When the flow of money from the foreign countries to the domestic firms equals the flow of money ...

When the flow of money from the foreign countries to the domestic firms equals the flow of money from the home country to the foreign firms, _____.
 a. a trade surplus exists
  b. an equal amount of agricultural and manufactured products are exported
  c. a trade deficit exists
  d. an equal amount of goods and services are imported
  e. the value of net exports is zero

Question 2

Which of the following would be most likely to shift a country's production possibilities curve outward?
 a. An improvement in the general level of literacy and education.
 b. A sudden, substantial expansion of consumer wants.
 c. A reduction in the country's labor force or population.
 d. Shifting resources from investment to consumption goods production.

Question 3

When the price level rises as a result of a decrease in aggregate supply, it is called cost-push inflation.
 a. True
  b. False
  Indicate whether the statement is true or false

Question 4

A trade deficit involves:
 a. net flows of goods from foreign countries to the domestic government.
  b. net money flows from the foreign firms to the domestic government.
  c. net money flows from the domestic firms to the domestic government.
  d. net money flows from the foreign firms to the domestic firms.
  e. net flows of goods from foreign countries to the domestic firms.

Question 5

Suppose Freeland produces few consumption goods and many investment goods while Liberty Nation produces few investment goods and many consumption goods. Other things equal, you would expect
 a. per capita income to grow more rapidly in Liberty Nation.
 b. population to grow faster in Liberty Nation.
 c. the production possibilities curve for Freeland will shift out more rapidly than that of Liberty Nation.
 d. that if both countries started with identical production possibilities curves, in twenty years, people in Liberty Nation will be able to produce more consumer goods than people in Freeland.

Question 6

When the price level rises as a result of a decrease in aggregate supply, it is called cost-push inflation.
 a. True
  b. False
  Indicate whether the statement is true or false

Question 7

Which of the following flows from the government to the households?
 a. Goods and services
  b. Resources of production
  c. Taxes
  d. Government services
  e. Loans

Question 8

Which of the following is likely to shift the production possibilities curve outward?
 a. A change in preferences away from one of the goods and toward the other.
 b. An invention that reduces the amount of natural resources necessary for producing a good.
  c. The discovery of new natural resources.
 d. Both b. and c. are likely to shift the production possibilities curve outward.

Question 9

Stagflation could be caused solely by a shift in the aggregate demand curve.
 a. True
  b. False
  Indicate whether the statement is true or false

Question 10

Households and firms pay taxes to the government to:
 a. increase their consumption spending.
  b. finance the country's import bill.
  c. increase their savings.
  d. improve their standard of living.
  e. finance government expenditures.

Question 11

From a point inside the production possibility frontier,
 a. more of one good can be produced only by sacrificing some output of another good.
 b. it is possible to increase production of both goods.
 c. it is impossible to increase production of either good with current resources and technology.
  d. increased output of both goods can only occur if the production possibility curve shifts outward.

Question 12

An unexpected decrease in aggregate demand results in an increase in real interest rates in the short run.
 a. True
  b. False
  Indicate whether the statement is true or false

Question 13

Which of the following is considered a financial intermediary?
 a. The Federal Reserve
  b. A bankruptcy court
  c. The U.S. Department of Commerce
  d. A credit union
  e. A foreign exchange