Figure 19.1
Referring to Figure 19.1, if the exchange rate is currently 14 pesos per dollar, then we
expect the dollar to ________ and the peso to ________.
A) depreciate; depreciate
B) depreciate; appreciate
C) appreciate; depreciate
D) appreciate; appreciate
Fearing that the economy was overheating, policymakers instituted a temporary tax
surcharge in 1968. This temporary surtax
A) successfully reduced consumption sufficiently to cool down the economy.
B) reduced savings but had little effect on consumption.
C) drastically reduced both savings and consumption.
D) increased savings and reduced consumption.
If BMW (a German company) earns profits while operating a business in the United
States, then the value of the profit is entered as a ________ in the U.S. ________
account.
A) negative; current account
B) positive; current account
C) negative; financial account
D) negative capital account
When using the formula PV = K/(1+i)t to calculate the present value of a future
payment, t represents:
A) the number of periods in the future that the future payment is received.
B) the present value.
C) the nominal interest rate.
D) the real interest rate.
Money market mutual funds are included in
A) M1.
B) M2.
C) both M1 and M2.
D) neither M1 nor M2.
Recall Application 3, “Are They Really Dumping?” to answer the following questions:
Based on what you learned from the application, how will the “constructed value”
method used by the Department of Commerce affect the number of cases that it will
deem as dumping?
A) The Department of Commerce will identify fewer cases of dumping into the U.S.
B) The Department of Commerce will identify all cases brought in front of them as “not
dumping.”
C) The Department of Commerce will identify more cases of dumping into the U.S.
D) The Department of Commerce will correctly identify all cases as “dumping.”
Financial intermediaries are
A) salespersons who collect money from customers purchasing goods and services.
B) firms that receive funds from savers and channel them to investors.
C) firms that receive funds from investors and channel them to savers.
D) persons that advise households on investment decisions.
Figure 18.3 Refer to Figure 18.3. After trade and specialization begin, the maximum
amount of pogo sticks that Livonia can consume is
A) 120.
B) 100.
C) 80.
D) 40.
The government debt is defined as
A) the excess of total expenditures over total revenues.
B) the excess of total revenues over total expenditures.
C) government spending on goods and services plus transfer payments.
D) the sum of all past deficits and surpluses.
When the government conducts activist fiscal policy, what type of spending does it
usually use?
A) entitlement and mandatory spending
B) net interest spending
C) discretionary spending
D) strategic spending
President George W. Bush used part of the budget surplus inherited from the Clinton
administration to
A) fund tax cuts.
B) stimulate the economy that was slowing down following the end of the high-tech
investment boom.
C) increase government entitlement spending.
D) both A and B
When the demand of a country’s currency exceeds the supply of the currency at the
current exchange rate, the country experiences:
A) a balance of payments surplus.
B) a capital account surplus.
C) a balance of payments deficit.
D) a capital account deficit.
What would happen to prices if, for example, all trade unions negotiated long-term
higher nominal pay and regular across-the-board increases for workers?
A) Prices would remain unchanged.
B) Prices would likely increase.
C) Prices are not affected by nominal salary increases.
D) Prices would likely decrease.