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 2 points Save 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 2 points Save 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

ECON125-HK2. ECONOMICS FOR MANAGERS
(ECON125-HK2) > TAKE ASSESSMENT: EXAM 5

Question 1 2 points Save
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 2 points Save
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 2 points Save
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 2 points Save
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 2 points Save
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 2 points Save
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 2 points Save
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 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 9 2 points Save
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 2 points Save
Since World War II, the importance of gold in
international exchange has increased.
True
False
Question 11 2 points Save
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 2 points Save
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 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 14 2 points Save
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 2 points Save
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 2 points Save
Appreciation of the U.S. dollar encourages
travel abroad by U.S. citizens.
True
False
Question 17 2 points Save
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 2 points Save
The revenue and protective purposes of a
tariff are largely incompatible.
True
False
Question 19 2 points Save
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 2 points Save
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 2 points Save
The General Agreement on Tariffs and Trade
(GATT) was replaced by the World Trade Organization (WTO).
True
False
Question 22 2 points Save
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 2 points Save
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 2 points Save
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 2 points Save
Beginning in 2002, Economic Monetary Union
members no longer print their own money.
True
False
Question 26 2 points Save
Chile has been invited to join the European
Union.
True
False
Question 27 2 points Save
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 2 points Save
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 2 points Save
Exports from China into the U.S. have most
seriously impacted the
automobile industry
furniture industry
travel industry
cosmetics industry
Question 30 2 points Save
Although political arguments strongly favor
free trade, most decisions affecting international trade are made in the
economic arena.
True
False
Question 31 2 points Save
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 2 points Save
The Export-Import Bank is owned by 150
nations, including the United States.
True
False
Question 33 2 points Save
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 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 35 2 points Save
In the United States, income is taxed only by
the federal government.
True
False
Question 36 2 points Save
Whether a tax is shifted forward or backward
depends on the price elasticities of demand and supply.
True
False
Question 37 2 points Save
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 2 points Save
The full-employment balanced budget always
shows a surplus.
True
False
Question 39 2 points Save
The government’s ability to repay the national
debt is governed only by the total assets of the economy.
True
False
Question 40 2 points Save
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 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 42 2 points Save
A consumption tax is usually collected on
wages and salaries
interest income
dividend income
none of the above
Question 43 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 44 2 points Save
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 2 points Save
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 2 points Save
The U.S. income tax is based on the principle
of
cost of service
benefit received
ability to pay
equality of sacrifice
Question 47 2 points Save
The U.S. national debt has declined
continuously as a percentage of GDP since World War II.
True
False
Question 48 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
equality
Question 49 2 points Save
The equality-of-sacrifice doctrine would
require larger taxes from higher-income groups.
True
False
Question 50 2 points Save
The sales tax is proportional with respect to
the tax base of the amount of purchases.
True
False