Economics

5 years ago

If the inflation rate is 7 percent, real GDP growth is 2 percent, and the current budget deficit is ...

If the inflation rate is 7 percent, real GDP growth is 2 percent, and the current budget deficit is $100 billion, what must the current national debt be if the debt-GDP ratio is to remain the same?
A) $1,111 billion
B) $2,000 billion
C

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6 years ago

During 1998-2001 the government budget

During 1998-2001 the government budget
A) moved deeper into deficit and caused a substantial increase in borrowing from foreign investors.
B) moved into surplus but the beneficial effect was largely offset by a drop in household saving.

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5 years ago

Persistent deficit after 1980 was almost entirely due to

Persistent deficit after 1980 was almost entirely due to
A) higher share of expenditures in GDP.
B) lower tax revenue.
C) lower share of expenditures in GDP.
D) Higher tax revenue.

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5 years ago

Return to deficit after 2001 was due to

Return to deficit after 2001 was due to
A) a drop in the revenue share.
B) an increase in the expenditure share.
C) both a drop in the revenue share and an increase in the expenditure share.
D) recession.

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6 years ago

The gap between Federal expenditures and Federal revenues after 1980 was caused primarily by

The gap between Federal expenditures and Federal revenues after 1980 was caused primarily by
A) the recessions which occurred in the 1980s.
B) a substantial decrease in Federal revenues.
C) a substantial increase in Federal expenditure

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5 years ago

Changes in tax laws in 1993

Changes in tax laws in 1993
A) reduced Federal revenues by making the tax code more regressive.
B) reduced Federal revenues by making the tax code more progressive.
C) increased Federal revenues by making the tax code more regressive.

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6 years ago

Between 1995 and 1998, Federal tax revenues from ________ increased sharply.

Between 1995 and 1998, Federal tax revenues from ________ increased sharply.
A) the personal income tax
B) the corporate profits tax
C) social insurance taxes
D) all of the above

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5 years ago

From the end of the World War II, the debt-GDP ratio in the United States fell almost without ...

From the end of the World War II, the debt-GDP ratio in the United States fell almost without interruption to a low point in ________, which marked the beginning of a long-run climb.
A) 1955
B) 1962
C) 1974
D) 1984
E) 1990

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6 years ago

A central cause of the rising debt-GDP ratio in the United States during the 1980s and 1990s was

A central cause of the rising debt-GDP ratio in the United States during the 1980s and 1990s was
A) the tax cuts of the early 1980s.
B) continuous increases in the military portion of the federal budget.
C) overly-generous indexation o

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6 years ago

The government deficit does NOT place a burden on future generations when

The government deficit does NOT place a burden on future generations when
A) taxes are eventually raised to pay interest on the additional debt.
B) the borrowed funds are used for productive government investment.
C) borrowing from for

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5 years ago

In a recession, automatic stabilization ________ tax revenues and ________ the debt-GDP ratio.

In a recession, automatic stabilization ________ tax revenues and ________ the debt-GDP ratio.
A) lowers, raises
B) lowers, lowers
C) raises, raises
D) raises, lowers

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6 years ago

The IS-LM model tells us that output remains constant when a tax cut is combined with ________ in ...

The IS-LM model tells us that output remains constant when a tax cut is combined with ________ in the money supply, with the interest rate ________ its initial level.
A) an increase, rising above
B) an increase, falling below
C) a decr

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5 years ago

A growing consensus among economists is that ________ policy is better suited for controlling GDP ...

A growing consensus among economists is that ________ policy is better suited for controlling GDP because of the promptness of ________ in making policy decisions.
A) monetary, the Federal Reserve
B) monetary, Congress
C) fiscal, the F

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6 years ago

Most economists would consider it sensible for the federal government to ________ its current ...

Most economists would consider it sensible for the federal government to ________ its current operating and capital expenditure budgets and then ________.
A) consolidate, never borrow to fund it
B) consolidate, borrow what is necessary to f

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6 years ago

Under the current Social Security System,

Under the current Social Security System,
A) only tax rates are changed yearly to help cover changes increases in benefits.
B) only benefits are changed to balance the budget of the Social Security System.
C) benefits are changed only

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6 years ago

Direct investment in the stock market by the Social Security trust fund

Direct investment in the stock market by the Social Security trust fund
A) does not require that new money be brought into the system.
B) would be more cost-effective than creating private accounts for each person in the Social Security sys

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5 years ago

International crowding out in the U.S. economy occurs when

International crowding out in the U.S. economy occurs when
A) relatively high U.S. interest rates weaken the dollar, ceteris paribus.
B) relatively high U.S. interest rates strengthen the yen, ceteris paribus.
C) relatively high U.S. i

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5 years ago

The foreign exchange rate refers to

The foreign exchange rate refers to
A) the rate of change in a nation's international investment position.
B) the amount of one nation's money that can be obtained in exchange for a unit of another nation's currency.
C)

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5 years ago

Which of the following would give rise to a credit in the balance of payments?

Which of the following would give rise to a credit in the balance of payments?
A) loans to foreigners
B) increase in foreign bank loans to U.S. companies
C) reductions in foreign holdings of U.S. assets
D) U.S hoarding of foreign

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5 years ago

The ballooning of the U.S. foreign debt to 500 billion dollars by 1988 implied that

The ballooning of the U.S. foreign debt to 500 billion dollars by 1988 implied that
A) a foreign trade surplus is required to reduce the interest payment burden.
B) a foreign trade deficit is required to reduce the interest payment burden.

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5 years ago

The payment of veterans benefits to U.S. servicemen retired in the Philippines would be included in ...

The payment of veterans benefits to U.S. servicemen retired in the Philippines would be included in ________ section in the calculation of the U.S. balance of payments.
A) only the capital account
B) both the capital account and the transfe

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6 years ago

The "official reserve transactions balance" will be positive when

The "official reserve transactions balance" will be positive when
A) the current account is in surplus.
B) exports exceed imports.
C) U.S. official holdings of foreign exchange are falling.
D) the current account and cap

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6 years ago

A nation's net international investment position moves toward surplus when

A nation's net international investment position moves toward surplus when
A) that nation runs a current account deficit.
B) that nation runs a current account surplus.
C) that nation runs a capital account surplus.
D) none o

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5 years ago

Exports are recorded in the balance of payments table of the exporting nation as

Exports are recorded in the balance of payments table of the exporting nation as
A) current account credits.
B) current account debits.
C) capital account credits.
D) capital account debits.

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6 years ago

If U.S. firms sell some of their holdings of Treasury bills to other nations, this is recorded in ...

If U.S. firms sell some of their holdings of Treasury bills to other nations, this is recorded in the U.S. balance of payments table as a
A) current account credit.
B) current account debit.
C) capital account credit.
D) capital a

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5 years ago

If the United States imports another good in exchange for assets transferred from an American bank ...

If the United States imports another good in exchange for assets transferred from an American bank to a foreign bank, in the U.S. balance of payments table
A) the current account deficit rises and so the balance of payments deficit rises.
B

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5 years ago

The experiences of countries with fixed exchange rates and unrestricted capital flows did NOT ...

The experiences of countries with fixed exchange rates and unrestricted capital flows did NOT include
A) withdrawal of foreign capital.
B) appreciation of the nominal exchange rate.
C) a stock market crash.
D) rising interest rate

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6 years ago

Which of the following does NOT create a demand for Swiss francs?

Which of the following does NOT create a demand for Swiss francs?
A) the repayment of a loan from a Swiss company to an Italian bank
B) the desire of a British company to purchase a Swiss factory
C) the declaration of a dividend by a S

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6 years ago

If the Federal Reserve intervenes in the foreign-exchange markets and buys foreign currencies

If the Federal Reserve intervenes in the foreign-exchange markets and buys foreign currencies
A) the U.S. money supply rises and foreign currencies depreciate.
B) the U.S. money supply falls and foreign currencies depreciate.
C) the U.

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5 years ago

Suppose the United States and Canada were the only two countries in the world. There is an excess ...

Suppose the United States and Canada were the only two countries in the world. There is an excess supply of U.S. dollars on the foreign-exchange market. This implies that
A) there is also an excess supply of Canadian dollars.
B) the Canadia

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5 years ago

The failure of U.S. net exports to improve dramatically in the mid-1980s despite the weakening of ...

The failure of U.S. net exports to improve dramatically in the mid-1980s despite the weakening of the dollar suggests that
A) U.S. industries supply of competitive goods was inelastic over the period.
B) LDC debt repayment schedules and lac

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5 years ago

Suppose the price of the dollar falls from 150 to 120 yen. As a result, Japanese purchases of ...

Suppose the price of the dollar falls from 150 to 120 yen. As a result, Japanese purchases of $35,000 Cadillacs rise from 2,000 to 2,100 per year. This is the kind of event underlying the reason for drawing
A) a downward-sloping demand curve for

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6 years ago

Suppose the price of the dollar falls from 150 to 120 yen. As a result, Japanese purchases of ...

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5 years ago

Suppose that "fundamentals" have determined an exchange rate of 130 yen to the dollar. ...

Suppose that "fundamentals" have determined an exchange rate of 130 yen to the dollar. If the Federal Reserve wishes to maintain an exchange rate of 140 yen to the dollar, it must meet the private excess ________ dollars in the dollar-yen m

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5 years ago

Which of the following is likely to upset the prediction of the purchasing power parity theorem?

Which of the following is likely to upset the prediction of the purchasing power parity theorem?
A) differing rates of technical change in the two nations
B) discovery of new natural resources in one of the nations
C) differing governm

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5 years ago

Suppose that a computer memory chip costs 600 yen in Japan and $3 in the United States and that the ...

Suppose that a computer memory chip costs 600 yen in Japan and $3 in the United States and that the exchange rate was 250 yen/$. In this situation traders would ________ increasing the ________ and causing the dollar to ________.
A) buy chips in

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5 years ago

If inflation is greater in Mexico by 10% than it is in the rest of the world then the purchasing ...

If inflation is greater in Mexico by 10% than it is in the rest of the world then the purchasing power parity theory predicts that the
A) Mexican peso would appreciate.
B) Mexican peso would depreciate.
C) Mexican peso would remain sta

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6 years ago

In the first half of 1989 the inflation rate in the United States exceeded that of Japan yet the ...

In the first half of 1989 the inflation rate in the United States exceeded that of Japan yet the dollar appreciated relative to the yen. Which of the following facts would explain the failure of the PPP theory to explain the strength of the $ during

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5 years ago

If the purchasing power parity theory was valid at all times,

If the purchasing power parity theory was valid at all times,
A) the nominal exchange rate would be very volatile.
B) the real exchange rate would be the stable.
C) aggregate demand would be relatively stable.
D) All of the above.

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