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Question 1 2 points Save 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 Save Interest on the national debt is an insignificant part of the U.S. federal budget. True False Question 3 2 points Save 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 Save A national sales tax would be considered regressive in relation to income. True False Question 5 2 points Save A good tax must possess the characteristic of reasonability. True False Question 6 2 points Save 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 Save 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 Save 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 Save A deficit budget adds to the national debt. True False Question 10 2 points Save Reducing the national debt would increase the money supply. True False Question 11 2 points Save The actual deficit is a poor measure of fiscal policy. True False Question 12 2 points Save 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 Save 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 Save A direct tax is one that cannot be shifted. True False Question 15 2 points Save The best example of a direct tax is a(n) excise tax liquor tax sales tax income tax Question 16 2 points Save 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 Save 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 Save 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 2 points Save Special Drawing Rights are issued by the International Monetary Fund and are a principal source of international reserves. True False Question 20 2 points Save 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 Save 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 Save The balance of payments is more like an income statement than a balance sheet. True False Question 23 2 points Save 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 Save 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 2 points Save 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 Save A nation on the gold standard would convert its currency into gold on demand. True False Question 27 2 points Save 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 Save 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 Save 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 Save 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 Save 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 Save 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 Save The United States devalued the dollar twice in the 1970s to alleviate the world’s dollar shortage. True False Question 34 2 points Save 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 Save The United States exports more to the Economic Union than it imports. True False Question 36 2 points Tariff protection Save 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 2 points Save 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 Save 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 2 points Save 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 Save In dollar value, the United States is the largest importer in the world. True False Question 41 2 points Save Which of the following countries is not a member of the European Union? Switzerland Portugal Sweden Ireland Question 42 2 points Save 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 Save 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 2 points Save The largest trading partner of the United states is Mexico Canada European Union Japan Question 45 2 points Save 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 Save 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 Save 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 Save 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 2 points Save The revenue and protective purposes of a tariff are largely incompatible. True False Question 50 2 points Save 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