Reference no: EM131316461

ECONOMICS FOR MANAGERS ASSESSMENT: EXAM
Question 1
Overseas investments by U.S. citizens are recorded as credit items in the capital account of the U.S. balance of payments.

True
False

Question 2
Under a fixed or controlled exchange rate system, if the United States wanted to increase the value of the dollar, it could buy foreign currencies with dollars.

True
False

Question 3
Since World War II, international exchange rates have been

fixed all the time
floating all the time
fixed most of the time until the early 1970s, and floating most of the time since then
determined by the use of exchange controls

Question 4
Under a system of fixed exchange rates, excess demand for foreign currency at the official exchange rate would cause

the exchange rate to rise
the exchange rate to fall
the government to buy foreign currency from the country's importers
the government to sell foreign currency to the country's importers

Question 5
The course of international monetary policy is directed primarily by the

Federal Reserve
World Bank
International Monetary Fund
leaders of the Group of Seven nations

Question 6
Overseas investments by U.S. citizens show up in the U.S. balance of payments as

credit items
debit items
current account items
investment income

Question 7
A debit item on the U.S. balance of payments is any transaction that

results in a loss by U.S. sellers
results in a loss by U.S. buyers
makes foreigners use up their holdings of U.S. dollars
makes U.S. dollars available to foreigners

Question 8
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 9
When a U.S. citizen invests in foreign assets, the transaction is recorded in the balance of payments as a

credit in capital account
debit in the capital account
credit in the current account
debit in the current account

Question 10
Since World War II, the importance of gold in international exchange has increased.

True
False

Question 11
A freely floating exchange rate exists when

governments set pegs for the exchange rate but occasionally adjust them
offshore banks determine the exchange rate
supply and demand forces are allowed to determine the rate at which currencies are exchanged for each other
governments use international reserves only to influence exchange rates

Question 12
An appreciation of the U.S. dollar would

encourage foreigners to invest in the United States
discourage foreigners from buying U.S. goods
discourage the travel abroad of U. S. citizens
encourage foreign travel in the United States

Question 13
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 14
Under a system of floating exchange rates, increased demand of U.S. citizens for Japanese goods will cause

the Japanese yen to depreciate against the U.S. dollar
the U.S. dollar to appreciate against the Japanese yen
the Japanese yen to appreciate against the U.S. dollar
the exchange rate between the Japanese yen and the U.S. dollar to remain unchanged

Question 15
Under the gold standard, a nation experiencing chronic trade deficits had to increase its money supply while reducing its holdings of gold.

True
False

Question 16
Appreciation of the U.S. dollar encourages travel abroad by U.S. citizens.

True
False

Question 17
If trade between the United States and Canada were totally free of restrictions, the incomes of most Canadian workers would decrease.

True
False

Question 18
The revenue and protective purposes of a tariff are largely incompatible.

True
False

Question 19
Using tariffs to support diversification of a nation's industrial structure

has little application to developing countries
is based on the need to protect high domestic wages
is based on the need to make the economy less vulnerable to demand fluctuations for its products
is designed to encourage specialization by the nation's producers in just one or a few goods

Question 20
In comparing a revenue tariff versus a protective tariff on the same good, a revenue tariff would tend to be

less than a protective tariff
greater than a protective tariff
equal to a protective tariff
greater than or equal to a protective tariff

Question 21
The General Agreement on Tariffs and Trade (GATT) was replaced by the World Trade Organization (WTO).

True
False

Question 22
The rule of origin defines the maximum percentage of a country's exported product that can be sold in the United States.

True
False

Question 23
Tariff protection

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 24
A provision that permits raising tariffs if domestic producers are suffering under an existing tariff is known as

a trading bloc
exchange control
antidumping
an escape clause

Question 25
Beginning in 2002, Economic Monetary Union members no longer print their own money.

True
False

Question 26
Chile has been invited to join the European Union.

True
False

Question 27
The principle of comparative advantage is associated with

restricting consumer choices
greater production at higher prices
specialization and exchange
comparing the efficiency of alternative tariffs

Question 28
The primary function of the Export-Import Bank is to assist in

guaranteeing markets for U.S. importers
financing exports from the United States
providing foreign currency to U.S. banking institutions
reducing tariff rates between trading nations

Question 29
Exports from China into the U.S. have most seriously impacted the

automobile industry
furniture industry
travel industry
cosmetics industry

Question 30
Although political arguments strongly favor free trade, most decisions affecting international trade are made in the economic arena.

True
False

Question 31
Who does not gain when a tariff is imposed?

domestic producers of the good
domestic workers in the protected industry
domestic consumers of the good
domestic suppliers in the protected industry

Question 32
The Export-Import Bank is owned by 150 nations, including the United States.

True
False

Question 33
Consider a tariff levied on the importer of a consumer good. The tariff is ultimately paid by

the importer
the consumer
competing foreign firms
competing domestic firms

Question 34
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 35
In the United States, income is taxed only by the federal government.

True
False

Question 36
Whether a tax is shifted forward or backward depends on the price elasticities of demand and supply.

True
False

Question 37
Which of the following taxes is not collected from the consumer on the final sale of goods and services?

consumption tax
national sales tax
value-added tax
flat tax

Question 38
The full-employment balanced budget always shows a surplus.

True
False

Question 39
The government's ability to repay the national debt is governed only by the total assets of the economy.

True
False

Question 40
When the federal budget is used as a tool for economic stabilization, the ideal goal is to

balance the budget over the entire business cycle
balance the budget each year
balance the budget during expansions
run a surplus during contractions

Question 41
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 42
A consumption tax is usually collected on

wages and salaries
interest income
dividend income
none of the above

Question 43
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 44
As interest rates rise,

the temptation to borrow increases
the cost of carrying the national debt rises
the likelihood of a surplus budget increases
the need for deficit spending to reinvigorate the economy grows

Question 45
A balanced federal budget

cannot have an expansionary effect on the economy
can have an expansionary effect on the economy if the government finances spending with taxes on idle funds
can have an expansionary effect on the economy if the government finances spending with taxes on funds that would have been used for private consumption
can have an expansionary effect on the economy if the government finances spending with taxes on funds that would have been used for private investment

Question 46
The U.S. income tax is based on the principle of

cost of service
benefit received
ability to pay
equality of sacrifice

Question 47
The U.S. national debt has declined continuously as a percentage of GDP since World War II.

True
False

Question 48
Which of the following is not a necessary characteristic for a tax to qualify as a good tax?

justifiability
convenience
being economical
equality

Question 49
The equality-of-sacrifice doctrine would require larger taxes from higher-income groups.

True
False

Question 50
The sales tax is proportional with respect to the tax base of the amount of purchases.

True
False