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Question 1 2 points
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As a percentage of GDP, the U.S. national debt held by the public is larger
than in any major European country.
True
False
Question 2
2 points
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Interest on the national debt is an insignificant part of the U.S. federal
budget.
True
False
Question 3
2 points
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The burden of a tax on a consumer good with very inelastic demand is
usually
shifted to the producer
shared equally by the producer
zero, since consumers do not decrease their purchases of the good
shifted to the final consumer
Question 4
2 points
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A national sales tax would be considered regressive in relation to income.
True
False
Question 5 2 points
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A good tax must possess the characteristic of reasonability.
True
False
Question 6 2 points
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The value of an object on which a tax is levied is known as the
tax rate
tax impact
tax base
tax incidence
Question 7 2 points
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The size of the national debt relative to GDP will not be reduced by
paying off some of the debt
lowering the federal deficit
having the GDP grow faster than the debt
having creditors forgive part of the debt
Question 8 2 points
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The equality-of-sacrifice doctrine of taxation is based on the
increasing marginal utility of income
increasing marginal utility of government transfer payments
diminishing marginal utility of income
diminishing marginal utility of government transfer payments
Question 9 2 points
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A deficit budget adds to the national debt.
True
False
Question 10
2 points
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Reducing the national debt would increase the money supply.
True
False
Question 11
2 points
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The actual deficit is a poor measure of fiscal policy.
True
False
Question 12
2 points
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When the government uses tax revenue to pay off portions of the national
debt, total purchasing power in the economy
increases
decreases
is not affected at any level
remains the same but changes individually
Question 13
2 points
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Which of the following is not a necessary characteristic for a tax to qualify
as a good tax?
justifiability
convenience
being economical
reasonable
Question 14
2 points
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A direct tax is one that cannot be shifted.
True
False
Question 15
2 points
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The best example of a direct tax is a(n)
excise tax
liquor tax
sales tax
income tax
Question 16
2 points
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According to the equality-of-sacrifice doctrine, proportional income taxes
impose a(n)
greater sacrifice on lower-income households
lesser sacrifice on lower-income households
greater sacrifice on higher-income households
equal sacrifice on all income levels
Question 17
2 points
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If the primary purpose of taxes was to raise sufficient revenue to cover the
costs of government-provided services, a balanced budget would be an ongoing
target.
True
False
Question 18
2 points
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Under the gold standard, a country experiencing a gold outflow
has a balance of payments surplus
had an increasing money supply
experienced a decline in output
experienced an increase in output
Question 19
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Special Drawing Rights are issued by the International Monetary Fund
and are a principal source of international reserves.
True
False
Question 20
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The demand curve for foreign exchange is
downward sloping
upward sloping
horizontal, because no individual country can influence the price of
foreign exchange
dependent on the supply of foreign exchange
Question 21
2 points
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In an attempt to solve the problem of the overvalued dollar in the early
1970s, the United States
revalued the dollar, which made foreign exchange cheaper
decreased the price of gold in terms of the dollar
devalued the dollar, which made foreign exchange cheaper
devalued the dollar, which made foreign exchange more expensive
Question 22
2 points
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The balance of payments is more like an income statement than a
balance sheet.
True
False
Question 23
2 points
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As foreign currency becomes less expensive in terms of the U.S. dollar,
foreign goods become cheaper to U.S. citizens
foreign goods become more expensive to U.S. citizens
the U.S. demand curve for foreign currency shifts to the left
the U.S. demand curve for foreign currency shifts to the right
Question 24
2 points
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When Japanese investors who own hotels in Hawaii receive profits from
their hotel operations, the receipt of such profits is recorded in the balance of
payments as a
current account item
capital account item
settlement account item
unilateral transfer
Question 25
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The International Monetary Fund was established to stabilize exchange
rates and to provide temporary assistance to nations with deficit balance of
payments.
True
False
Question 26
2 points
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A nation on the gold standard would convert its currency into gold on
demand.
True
False
Question 27
2 points
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Under the gold standard, a country that is experiencing a gold outflow
has a balance of payments deficit
has a shrinking money supply
is experiencing a fall in output
all of the above
Question 28
2 points
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If the World Bank lends $10 million to the government of Fiji to develop
new sugar cane fields, that would be seen on Fiji’s international balance of
payments as a
unilateral transfer
settlement account entry
capital account entry
service transaction in the current account
Question 29
2 points
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In recent years, the IMF has altered its mission from one of providing
long-term loans to developing nations to one of providing short-run financial
support for dealing with balance-of-payments problems.
True
False
Question 30
2 points
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When U.S. citizens travel on United Airlines to Japan, this constitutes a
debit in the U.S. balance of payments.
True
False
Question 31
2 points
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One factor that definitely did not contribute to the deficit in the U.S.
balance of payments during 2005 was
the war in Iraq
sales of military equipment to foreign nations
the large federal government deficit in the United States
investments abroad by U.S. companies
Question 32
2 points
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The balance of payments and the balance of trade are
exactly the same thing
not exactly the same thing but are always equal
two different and unrelated things
two different things, but one is a part of the other
Question 33
2 points
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The United States devalued the dollar twice in the 1970s to alleviate the
world’s dollar shortage.
True
False
Question 34
2 points
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The 1992 plan of the European Union calls for
the complete mobility of economic resources across EU borders
establishing the British pound as the common currency
a central banking system in Zurich
a federal tax system similar to that of the United States
Question 35
2 points
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The United States exports more to the Economic Union than it imports.
True
False
Question 36
2 points
Tariff protection
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encourages the optimum use of scarce resources
has no impact on use of scarce resources
prevents the optimum use of scarce resources
eliminates the scarcity of resources
Question 37
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In a large and diversified economy like the United States, international
trade usually hurts more people domestically than it helps.
True
False
Question 38
2 points
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Dumping refers to the practice of
flooding a foreign market with large quantities of a good
selling a product abroad at a price below cost or below the
domestic price
exporting inexpensive products to foreign countries
selling surplus goods abroad with counterfeit brand names
Question 39
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The only factor determining whether a country can develop a
comparative advantage in production is the degree to which it has a highly skilled
labor force.
True
False
Question 40
2 points
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In dollar value, the United States is the largest importer in the world.
True
False
Question 41
2 points
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Which of the following countries is not a member of the European
Union?
Switzerland
Portugal
Sweden
Ireland
Question 42
2 points
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During times of recession, retaining the domestic economy’s money at
home is a valid argument for restricting imports.
True
False
Question 43
2 points
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Since the Civil War, the international trade policies of the United States
have been generally
for free trade
against free trade
in favor of free trade since the 1930s
increasingly against free trade since the 1930s
Question 44
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The largest trading partner of the United states is
Mexico
Canada
European Union
Japan
Question 45
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If a tariff is used to protect U.S. jobs,
income is transferred from consumers to protected producers
national production and income increase
national production rises but income decreases
the effect is neutral since imports are replaced by domestic goods
Question 46
2 points
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The most-favored-nation clause was created in the
Trade Expansion Act of 1962
Marshall Plan
Reciprocal Trade Agreements Act of 1934
Canadian-American Trade Act
Question 47
2 points
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Consider a country that initially does not interfere with imports of a given
good. If the government then imposes a tariff on that good, the supply curve
shifts downward
remains unchanged
slopes upward less steeply
shifts upward
Question 48
2 points
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Only in developing nations would one expect the value of either exports
or imports to exceed 200 percent of gross national product.
True
False
Question 49
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The revenue and protective purposes of a tariff are largely incompatible.
True
False
Question 50
2 points
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The North American Free Trade Agreement is likely to lead to
decreased employment in some U.S. industries
decreased employment in all U.S. industries
increased employment in all U.S. industries
no changes in U.S. employment