21) Assume that with existing tax and spending laws, government spending exceeds government tax revenues. To cover the resulting shortfall, the government must: A) increase consumers' incomes. B) print more money. C) Borrow money in the financial markets. D) lower interest rates.
21) Assume that with existing tax and spending laws, government spending exceeds government tax revenues. To cover the resulting shortfall, the government must:
A) increase consumers' incomes.
B) print more money.
C) Borrow money in the financial markets.
D) lower interest rates.
22)
A) all goods and services sold during the year by domestic and foreign producers.
B) all final consumer goods produced during the year by domestic and foreign suppliers.
C) all intermediate goods produced during the year by domestic and foreign suppliers.
D) all final goods and services produced within the boundaries of an economy during the year by domestic and foreign-supplied resources.
23) In the equation GDP = C + I + G + F, in which F equals net export spending (i.e., total spending on exports minus total spending on imports), imports are subtracted from the other types of expenditures because:
A) imports reduce national welfare.
B) other countries do not import goods from the U.S.
C) it represents a flow of expenditures out of the domestic economy to the rest of the world.
D) the value of imports is difficult to determine due to the fact that they are frequently stated in terms of foreign currency.
24) Assuming that C = $4,500, I = $1,000, G = $1,200, Exports = $450, Imports = $550, Depreciation = $600, and Indirect Business Taxes = $500 (all in billions of dollars), GDP equals:
A) $5,500 billion.
B) $6,000 billion.
C) $6,400 billion.
D) $6,600 billion.
25) Which of the following statements is correct?
A) Because it is subject to change, and frequently does, consumer and business confidence has only a minimal impact on future economic activity.
B) Because it has historically remained steady, consumer and business confidence has only a minimal impact on future economic activity.
C) Consumer and business confidence is extremely important and can have a great impact on future economic activity.
D) Consumer confidence is extremely important and can have a great impact on future economic activity. The same is not true of business confidence.
26) The type of policy that involves interest rates and the availability of loanable funds is known as:
A) fiscal policy.
B)
C) strategic financial policy.
D) federal policy.
27) The type of policy that involves changes in taxes or spending by the federal government is known as:
A) fiscal policy.
B) monetary policy.
C) strategic financial policy.
D) federal policy.
28) If a country's central bank wants to stimulate spending in the economy, it should:
A) increase the amount of assets banks should keep on reserve at all times.
B) decrease taxes.
C) lower interest rates.
D) increase government spending.
29) If a country's national government wants to stimulate spending in the economy, it should:
A) decrease taxes and increase government spending.
B) increase taxes and decrease government spending.
C) increase taxes and government spending.
D) decrease taxes and government spending.
30) Which of the following would have the greatest positive impact on a country's domestic economy?
A) An increase in spending on imports from other countries.
B) An increase in spending by foreigners on the country's exports.
C) A decrease in the confidence of foreign investors in the country's economy.
D) A decrease in the incomes of consumers in foreign countries.
Step by step
Solved in 4 steps
