing that good than the other country.
A. a comparative advantage
B. an autarky advantage
C. an absolute advantage
D. both a comparative advantage and an absolute advantage
answer
A. a comparative advantage
question
Refer to Figure 18.4. With a tariff or​ quota, what is the equilibrium quantity of gloves in​ Duckland?
A. 100
B. 80
C. 60
D. 40
answer
B. 80
question
The argument that calls for the trade protection of only newly developing industries is known as the​ ________ argument.
A. predatory dumping
B. learning by doing
C. infant industry
D. developing nation
answer
C. infant industry
question
As a​ whole, nations are better off after trade and specialization because
A. nations experience an inward shift of their production possibilities curve.
B. nations can consume along their consumption possibilities​ curve, which is outside of their production possibilities curve.
C. nations can consume along their consumption possibilities​ curve, which is inside of their production possibilities curve.
D. nations can consume along their production possibilities​ curve, which is outside of their consumption possibilities curve.
answer
B. nations can consume along their consumption possibilities​ curve, which is outside of their production possibilities curve.
question
Which of the following situations will arise in the domestic market following the imposition of an import​ ban?
A. imports​ increase, domestic production​ increases, prices increase
B. imports​ decrease, domestic production​ increases, prices decrease
C. imports​ decrease, domestic production​ increases, prices increase
D. imports​ increase, domestic production​ decreases, prices decrease
answer
C. imports​ decrease, domestic production​ increases, prices increase
question
Suppose the nation of Alphonia was charged with dumping electric lawnmowers in the nation of Omegalon. The charge of dumping electric lawnmowers in the Omegalon market means that Alphonia was accused of
A. selling counterfeits−branded electric lawnmowers in Omegalon.
B. selling electric lawnmowers below cost or below domestic prices.
C. discarding electric lawnmowers which would not sell in their home country.
D. selling faulty electric lawnmowers in Omegalon.
answer
B. selling electric lawnmowers below cost or below domestic prices.
question
Referring to Figure​ 19.1, U.S. goods will become cheaper in Mexico if the exchange rate goes from​ ________ to​ ________ pesos to the dollar.
A. 11; 13
B. 12; 11
C. 10; 14
D. 12; 13
answer
B. 12; 11
question
An appreciation is
A. a decrease in the trade deficit.
B. a decrease in the value of currency.
C. an increase in the value of currency.
D. an increase in the trade surplus.
answer
C. an increase in the value of currency.
question
A market exchange rate which has been adjusted for inflation is called a
A. foreign market price index.
B. domestic exchange factor.
C. nominal exchange rate.
D. real exchange rate.
answer
D. real exchange rate.
question
Suppose iPhones cost 180 euros and 240 dollars in Belgium and the United​ States, respectively, while binoculars cost 60 euros and 75 dollars in Belgium and the United​ States, respectively. If the exchange rate is 0.8​ euros/dollar, the law of one price​ ________ for iPhones and​ ________ for binoculars.
A. holds; does not hold
B. holds; holds
C. does not​ hold; holds
D. does not​ hold; does not hold
answer
C. does not​ hold; holds
question
According to the theory of purchasing power​ parity, the exchange rate between two countries is determined by
A. the interest rates in the two countries.
B. government spending in the two countries.
C. the difference in the overall price levels in the two countries.
D. the unemployment rates in the two countries.
answer
C. the difference in the overall price levels in the two countries.
question
Referring to Figure​ 19.2, the effect of a decrease in Japanese prices is represented by a movement from point
A. c to b.
B. c to d.
C. d to a.
D. d to c.
answer
D. d to c.
question
An increase in Swiss prices will cause
A. an increase in the supply of U.S. dollars and a decrease in the exchange rate of Swiss francs per dollar.
B. an increase in the demand for U.S. dollars and an increase in the exchange rate of Swiss francs per dollar.
C. a decrease in the supply of U.S. dollars and an increase in the exchange rate of Swiss francs per dollar.
D. a decrease in the demand for U.S. dollars and a decrease in the exchange rate of Swiss francs per dollar.
answer
C. a decrease in the supply of U.S. dollars and an increase in the exchange rate of Swiss francs per dollar.
question
If the dollar to euro exchange rate moves from 1.1 to 0.9 dollars per​ euro, then the dollar has​ ________ and the euro has​ ________.
A. depreciated; appreciated
B. appreciated; appreciated
C. depreciated; depreciated
D. appreciated; depreciated
answer
D. appreciated; depreciated
question
If the dollar depreciates against the British​ pound, U.S. goods sold in​ ________ would become less expensive and British goods sold in​ ________ would become more expensive.
A. Great​ Britain; Great Britain
B. Great​ Britain; the United States
C. the United​ States; the United States
D. the United​ States; Great Britain
answer
B. Great​ Britain; the United States
question
If the price of papayas is 12 baht in Thailand and the exchange rate is 30 baht per​ dollar, then what is the dollar price of​ papayas?
A. $0.40
B. $2.50
C. $2.90
D. $26.00
answer
A. $0.40
question
Spending on goods from a country will​ ________ as the value of its currency gets cheaper against the U.S. dollar.
A. reverse
B. increase
C. decrease
D. go to other countries
answer
B. increase
question
Referring to Figure​ 19.2, a depreciation of the dollar is represented by a movement from point
A. a to c.
B. c to a.
C. b to a.
D. c to d.
answer
A. a to c.
question
Referring to Figure​ 19.2, the effect of a decrease in U.S. interest rates is represented by a movement from point
A. d to a.
B. b to c.
C. c to d.
D. c to b.
answer
B. b to c.
question
If the yen to dollar exchange rate is​ 115, the U.S. price index is​ 140, and the Japanese price index is​ 165, what is the U.S. real exchange​ rate?
A. 74.52
B. 97.58
C. 135.55
D. 200.87
answer
B. 97.58
question
If the U.S. real exchange rate​ decreases, U.S. imports will​ _______ and U.S. exports will​ _______.
A. fall; fall
B. rise; fall
C. rise; rise
D. fall; rise
answer
D. fall; rise

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