Econ Final

Quiz: Chapter Thirteen

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Luke Sowa (username: luke_sowa1)To Submissions

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Written: Nov 9, 2010 7:53 PM - Nov 9, 2010 9:40 PM

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Your quiz has been submitted successfully.Question 1 1 / 1 point

What is exchanged in the financial sector?

Money only.

Goods and services.

All financial assets.

All assets with a money price.

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A financial asset is liquid:

if it can be carried easily from one place to another.

if it can be readily exchanged for another asset or good.

only if it takes the form of cash.

if it is held by the public and earning interest.


The U.S. central bank is a financial institution that:

has the sole right to accept deposits and make loans.

has the sole right to issue currency.

sets borrowing and lending in a country.

determines what assets will back a currency.

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Question 4 1 / 1 pointAll of the following are characteristics of money except:

it must be difficult to counterfeit.

it must be available in unlimited supply.

it must be durable.

it must be divisible.


Which of the following is not one of the functions of money?

medium of exchange.

unit of account.

standard of economic well-being.

store of wealth.


In order to function as a medium of exchange, money must:

be backed by gold.

maintain a constant value over an extended period of time.

be backed by some precious commodity.

be generally accepted in exchange for goods and services.


In POW camps during World War II, everything was traded for cigarettes. For example, 1 bar of soap cost 2 cigarettes, 2 candy bars cost 4 cigarettes. During the time the POW camps, cigarettes:

did not serve as money because their value was not backed by government.

did not serve as money because no one controlled the supply of cigarettes.

served as money for those who smoked.

served as money because they served as a unit of account, medium of exchange, and store of wealth.


When money is used to set the value of goods such as cars, DVDs, and TVs, money is serving as a:medium of exchange.

unit of account.

store of wealth.

unit of wealth.


M1 includes which of the following?

Time deposits.

Checking account deposits.

Gold certificates.

Money market mutual funds.


The measure of money that best fulfills the medium of exchange function because it is most liquid is:

M1.

M2.

M3.

L.

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Question 11 1 / 1 pointChecking account deposits are classified as money because:

they earn interest income for the depositor.

they are ultimately obligations of the Treasury.

banks hold currency equal to their outstanding deposits.

they can be readily used in the making of purchases and the payment of debts.


The chief difference between the M1 and M2 measures of the money supply is:

the supply of M1 exceeds the supply of M2.

M2 excludes traveler's checks.

M1 is a broader, more comprehensive measure.

M2 includes assets with a lower liquidity than those in M1.


When the Fed prints and issues bills, it creates:

a financial liability for the holder of the IOU.

a financial asset for itself.

a real asset.

money.


Early medieval bankers were similar to modern bankers in that:

they lend a portion of the deposits.

they could not create money.

deposits were backed by gold.

they were not subject to any regulation.


The goldsmith's ability to create money was based on the fact that:

gold receipts were rarely exchanged for gold.

the goldsmith was required to keep 100% gold reserves.

consumers preferred to use gold for transactions.

withdrawals of gold tended to exceed deposits of gold.


A commercial bank's reserve ratio equals the ratio of its reserves to its:

assets.

required reserves.

deposits.

excess reserves.


Bank reserves are:

real assets deposited at banks.

cash and deposits a bank keeps on hand or at the central bank.

loans issued by banks deposited into checking accounts.

checks held by depositors.

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Question 18 1 / 1 pointThe required reserve ratio refers to the ratio of a bank's:

liabilities to its net worth.

required reserves to its deposits.

total reserves to its deposits.

deposits to its actual reserves.


Suppose total deposits in the First Bank of Commerce are $100,000 and required reserves are $10,000. Based on this information, the required reserve ratio is:

0.10.

0.9.

1.

10.

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Question 20 0 / 1 pointA bank has a reserve requirement of 10 percent. This means that if a customer deposits $10,000, the bank may lend:

$1,000.

$9,000.

$10,000.

$11,000.

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Question 21 1 / 1 pointA bank has a reserve requirement of 0.10. If it has demand deposits of $100,000 and is holding $12,000 in reserves:

all the bank's reserves are excess reserves.

the bank is not meeting its reserve requirement.

the bank is holding $2,000 in excess reserves.

all reserves are required reserves.


When a bank makes a loan, the money supply:

does not increase.

decreases.

increases.

may increase or decrease depending on how the loan is used.


The organizations that can create money are the:

government and its agencies.

Fed and the banks.

mutual funds and retirement funds.

households and corporations.


As the reserve ratio goes up, the simple money multiplier goes:

up, and more money will be created.

down, and less money will be created.

up, and less money will be created.

down, and more money will be created.


As the reserve ratio goes up, less money will be created because:

people will hold less cash.

people will hold more cash.

banks will extend more loans.

banks will extend fewer loans.


If the required reserve ratio is 0.20 and individuals hold no cash, what is the maximum amount of money that can be created from a $5 million deposit in the banking system?

$5 million.

$20 million.

$25 million.

$50 million.

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Question 27 1 / 1 pointExcess reserves equal:

total deposits.

total deposits minus required reserves.

total reserves.

total reserves minus required reserves.


Some colleges charge for student parking. Currently, your college does not charge for parking but the administration announced a possible charge of $2 per day. You are not sure when the new parking policy will start; therefore you decide to maintain a $5 bill in your wallet. You hold cash for the:

transactions motive.

precautionary motive.

speculative motive.

impulsive motive.


If I am worried about the price of assets such as bonds falling, I may be more inclined to hold money instead. You hold cash for the:

transactions motive.

precautionary motive.

speculative motive.

impulsive motive.


The higher the interest rate in the economy, the __________ the quantity of money demanded.

lower

higher

more

better

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Attempt Score: 27 / 30 (90.00 %)

Overall Grade (highest attempt): 27 / 30 (90.00 %)

Quiz: Chapter Fifteen

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Why are financial-sector crises scarier than collapses in other sectors of the economy?

The financial sector is the biggest sector.

Financial-sector crises happen more often than collapses in other sectors.

Most people work in the financial sector.

If the financial sector fails, it can bring the whole economy down with it.


How do companies most commonly pay for raw materials and pay wages?

They use their cash reserves.

They get loans from the Federal Reserve.

They get short-term loans from financial institutions.

They issue stock options and use the funds from those.


Which of the following is not a stage of a financial crisis?

The forming of an asset bubble.

The public announcement by the government of a financial crisis occurring.

The bursting of an asset bubble.





The collapse of the financial sector.


Suppose the people in my town hear a rumor that their local bank is in trouble and all rush to withdraw money from the bank. This is referred to as:

leverage.

a moral hazard problem.

a bad precedent problem.

a bank run.


When there is unsustainable rapidly rising prices of some type of financial asset, such as stock, we refer to this a(n):

liquidity trap.

bubble.

bad-precedent problem.

moral-hazard problem.


A company borrows money to supplement its current funds and buy more financial assets. This is what referred to as:

diversification.

leverage.

quantitative easing.

herding.


Which of the following was not a direct contributor to the booming housing market in the 2000s?

People were expecting housing prices to keep on rising.

People could get mortgages with no money down.

Lending standards became loose.

A fiscal stimulus package was passed in early 2001.

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Question 8 1 / 1 pointSuppose my financial adviser tells me to combine different financial assets, whose prices are not expected to move together, in an effort to reduce risk. This process is known as:

liquidity.

quantitative easing.

diversification.

herding.


Buying on "margin" occurs when:

banks borrow from the Federal Reserve.

people put down payments on purchases of automobiles and houses.

people borrow money from stockbrokers to buy shares they could not afford on their own.

people borrow money from banks using their stock as collateral.


If a financial asset is liquid:

it is considered to be a safe asset with no chance of being deleveraged.

it is an online asset and has no physical piece of paper associated with it.

it is a highly desirable asset.

it is an asset that can easily be converted into cash.


The 2008 financial crisis was caused largely by:

a run on banks and other financial institutions.

a bursting of the stock market bubble.

a bursting of the housing market bubble.

the inability of the government to issue Treasury bonds.


In the 2008 financial crisis, the Fed was:

less aggressive with monetary policy than it was in the Depression.

more aggressive with monetary policy than it was in the Depression.

less aggressive with fiscal policy than it was in the Depression.

more aggressive with fiscal policy than it was in the Depression.


In the 2008-2009 recession, the Congress was:

less aggressive with monetary policy than it was in the Depression.

more aggressive with monetary policy than it was in the Depression.

was aggressive with fiscal policy than it was in the Depression.

more aggressive with fiscal policy than it was in the Depression.


Which of the following best describes how the economy recovered from the Great Depression?

The Fed finally started using expansionary monetary policy and the economy quickly recovered.

The expansionary monetary policy that the Fed had been engaging in throughout the crisis finally started to work.

The economy eventually recovered on its own without any government interventions.

Fiscal policy became extremely expansionary as the US geared up for WWII.


The Glass-Steagall Act was set up to:

regulate financial institutions after the Savings and Loan Crisis of the 1980s.

give the Federal Government the sole responsibility in carrying out fiscal policy to regulate the economy.

establish banking regulations and deposit insurance as a result of the 1930s crisis.

regulate the derivatives market as a result of the 2008 crisis.

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Attempt Score: 14 / 15 (93.33 %)


Quiz: Chapter Sixteen

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Inflation hurts:

everyone.

those whose incomes don't change.

those whose incomes can change.

no one.


Suppose workers bargain for a new contract that gives them a 5 percent pay increase over the next year. If they expected no inflation but inflation is in fact 2 percent, inflation makes:

both workers and firms worse off.

workers worse off and firms better off.

workers better off and firms worse off.

both workers and firms better off.


Unexpected inflation hurts:

lenders.

borrowers.

both lenders and borrowers.

neither lenders nor borrowers.


Suppose inflation is expected to be 2 percent but it is actually 4 percent. The people who gain from the difference between actual and expected inflation are most likely to be the:

owners of firms and lenders.

owners of firms and borrowers.


workers and lenders.

workers and borrowers.


Rational expectations, strictly speaking, are expectations based on:the predictions of economic models.

what has happened in the past.

models of human behavior.

the continuation of past trends.


Suppose inflation in 2007, 2008, and 2009 was 4 percent, 3 percent, and 2 percent, respectively. If people use only this information and expect inflation to be 3 percent as a result, then their expectations are best described as:

adaptive.

rational.

extrapolative.

imperfect.


Deflation is a problem for all of the following reasons except it:

is often associated with large falls in asset prices.

may prevent a central bank from lowering the real interest rate as much as it would like.

can undermine a country's financial system.

can lead to excessive increases in aggregate demand.


The equation of exchange is expressed as:

MR = PQ.

MV = PQ.

MPP = P.

MR = MC.


According to the quantity theory of money, if the money supply increases by 12 percent, then in the long run prices go:

down by 12 percent.

up by less than 12 percent.

up by 12 percent.

up by more than 12 percent.


Suppose that real output is fixed and equal to 400 while velocity is fixed and equal to 5. Then, if the money supply is equal to 200, the price level will be:

2.5.

5.

7.5.

10.

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Question 11 1 / 1 pointIn the fourth quarter of 2008, the velocity of money was about 1.8 and nominal GDP was $14.4 trillion. Approximately what was the money supply in the fourth quarter of 2008?

$1.8 trillion.

$8.0 trillion.

$14.4 trillion.

We cannot compute the money supply from the data given.


The quantity theory of money concludes that if real output is constant:

changes in the price level are caused by changes in the money supply.

real GDP and the money supply are related in the long run.

changes in velocity are proportional to changes in nominal income.

changes in velocity are proportional to changes in the money supply.


Which of the following is not one of the assumptions of the quantity theory of money?

Velocity is constant.

The money growth rate is constant.

Real output is independent of the money supply.

Causation goes from money supply to prices.


The inflation tax is:

an implicit tax on the holders of cash and the holders of any obligations specified in real terms.

an implicit tax on the holders of cash and the holders of any obligations specified in nominal terms.

an explicit tax on wealth.

an explicit tax on consumption.


Annual inflation in Zimbabwe was 32 percent in 1998, 383 percent in 2003, and rose to about 100,000 percent in 2009. What is the likely cause of this rapid rise of inflation?

The central bank is run by people who do not understand the relationship between money and spending.

The government wants to transfer wealth from debtors to creditors.

The economy is experiencing balance of payments problems.

The government must print money to finance its large deficits because it cannot borrow or raise taxes.


Experiences from different countries suggest that the relationship between money growth and inflation is:

straightforward since when money supply increases inflation also increases.

straightforward in countries with low inflation.

unclear since there can be a time lag from the moment the money supply grows and the effect on inflation.

nonexistent since money growth always promotes output growth instead of inflation.


Economists who believe in the institutionalist theory of inflation argue that:

causation in the equation of exchange goes from PQ to MV.

causation in the equation of exchange goes from MV to PQ.

the equation of exchange is invalid.

there is no relationship between PQ and MV.


Cost-push inflation occurs when:

output is above potential output.

output equals potential output.

price increases are not related to demand pressures.

price increases are related to demand pressures.


The short-run Phillips curve suggests that an increase in the rate of inflation will accompany:

a decrease in the unemployment rate.

an increase in the unemployment rate.

an increase in expected inflation.

a decrease in expected inflation.


Empirical evidence led many economists in the 1960s to believe that there was:

no predictable relationship between inflation rates and unemployment rates in the U.S. economy.

an unstable direct relationship between inflation rates and unemployment rates in the U.S. economy.

a stable inverse relationship between inflation rates and unemployment rates in the U.S. economy.

a stable direct relationship between inflation rates and unemployment rates in the U.S. economy.


Stagflation is the combination of:

high and accelerating inflation and low unemployment.

high and accelerating inflation and high unemployment.

low and decelerating inflation and high unemployment.

low and decelerating inflation and low unemployment.


The long-run Phillips curve is:

downward-sloping, implying a trade-off between unemployment and inflation.

downward-sloping, implying that the unemployment rate always returns to its natural rate in the long-run.

vertical, implying a long-run trade-off between unemployment and inflation.

vertical, implying that the unemployment rate always returns to its target rate in the long-run.


If expected inflation increases:

the short-run Phillips curve shifts up.

the short-run Phillips curve shifts down.

the short-run Phillips curve remains unchanged.

there is a movement along a short-run Phillips curve.


Inflationary pressures increase when the economy moves:

to the right of the long-run Phillips curve.

to the left of the long-run Phillips curve.

down the short-run Phillips curve.

down the long-run Phillips curve.


Supporters of the institutionalist theory of inflation:

do not believe that a little bit of inflation will eventually create much higher levels of inflation.

believe that high levels of inflation are unavoidable if the government tries to keep unemployment at its target rate.

believe that price stability should be the most important goal of monetary and fiscal policies.

believe that there is a long-run trade-off between inflation and growth.

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Quiz: Chapter Seventeen

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When the government runs a deficit, it will:

buy bonds to finance the deficit.

sell bonds to finance the deficit.

reduce the money supply to finance the deficit.

raise taxes immediately.


Deficits may be desirable in the short run if they:

help to stabilize the economy when the economy falls below potential output.

increase savings necessary for future investment and growth.

increase savings necessary for future consumption and demand.

help to stabilize the economy when the economy is above potential output.


A passive deficit is the portion of the deficit that exists when:

the economy is at potential income.

the economy is beneath potential income.

inflation is not fully anticipated.

inflation is fully anticipated.


If a passive surplus exists, the economy must be:



at potential income.

above potential income.

below potential income.

experiencing deflation.


Economists generally are:more concerned about structural deficits than passive deficits.

equally concerned about structural and passive deficits.

more concerned about passive deficits than structural deficits.

not concerned about structural or passive deficits.


Which of the following will decrease the nominal deficit?

An increase in taxes.

An increase in government expenditures.

An increase in interest rates.

An increase in the debt.


Which of the following statements gives the correct definition of the real deficit?

Real deficit = Nominal deficit + (inflation x total debt)

Real deficit = Nominal deficit + (total debt/inflation)

Real deficit = Nominal deficit - (total debt/inflation)

Real deficit = Nominal deficit - (inflation x total debt)


Government debt is defined as:

a shortfall of incoming revenue under outgoing payment.

a shortfall of outgoing payments under incoming revenue.

accumulated deficits minus accumulated surpluses.

accumulated deficits plus accumulated surpluses.


Use the following table to determine which statement is true.

The budget deficit in 1950 was $2.3 billion.

From 1946 to 1950, the U.S. debt was $2.3 billion.

From 1945 to 1950, the debt rose by $2.3 billion.

In 1950, the U.S. debt was $2.3 billion.


Which of the following statements is true?

The debt is a flow measure and the deficit or surplus is a stock measure.

Both the debt and the deficit or surplus are flow measures.

Both the debt and the deficit or surplus are stock measures.

The debt is a stock measure and the deficit or surplus is a flow measure.


If the national debt increases in any given year, it follows that the government:

sold bonds in that year to finance a budget surplus.

bought bonds in that year to finance a budget surplus.

sold bonds in that year to finance a budget deficit.

bought bonds in that year to finance a budget deficit.


If the debt of the federal government decreases by $20 billion in one year the budget:

deficit in that year must be $20 billion.

surplus in that year must be $20 billion.

deficit in that year decreases by $20 billion.

surplus in that year increases by $20 billion.


Deficits and debt are often measured relative to GDP because:

this method always makes them appear smaller.

this method always makes them appear larger.

the government's ability to repay the debt depends on GDP.

the growth in GDP depends on the debt.


Which of the following holds the most U.S. government debt?

U.S. government agencies.

The Federal Reserve.

U.S. citizens.

Foreigners.


Between 1997 and 2008, U.S. external debt rose from 5 percent of GDP to 30 percent. This increase in external debt:

is not a potential problem because repayment does not imply a net reduction in the income of an average citizen.

is not a potential problem because government debt differs from the debt of individuals.

is a potential problem because government debt is no different from the debt of individuals.

is a potential problem because repayment implies a net reduction in the income of an average citizen.


The U.S. debt to GDP ratio in 2008 was approximately:

5 percent.

25 percent.

75 percent.

105 percent.


When the U.S. debt to GDP ratio has fallen, it has generally been because:

the budget deficit fell.

the budget deficit rose.

income fell.

income rose.


The large budget deficits experienced between 2002 and 2009 caused the U.S. national debt to:

increase in terms of dollars but to decrease as a percentage of GDP.

increase both in terms of dollars and as a percentage of GDP.

decrease in terms of dollars but to increase as a percentage of GDP.

decrease both in terms of dollars and as a percentage of GDP.


As the interest rate rises, debt service:

decreases.

does not change, but debt increases.

increases.

does not change and neither does the debt.


Debt service payments by the government:

are used to purchase goods and services.

are a payment for past expenditures.

do not burden the generations that must make them.

have fallen continuously since World War II.


Which of the following factors turned the budget surplus into a deficit in 2002?

In 2001, taxes were cut significantly.

Economic growth accelerated.

The war with Iraq ended sooner than expected.

The government reduced expenditures.


Interest rates on government bonds are relatively low because:

a majority of the public debt is owed to foreigners and interest rates in foreign countries are low.

the debt-to-GDP ratio is almost zero.

U.S. government bonds are considered one of the safest assets in the world.

many are worried about the U.S. government's defaulting.


The financial crisis of 2008 led to massive federal spending in an effort to stimulate the economy. The combination of the new federal spending and the automatic stabilizers led to

the largest budget deficit since World War II.

the highest rate of inflation since the Great Depression.

a higher government debt-to-GDP ratio than at any time in American history.

a deficit that is expected to remain permanently at ten percent or more of GDP.


Which of the following would make the impending Social Security problem worse?

Raising social security taxes.

Raising the age at which one is eligible to receive payments.

An increase in the average age at which people die.

Taxing social security payments received.


If an economy is operating at potential output:

any surplus would be a cyclical surplus.

any surplus would be a structural surplus.

a budget surplus is impossible.

the budget must be in surplus.

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Attempt Score: 22 / 25 (88.00 %)


Quiz: Chapter Nineteen

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Written: Dec 6, 2010 9:29 PM - Dec 6, 2010 10:20 PM

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As a percentage of total imports, how have U.S. imports from China and India changed in the past 15 years?

They have remained roughly the same.

They have risen.

They have fallen.

They rose initially, then dropped back to the original level.


As a country develops economically, what changes usually take place in the goods it exports?

There is little change because comparative advantage does not change.

Raw materials and agricultural products decline in importance and are replaced by services and manufactured goods.

Services and manufactured goods decline in importance and are replaced by raw materials and agricultural products.

Exports go from being diversified to being specialized in whatever the country finds to be its comparative advantage.


In the U.S., the outsourcing of service jobs such as those in call centers has become a political issue. How do economists typically view outsourcing?

It helps both countries in the long run.

It hurts both countries because the U.S. loses jobs and the employees of the call center are exploited with low wages.

It helps the U.S. but hurts the country with the low-cost labor.

It helps the country getting the jobs but hurts the U.S.




The U.S. balance of trade has

shown a surplus since the 1980s.

been in deficit since the 1980s.

gone from a surplus in the 1980s to a deficit in the 1990s back to a surplus since 2000.

gone from a deficit in the 1980s to a surplus in the 1990s back to a deficit since 2000.


When a country runs a trade surplus, it will:

borrow from foreign countries or sell assets to them.

borrow from foreign countries or buy assets from them.

lend to foreign countries or sell assets to them.

lend to foreign countries or buy assets from them.


Countries can expect to gain from international trade as long as they:

keep production diversified.

specialize according to their comparative advantage.

produce only those goods for which they have a relatively high opportunity cost.

use trade restrictions to reduce competition for domestic producers.


Specialization according to comparative advantage means that a country is producing the goods:

that it wants to consume.

for which it has a relatively high opportunity cost.

for which it has a relatively low opportunity cost.

that it can produce at zero cost.


Production Possibility Schedules for Two South Pacific Island Nations

Refer to the table above. In Tuvalu, the opportunity cost of producing one coconut (in terms of mangoes) is:

0.

1/3.

3.

400.

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Question 9 1 / 1 pointProduction Possibility Schedules for Two South Pacific Island Nations

Refer to the table above. A comparative advantage in the production of coconuts is held by:

Kiribati.

Tuvalu.

both countries.

neither country.


The country with a comparative advantage in the production of good X is the one that:

has the greatest technical efficiency in producing good X.

has the greatest supply of the natural resources used in producing good X.

can produce good X with the least labor.

can produce good X at the lowest opportunity cost.


If the U.S. were to stop trading with other nations, economists would predict that in the long run the U.S. would end up with:

more jobs.

lower prices.

a higher standard of living.

a lower standard of living.


The gains from trade:

accrue primarily to traders when there are no barriers to entry.

tend to go to countries producing goods with diseconomies of scale rather than to countries producing goods with economies of scale.

tend to go to small countries rather than large countries.

accrue primarily to countries, not traders.


Crusoe and Friday are the only two inhabitants of an island and produce and consume only two goods, fish and coconuts. For every fish Crusoe catches, he could gather two coconuts. For every fish Friday catches, he could gather one coconut. From this information we:

cannot determine who has comparative advantage in either good.

can determine who has a comparative advantage in fish but not in coconuts.

know that Crusoe has the comparative advantage in coconuts.

know that Friday has the comparative advantage in coconuts.


The text mentions ten sources of U.S. comparative advantage. Which of the following is NOT one of them?

A large military

Skills of the labor force

A stable government

An extensive physical and technological infrastructure


The text calls the type of comparative advantage that is not easily changed, such as climate,

stable comparative advantage.

inherent comparative advantage.

equilibrium comparative advantage.

permanent comparative advantage.


The WTO authorized several countries to impose about $150 million in trade sanctions against the United States in retaliation for a U.S. import law that the WTO ruled to be illegal. The WTO that issued this ruling against the United States is known as

Wage Tariff Objective

World Trade Organization

Wealth Technology Order

Welfare Tax Order


Analysts have suggested that the cost of bras is related to trade restrictions on textile imports. What does the price of bras have to do with tariffs and quotas?

Trade restrictions protect consumers by keeping the price of bras low.

Trade restrictions in the form of tariffs keep prices of bras high, but replacing them with quotas will result in lower prices.

Trade restrictions keep the prices of bras high, and ending them will result in lower prices.

Trade restrictions do not influence the price of bras; the price is determined by domestic technology and the overall inflation rate.


Duties imposed by the U.S. government on imported Chinese frozen and canned shrimp are an example of:

tariffs.

quotas.

voluntary restrictions.

regulatory trade restrictions.


An import quota:

increases both domestic production and domestic prices.

increases domestic production and reduces domestic prices.

reduces domestic production and increases domestic prices.

reduces both domestic production and domestic prices.


Trade embargoes are generally implemented:

to benefit emerging industries.

to lower domestic unemployment rates.

for political reasons.

to raise revenue from trade.


Which of the following is not a regulatory trade restriction?Vegetables prohibited because of excess pesticide usage.

Inspections designed to impede trade processes.

A limit on the number of imported cars.

Leather products banned because of tanning by urine.


All of the following are arguments in support of protectionist legislation except:

supporting infant industries.

preserving domestic employment.

increasing global trade.

promoting national security.


Trade adjustment assistance is:difficult to implement because the adjustment costs of international trade are generally greater than the gains from trade.

difficult to implement because claims of injury are easy to make and may be politically difficult to reject.

easy to implement because the adjustment costs of international trade are typically less than the

gains from trade.

easy to implement because it is easy to identify the few industries genuinely injured by international trade.


Infant industry protection can be justified in theory by:

both the "learning by doing" argument and the existence of economies of scale.

the "learning by doing" argument but not by the existence of economies of scale.

the existence of economies of scale but not by the "learning by doing" argument.

neither the "learning by doing" argument nor the existence of economies of scale.


Economists generally agree that:

trade restrictions will increase the welfare of a large country, even if other countries retaliate.

trade between two nations generally benefits one at the expense of the other.

infant industry protection, although justified in theory, often becomes permanent because infant industries fail to grow up.

trade embargoes are not an effective way of achieving international political objectives.

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Attempt Score: 19 / 25 (76.00 %)


Econ Final

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point deposits

point time deposits

deposits of gold

money supply

bank reserves

measure of money

characteristics of money