The federal government never has to pay off the national debt.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 2When an exchange rate is determined strictly by the demands and supplies for a nation's currency, it is called:
a. fixed.
b. arbitrage.
c. floating.
d. unilateral.
e. balance of payments.
QUESTION 3The consumption function has a negative slope.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 4The way to prevent the national debt from growing is for the budget not to be in deficit.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 5The demand curve for Japanese yen is downward sloping because when the exchange rate (measured in dollars per yen) falls,
a. Japanese goods become relatively cheaper so foreigners buy more of them and need more yen to do so.
b. foreigners need more dollars to buy one yen so they can now afford more Japanese goods.
c. the yen demand curve shifts to the right as foreigners try to buy more Japanese goods.
d. the dollar becomes weaker and this reduces the strength of both economies.
e. everyone wants fewer yen because they have lost some of their underlying value.
QUESTION 6The Keynesian theory focuses on aggregate supply, while the classical theory focused on aggregate demand.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 7The federal budget deficit has been over 30 percent of GDP since the early 1980s.
a. True
b. False
Indicate whether the statement is true or false
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