Taxes for the most part are efficient because they retain incentives and align the values that buyers and sellers place on goods and services.
a. True
b. False
Indicate whether the statement is true or false
Question 2Which of the following had resulted from the Smithsonian agreement of 1971?
a. Devaluation of the U.S. dollar
b. Dissolution of a fixed exchange rate regime
c. Appreciation of the U.S. dollar
d. Establishment of an equilibrium exchange rate
e. Laissez-faire in the foreign exchange market
Question 3Stock in a German corporation can be purchased directly with currency from any other country.
a. True
b. False
Indicate whether the statement is true or false
Question 4A flat tax plan with a standard deduction of 25,000 in income and a tax rate of 20 would require an individual earning 100,000 to pay 15,000 in income taxes.
a. True
b. False
Indicate whether the statement is true or false
Question 5The Bretton Woods system required countries to actively buy and sell dollars to maintain fixed exchange rates when:
a. a country experienced a severe bout of inflation.
b. the free market equilibrium exchange rate differed from the fixed rate.
c. a country experienced serious unemployment.
d. the threat of recession began to spread from one country to another.
e. worldwide trade began to deteriorate.
Question 6An exchange rate is the price of one currency in terms of a second currency.
a. True
b. False
Indicate whether the statement is true or false
Question 7If a flat tax plan allowed individuals to deduct a standard allowance of 15,000 and the flat tax rate was 10 percent, an individual earning 12,000 a year would not pay any income taxes.
a. True
b. False
Indicate whether the statement is true or false
Question 8The exchange rate that is established in the absence of foreign exchange market intervention by the government is known as a(n):
a. historical anachronism.
b. fixed exchange rate.
c. dirty float exchange rate.
d. unmanaged exchange rate.
e. free market equilibrium exchange rate.
Question 9The balance on goods and services is the same as the balance on the current account.
a. True
b. False
Indicate whether the statement is true or false
Question 10A flat tax would increase the possibilities of abuses and misrepresentations that go with tax deductions.
a. True
b. False
Indicate whether the statement is true or false
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