Post Test Quiz

The introduction of new manufacturing technologies generally affects economic growth by —

• creating safer work environments

• increasing the productivity of labor

• restricting growth because of the additional expense

• stopping production while workers learn the new technology

How does international trade impact economic growth within a trading nation?

• International trade allows industries within a trading nation to increase market power without losing customers.

• International trade allows a trading nation to limit opportunity costs, making the market more efficient.

• International trade shifts the demand curve of a trading nation outward, increasing the purchasing power of industries.

• International trade shifts the production possibility curve of a trading nation outward by using resources more efficiently.

The late twentieth century has been characterized by an increase in free trade agreements. Advocates of free trade argue that it results in —

• higher unemployment

• increased immigration

• lower corporate tax rates

• increased economic growth

Money that has value simply because the government says it does is called —

• credit

• currency

• fiat money

• representative money

Commodity money can best be described as —

• trade goods or services between two people without the exchange of money

• currency that a government has declared to be legal tender, despite the fact that it has no intrinsic value and is not backed by reserves

• a form of money which has an intrinsic value, meaning it is worth something in its own right rather than simply being a token of financial value

• money that consists of a token or certificate that can be exchanged for a specific good, such as gold, silver, or potentially water, oil, or food

One advantage to using a debit card is that it allows the user to —

• A) build a strong credit score

• B) repay credit card debts faster

• C) access currency without carrying cash

• D) purchase goods without having any money

One of the disadvantages of operating a barter system is that trading is —

• A) taking place without currency

• B) carried out in very large markets

• C) limited by availability and demand

• D) conducted without consumer protections

Open market operations, the discount rate, and reserve requirements are used by the Federal Reserve to most directly affect the —

• A) amount of taxes collected

• B) minimum wages of workers

• C) cost of doing business overseas

• D) supply of money in the economy

In order to require banks to hold more money as opposed to lending it, the Federal Reserve can —

• A) decrease the discount rate

• B) decrease the federal funds rate

• C) increase the reserve requirement

• D) suspend the federal funds rate target

Why did abandoning the gold standard result in a decline in the value of the U.S. dollar?

• A) People began hording dollar bills so the value would decline

• B) More currency was able to be printed thus reducing its value

• C) Americans did not want to use fiat currency so the value declined

• D) Businesses preferred to be paid with gold thus dollars were less valued