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Chapter 5-6-7-8 Study guide
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- Mexican importers are suppliers of pesos in the foreign exchange market.
True False
- The Smoot-Hawley Act:
A.bound the world's nations to a gradual process of tariff reduction. B.established very high tariffs on goods imported to the United States. C.exempted American exporters from the Sherman Antitrust Act. D.established the reciprocal trade agreements program.
- Barriers to free trade impair efficiency in the international allocation of resources.
True False
- Global competition:
A.forces domestic producers to become more efficient and to improve product quality. B.drives up prices worldwide. C.reduces employment worldwide. D.creates higher flows of international migration than without trade.
- If depreciation (consumption of fixed capital) exceeds domestic investment, we can conclude that:
A.nominal GDP is rising but real GDP is declining. B.net investment is negative. C.the economy is importing more than it exports. D.the economy's production capacity is expanding.
- In national income accounting, government purchases include:
A.purchases by Federal, state, and local governments. B.purchases by the Federal government only. C.government transfer payments. D.purchases of goods for consumption, but not public capital goods.
- In an economy experiencing a declining production capacity:
A.the nation's stock of capital goods is expanding. B.net exports are necessarily zero. C.depreciation exceeds gross investment. D.NDP exceeds GDP.
- In 2003, Trailblazer Bicycle Company produced a mountain bike that was delivered to a retail outlet in November of 2003. The bicycle was sold to E.Z. Ryder in March of 2004. This bicycle is counted as:
A.consumption in 2003 and as disinvestment in 2004. B.disinvestment in 2003 and as consumption in 2004. C.disinvestment in 2003 and as investment in 2004. D.investment in 2003 and as disinvestment in 2004.
- In 1933 net private domestic investment was a minus $6.0 billion. This means that:
A.gross private domestic investment exceeded depreciation by $6.0 billion. B.the economy was expanding in that year. C.the production of 1933's GDP used up more capital goods than were produced in that year. D.the economy produced no capital goods at all in 1933.
- A nation's stock of capital goods will decline when:
A.gross investment exceeds net investment. B.net investment is positive, but less than gross investment. C.depreciation exceeds gross investment. D.gross investment exceeds depreciation.
- Suppose that GDP was $200 billion in year 1 and that all other components of expenditures remained the same in year 2 except that business inventories fell by $10 billion. GDP in year 2 is:
A.$180 billion. B.$190 billion. C.$200 billion. D.$210 billion.
- At the economy's natural rate of unemployment:
A.the economy achieves its potential output. B.there is only a relatively small amount of cyclical unemployment. C.only frictional unemployment exists. D.only structural unemployment exists.
- For every 1 percentage point that the actual unemployment rate exceeds the natural rate, a 2 percentage point negative GDP gap occurs. This is a statement of:
A.Taylor's rule. B.Okun's law. C.Say's law. D.the Coase theorem.
- Recurring upswings and downswings in an economy's real GDP over time are called:
A.recessions. B.business cycles. C.output yo-yos. D.total product oscillations.
- The phase of the business cycle in which real GDP declines is called:
A.the peak. B.an expansion. C.a recession. D.the trough.
- In which phase of the business cycle will the economy most likely experience rising real output and falling unemployment rates?
A.expansion B.recession C.peak D.trough
- In 2005, aggregate consumption spending in the United States exceeded U.S. disposable income.
True False
- As aggregate income decreases, the APC:
A.and APS will both increase. B.will decrease, but the APS will increase. C.will increase, but the APS will decrease. D.and APS will both decrease.
- Refer to the above diagram. At disposable income level D , the average propensity to save is equal to:
A. CD / BD. B. CD /0 D. C.0 D / CD. D.0 A /0 B.
- In 2005, aggregate consumption spending in the United States exceeded U.S. disposable income.
True False
- If the MPS is 1, the multiplier will be 1.
True False
