Questions:
1) WHICH ONE OF THE FOLLOWING HELPS PRESERVE INCENTIVES TO DEVELOP NEW TECHNOLOGIES?
A) TARIFFS
B) INCOME TAXES
C) PATENTS
D) QUANTITY RESTRICTIONS ON IMPORTS
2) THE RIGHT TO OPENLY SUPPORT AND TO ELECT LEADERS IN A DEMOCRATIC WAY IS KNOWN AS
A) POLITICAL FREEDOM
B) EXTERNAL FREEDOM
C) ECONOMIC FREEDOM
D) CONSTITUTIONAL FREEDOM
3) WHEN THERE IS ECONOMIC GROWTH IS A COUNTRY, THE DISTRIBUTION OF OUTPUT AND INCOME
A) WILL ALWAYS BECOME LESS EQUAL
B) WILL BE UNAFFECTED
C) WILL ALWAYS BECOME MORE EQUAL
D) CAN CHANGE IN ANY NUMBER OF WAYS
4) WHEN PRESENT, THE THREAT OF NATIONALIZATION INHIBITS ECONOMIC GROWTH
A) TRUE
B) FALSE
5) THE SPEED AT WHICH THE PRODUCTION POSSIBILITIES CURVE SHIFTS OUTWARD INDICATES
A) THE PROCESS OF RESEARCH AND DEVELOPMENT
B) THE RATE OF ECONOMIC GROWTH
C) THE LEVEL OF LABOR FORCE PARTICIPATION
D) THE RATE OF UNEMPLOYMENT
6) WHICH OF THE FOLLOWING WOULD TYPICALLY BE CONSIDERED A COST OF ECONOMIC GROWTH?
A) DECREASED LEVELS OF HEALTH
B) URBAN CONGESTION
C) INCREASED ILLETERACY
D) INCREASED POVERTY
7) OTHER FACTORS HELD CONSTANT, A RISE IN THE PRICE LEVEL IN JAPAN THAT EXCEEDS THE RISE IN THE PRICE LEVEL IN OTHER COUNTRIES WILL MOST LIKELY RESULT IN
A) DECREASE IN THE SUPPLY OF THE JAPANESE YEN
B) AN INCREASE IN THE SUPPLY OF JAPANESE GOODS
C) A DEPRECIATE OF THE DOLLAR
D) A DECLINE IN THE LEVEL OF JAPANESE EXPORTS
12) IF THE INFLATION RATE IN JAPAN IS HIGHER THAN THE INFLATION RATE IN THE UNITED STATES
A) THERE WILL BE NO CHANGE IN U.S. IMPORTS FROM JAPAN
B) THERE WILL BE A DECREASE IN U.S. IMPORTS FROM JAPAN
C) THERE WILL BE AN INCREASE IN U.S. IMPORTS FROM JAPAN
D) THERE WILL BE AN INCREASE IN JAPANESE EXPORTS TO THE UNITED STATES
8) AN INCREASE IN THE SUPPLY OF A CURRENCY ON THE FOREIGN EXCHANGE MARKET WILL LEAD TO ITS DEPRECIATION, WHICH WILL MAKE ITS EXPORTS RELATIVELY AFFORDABLE IN OTHER COUNTRIES
A) TRUE
B) FALSE
9) AN INCREASE IN THE U.S. DEMAND FOR JAPANESE YEN CAUSES
A) AN INCREASE IN THE DOLLAR-PRICE OF YEN
B) AN INCREASE IN THE DEMAND FOR U.S. GOODS
C) AN INCREASE IN THE YEN-PRICE OF DOLLARS
D) A DECREASE IN THE SUPPLY OF YEN
10) WHEN A JAPANESE PERSON BUYS SOFTWARE FROM AN AMERICAN PRODUCER, THERE IS A(N)
A) DECREASE IN THE SUPPLY OF YEN IN THE FOREIGN EXCHANGE
B) INCREASE IN THE DEMAND FOR YEN IN THE FOREIGN EXCHANGE
D) DECREASE IN THE DEMAND FOR YEN IN THE FOREIGN EXCHANGE
C) INCREASE IN THE SUPPLY OF YEN IN THE FOREIGN EXCHANGE
11) THE EFFECT OF A GIFT GIVEN TO A U.S. CITIZEN FROM A FOREIGNER IS TO
A) INCREASE THE BALANCE OF PAYMENTS
B) HAVE NO EFFECT ON THE BALANCE OF PAYMENTS IF THE GIFT WAS MADE BY A FOREIGN COUNTRY
C) DECREASE THE BALANCE OF PAYMENTS
D) HAVE NO EFFECT ON THE BALANCE OF PAYMENTS IF THE GIFT WAS MADE IN THE UNITED STATES
12) THE SUPPLY OF DOLLARS IN FOREIGN EXCHANGE MARKETS IS
A) DETERMINED BY THE AMERICAN DEMAND FOR FOREIGN GOODS
B) DETERMINED BY THE FEDERAL RESERVE BOARD
C) A FUNCTION OF THE INTERNATIONAL BANKING SYSTEM
D) DETERMINED BY THE DEMAND FOR AMERICAN GOODS
13) WHICH OF THE FOLLOWING IS FALSE?
A) ONE TOOL THE FED CAN USE TO CHANGE THE MONEY SUPPLY IS TO ALTER THE RESERVE REQUIREMENT
B) IF THE FED FOLLOWS A MONETARY RULE, THE MONEY SUPPLY WILL NEVER INCREASE
C) WHEN THE FED INJECTS MORE RESERVES INTO THE BANKING SYSTEM, THE MONEY SUPPLY WILL INCREASE
D) IF THE FED WANTS TO MAINTAIN INTEREST RATES AT A GIVEN LEVEL, IT WILL HAVE TO ALLOW THE RATE OF MONEY SUPPLY GROWTH TO VARY
14) THE SHORT-RUN EFFECT OF AN INCREASE IN THE SUPPLY OF MONEY IS
A) AN INCREASE IN THE PRICE LEVEL, A DECREASE IN REAL NATIONAL INCOME, BUT AN INCREASE IN NOMINAL NATIONAL INCOME
B) AN INCREASE IN BOTH REAL NATIONAL INCOME AND THE PRICE LEVEL
C) AN INCREASE IN REAL NATIONAL INCOME BUT NOT IN THE PRICE LEVEL
D) AN INCREASE IN THE PRICE LEVEL BUT NOT IN REAL NATIONAL INCOME
15) THE FED'S OPEN MARKET COMMITTEE ENGAGES IN CONTRATIONARY MONETARY POLICY BY
A) SELLING BONDS
B) LOWERING INTEREST RATES
C) BUYING BONDS
D) CREATING EXCESS RESERVES
16) TO THE EXTENT THAT THERE ARE TIME LAGS PRESENT IN THE IMPLEMENTATION OF MONETARY POLICY, ITS EFFECTIVENESS IS LESSENED.
A) TRUE
B) FALSE
17) OPEN MARKET OPERATIONS ALTER THE LEVEL OF RESERVES IN THE BANKING SYSTEM
A) TRUE
B) FALSE
18) IN THE FED INCREASES THE DISCOUNT RATE,
A) BANKS WILL FACE A HIGHER COST OF BORROWING AND WILL PASS SOME OF THIS COST ONTO CUSTOMERS IN TERMS OF HIGHER INTEREST RATES
B) IT WILL THEN DECREASE REQUIRED RESERVE RATIO TO OFFSET ANY POSSIBLE CONTRACTIONARY EFFECT
C) IT WILL THEN INCREASE THE REQUIRED RESERVE RATIO AS WELL
D) IT WILL BE EASIER FOR BANKS TO SECURE THE RESERVES NEEDED TO SUPPORT A HIGHER VOLUME OF COMMERCIAL LOANS
19) THE DIRECT EFFECT OF AN INCREASE IN THE MONEY SUPPLY IS THAT
A) PEOPLE WILL SPEND THE EXTRA MONEY, CAUSING THE AGGREGATE DEMAND CURVE TO SHIFT TO THE RIGHT AND RESULTING IN A BOOST TO ECONOMIC ACTIVITY
B) PEOPLE WILL SPEND THE EXTRA MONEY, CAUSING THE AGGREGATE DEMAND CURVE TO SHIFT TO THE LEFT AND RESULTING IN RECESSION
C) PEOPLE WILL SAVE THE MONEY, CAUSING AN INCREASE IN BANK DEPOSITS WITH THE RESULT THAT INTEREST RATES WILL INCREASE
D) PEOPLE WILL SAVE MORE MONEY, CAUSING A DECREASE IN ECONOMIC ACTIVITY AND A FALL IN PRICES
20) ECONOMISTS WHO GENERALLY BELIEVE THAT ANY EXCESSIVE GROWTH IN THE MONEY SUPPLY WILL DO LITTLE MORE THAN CAUSE INFLATION ARE CALLED
A) MONETARISTS
B) KEYNESIANS
C) SUPPLY SIDERS
D) CLASSICALS
21) IF THE PREVAILING RATE OF INTEREST IN THE ECONOMY WERE TO RISE, WHAT EFFECT WOULD THIS HAVE ON THE MARKET PRICE OF EXISTING BONDS?
A) THE MARKET PRICE IS NOT RELATED TO THE PREVAILING RATE OF INTEREST
B) THE MARKET PRICE WOULD ALSO RISE
C) THE MARKET PRICE FALLS WHEN THE REAL INTEREST RATE IS NEGATIVE
D) THE MARKET PRICE WOULD FALL
22) TO INCREASE AGGREGATE DEMAND, THE FED WOULD
A) SELL BONDS
B) DECREASE THE MONEY SUPPLY
C) INCREASE INTEREST RATES
D) INCREASE THE MONEY SUPPLY
23) KEYNESIAN THEORY ARGUES THAT
A) DECREASE IN THE MONEY SUPPLY LEAD TO INCREASE IN THE INTEREST RATE WHICH INCREASES INVESTMENT WHICH INCREASES THE LEVEL OF REAL GDP
B) INCREASE IN THE MONEY SUPPLY LEAD TO DECREASES IN THE INTEREST RATE WHICH INCREASES INVESTMENT WHICH INCREASES THE LEVEL OF REAL GDP
C) INCREASES IN THE MONEY SUPPLY LEAD TO DECREASES IN THE INTEREST RATE WHICH DECREASES INVESTMENT WHICH DECREASES THE LEVEL OF REAL GDP
D) INCREASES IN THE MONEY SUPPLY CAUSE CONSUMERS TO SPEND MORE WHICH REDUCES THE UNEMPLOYMENT RATE AND THEREFORE INCREASES REAL GDP
24) A DIFFERENCE BETWEEN A QUOTA AND A TARIFF IS THAT
A) A TARIFF GENERATES A GREATER REDUCTION IN EXPORTS
B) A TARIFF GENERATES A HIGHER PRICE THAN A QUOTA DOES
C) THE GOVERNMENT COLLECTS REVENUES FROM A TARIFF, WHICH DOES NOT HAPPEN WITH A QUOTA
D) A QUOTA INCREASES PROFITS OF DOMESTIC PRODUCERS, WHICH DOES NOT HAPPEN WITH A TARIFF
25) IN THE UNITED STATES TODAY, IMPORTS ARE OVER
A) 22 PERCENT OF GDP
B) 26 PERCENT OF GDP
C) 14 PERCENT OF GDP
D) 18 PERCENT OF GDP
26) WHICH OF THE FOLLOWING IS NOT A BENEFIT OF INTERNATIONAL TRADE?
A) IT RESULTS IN A TRANSMISSION OF IDEAS
B) IT INCREASES OVERALL OUTPUT
C) IT RESULTS IN THE TRANSMISSION OF NEW PROCESSES
D) IT PROMOTES SELF SUFFICIENCY
27) SUPPOSE AN INDUSTRY RECEIVES PROTECTION FROM THE GOVERNMENT IN THE FORM OF TARIFFS. A NUMBER OF YEARS LATER, IT IS OBSERVED THAT THE QUANTITY SUPPLIED BY DOMESTIC FIRMS HAD DECREASED AND THAT THE DOMESTIC PRICE WAS SUBTANTIALLY GREATER THAN THE WORLD PRICE. WE COULD CONCLUDE THAT
A) REMOVAL OF THE TARIFF WOULD ACTUALLY CAUASE DOMESTIC OUTPUT TO INCREASE AND PRICE TO FALL
B) THE TARIFF HAD BEEN IMPOSED TO COUNTERACT DUMPING AND HAD BEEN SUCCESSFUL
C) REMOVAL OF THE TARIFF WOULD CAUSE DOMESTIC OUTPUT TO FALL EVEN FURTHER
D) THE TARIFF HAD BEEN IMPOSED TO PROTECT AN INFANT INDUSTRY AND THAT THE INDUSTRY STILL NEEDED PROTECTION
28) THE EFFECT OF A TARIFF IS TO SHIFT THE DEMAND CURVE FOR A GOOD TO THE RIGHT
A) TRUE
B) FALSE
29) WHICH ONE OF THE FOLLOWING IS FALSE?
A) AS IMPORTS INTO A COUNTRY INCREASE, ITS UNEMPLOYMENT RATE WILL INCREASE
B) A NATION PAYS FOR ITS IMPORTS THROUGH ITS EXPORTS
C) TRADE ALLOWS EACH COUNTRY TO SPECIALIZE IN PRODUCING THOSE GOODS FOR WHICH IT ENJOYS A COMPARATIVE ADVANTAGE
D) BOTH TARIFFS AND QUOTAS REDUCE THE VOLUME OF TRADE
30) THE INDUSTRIES RECEIVING THE MOST IMPORT PROTECTIONS HAVE EXPERIENCED THE BIGGEST INCREASE IN EMPLOYMENT
A) TRUE
B) FALSE