The balance of payments is ....

diff between value of goods & services exported & imported

Protectionists favor ...

high tariffs against competition.

The Federal Reserve System can increase the money supply when it ....

buys government bonds on the open market.

The most favored nation clause allows a country to ...

get same tariff reduction US negotiates w/ another country

If the exchange rate changes from $1 = 3 euros to $1 = 2 euros:

the dollar has depreciated in value.

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ECON: Unit 6 - The Federal Reserve & International Trade

24 termsStudBud Administration641 plays

International Trade Fiscal Policy Monetary Policy

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Questions 24

Answers

1
The balance of payments is ....
where imports and exports do not equal zero.
where a country is importing more than it is exporting.
the total $ amount of transactions made with other countries
diff between value of goods & services exported & imported
2
When the Fed reduces the money supply, which of the following would likely occur ...
Interest rates will increase
It will stimulate the economy
The Fed must have sold bonds
The fed must have lowered the discount rate
3
If a nation wants to allow domestic producers to charge higher prices, the gov't can impose ...
higher sales taxes
lower tariff rates.
export restrictions.
quotas on imports.
4
If the exchange rate is 10 euro = 1 dollar, a pound of wheat with a price of $6 will cost....
0.60 euro
60 euro
600 euro
6 euro
5
When a country can produce numerically more of a given product is called a(n) ______
absolute advantage
comparative advantage
international trade advantage
specialized advantage
6
An easy money policy is used to.....
stimulate the economy.
restrict the money supply.
increase interest rates.
slow the economy down.
7
Protectionists favor ...
more agreements like NAFTA.
free trade in the world.
high tariffs against competition.
full disclosure laws for consumers.
8
Which fiscal policy would you use to correct severe demand-pull inflation?
depreciation of the dollar
an increase in government spending
a reduction in interest rates
a tax rate increase
9
The Federal Reserve System can increase the money supply when it ....
raises the discount rate.
encourages individual stock market investments.
sells government securities to bond dealers
buys government bonds on the open market.
10
What is the interest the Fed charges on loans to financial institutions.?
Reserve requirements
Discount rate
Open market operations
Moral suasion
11
The most favored nation clause allows a country to ...
be free from import restrictions on goods shipped to the US
enact trade barriers similar to those of the United States.
be the United States’ leading trading partner
get same tariff reduction US negotiates w/ another country
12
If the exchange rate changes from $1 = 3 euros to $1 = 2 euros:
the dollar has neither appreciated nor depreciated
the dollar has depreciated in value.
the dollar has appreciated in value.
13
This group in the Federal Reserve controls the activities of the Fed by making general policies
Board of governors
Fed. open market committee
Fed. advisory council
Fed. security council
14
Monetary expansion is possible because of
check clearing.
the fractional reserve system.
monetary policy.
margin requirements.
15
The ability of a country to produce relatively more efficiently is
specialization.
comparative advantage.
international trade.
absolute advantage.
16
Which is the best fiscal policy to correct the following scenario?
decrease taxes
decrease government spending
increase the reserve requirement
increase the discount rate
17
By increasing spending and decreasing taxes the federal government would.....
shrink the economy
depress the economy
contract the economy
stimulate the economy
18
Fiscal policy that would work best if the economy had high unemployment & a decreasing GDP.
increase the discount rate
increase the reserve requirement
decrease taxes
decrease government spending
19
A Federal Reserve System policy that increases the money supply is a/an:
expansionary fiscal policy.
contractionary fiscal policy.
expansionary monetary policy.
contractionary monetary policy.
20
This function of the fed allows you to be paid by your employer.
Check clearing
Open market operations
Reserve requirement
Margin requirements
21
Which fiscal policy would be most appropriate to get out of the recession?
buy bonds on the open market
decrease government spending
decrease taxes
raise the reserve requirement
22
This entity promotes free trade and settles trade disputes between countries.
EU (European Union)
ASEAN (Association of Southeast Asian countries)
NAFTA (North American Free Trade Agreement)
WTO (World Trade Organization)
23
Under a flexible exchange rate, what establishes the value of a country’s currency?
process of devaluation
most favored nation clause
forces of supply and demand
amount of gold reserves
24
The long-term effect of expanding the money supply is what?
The supply of money remains the same
The discount rate will be lowered
Interest rates will go down
Inflation will increase

ECON: Unit 6 - The Federal Reserve & International Trade Flashcards | StudBud