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

buys government bonds on the open market.

The balance of payments is ....

diff between value of goods & services exported & imported

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

get same tariff reduction US negotiates w/ another country

Protectionists favor ...

high tariffs against competition.

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

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