Chapter 16,17,18,19 (edited)

Countries engaged in international trade will specialize in production based on

• relative exchange rates

• absolute advantages

• relative levels of gross domestic product (GDP)

• relative inflation rates

• comparative advantage

The marginal propensity to consume is a number between

• -1 and 1

• 1 and 10

• 0 and 1

• 1 and 100

• -10 and 10

The Federal Reserve System was created in _____

• 1975

• 1776

• 1863

• 1913

• 1945

Money serves as a unit of account when goods

• have a value expressed in the same currency, then allowing comparison

• align in a double coincidence of wants

• have a value expressed in terms of both a commodity money and a commodity-backed money

• have a value that remains constant over time

• are no longer used to back currency

Crowding-out occurs when

• consumption increases when government spending increases

• supply-side fiscal policy does not increase total output

• private spending falls in response to increases in government spending

• increases in government spending and decreases in taxes are offset by increases in savings

• time lags crowd out the effects of fiscal policy

Contractionary fiscal policy occurs when the

• government increases spending or increases taxes to slow economic expansion

• government decreases spending or decreases taxes to slow economic expansion

• government increases spending or decreases taxes to stimulate the economy

• government decreases spending or increases taxes to slow economic expansion

• Federal Reserve decreases money supply to stimulate the economy

If trade is balanced for a nation,

• net exports are positive always for this nation

• the value of its exports exceeds the value of its imports

• the difference between exports and imports for this nation is greater than zero

• the value of its exports is equal to the value of its imports

• the sum of its exports and imports is zero

To increase the money supply, the Federal Reserve could

• discourage banks from lending money to borrowers

• increase the discount rate

• conduct an open market sale of U.S. Treasury securities

• increase the reserve ratio

• conduct an open market purchase of U.S. Treasury securities

Which of the following is an example of expansionary fiscal policy?

• eliminating the certain tax deductions for households

• raising the federal minimum wage

• means-testing Social Security benefits

• reducing Medicare benefits

• reducing taxes on corporations

Commodity money is

• an actual good use as money

• a commonly accepted medium of exchange

• money that can be exchanged for a commodity at a fixed rate

• the use of a good or service as money

• the use of precious metals for money