Question 1

If Japan adopts a contractionary monetary policy, then the dollar will:

Accepted Answer

A) lose value and U.S. inflation will fall. 
B) gain value and U.S. inflation will rise. 
C) lose value and U.S. inflation will rise. 
D) gain value and U.S. inflation will fall. 
A) lose value and U.S. inflation will fall. 
B) gain value and U.S. inflation will rise. 
C) lose value and U.S. inflation will rise. 
D) gain value and U.S. inflation will fall.

Question 2

In 2018, China held over $3 trillion in foreign reserves. Over 40 percent of China's reserves were in the form of U.S. Treasuries. This is an example of:

Accepted Answer

A) a crowding out effect. 
B) internationalizing the U.S. debt. 
C) policy conversion. 
D) the real debt. 
A) a crowding out effect. 
B) internationalizing the U.S. debt. 
C) policy conversion. 
D) the real debt.

Question 3

What are the paths through which monetary policy affects the trade balance?

Accepted Answer

Monetary policy affects the trade balanc

Question 4

A U.S. trade deficit will cause all of the following phenomena except:

Accepted Answer

A) U.S. assets will have to be sold to foreigners. 
B) future interest and profits from assets sold to foreigners must be paid to them. 
C) future consumption must decrease to pay for the current excess of imports over exports. 
D) production must eventually increase. 
A) U.S. assets will have to be sold to foreigners. 
B) future interest and profits from assets sold to foreigners must be paid to them. 
C) future consumption must decrease to pay for the current excess of imports over exports. 
D) production must eventually increase.

Question 5

A stronger dollar would be a good policy if the U.S. government wanted to:

Accepted Answer

A) reduce the trade balance and lower inflation. 
B) increase the trade balance and lower inflation. 
C) reduce imports and increase the trade balance. 
D) increase exports and reduce the trade balance. 
A) reduce the trade balance and lower inflation. 
B) increase the trade balance and lower inflation. 
C) reduce imports and increase the trade balance. 
D) increase exports and reduce the trade balance.

Question 6

When the value of the U.S. dollar fell in the mid-1990s, it:

Accepted Answer

A) encouraged U.S. imports and exports. 
B) discouraged U.S. imports and exports. 
C) encouraged U.S. imports and discouraged U.S. exports. 
D) discouraged U.S. imports and encouraged U.S. exports. 
A) encouraged U.S. imports and exports. 
B) discouraged U.S. imports and exports. 
C) encouraged U.S. imports and discouraged U.S. exports. 
D) discouraged U.S. imports and encouraged U.S. exports.

Question 7

The trade balance is:

Accepted Answer

A) exports less imports. 
B) imports less exports. 
C) total trade this year less total trade last year. 
D) sum of imports and exports. 
A) exports less imports. 
B) imports less exports. 
C) total trade this year less total trade last year. 
D) sum of imports and exports.

Question 8

If a country wants to prevent its exchange rate from falling, it could:

Accepted Answer

A) remove restrictions on imports. 
B) place restrictions on imports. 
C) pursue easier monetary policy. 
D) remove any subsidies on exports. 
A) remove restrictions on imports. 
B) place restrictions on imports. 
C) pursue easier monetary policy. 
D) remove any subsidies on exports.

Question 9

Monetary and fiscal policies have little effect on the trade deficit.

Accepted Answer

A) True 
 B)False

Question 10

If an economy has a trade policy of a fixed exchange rate, then its monetary and fiscal policies are:

Accepted Answer

A) independent of the trade policy. 
B) independent of the trade regime. 
C) less restricted when dealing with domestic goals. 
D) more restricted when dealing with domestic goals. 
A) independent of the trade policy. 
B) independent of the trade regime. 
C) less restricted when dealing with domestic goals. 
D) more restricted when dealing with domestic goals.

Question 11

Considering only its direct effect on income, contractionary monetary policy tends to:

Accepted Answer

A) be ambiguous with respect to the exchange rate but decrease the trade deficit. 
B) be ambiguous with respect to the trade deficit but decrease the exchange rate. 
C) decrease the exchange rate and increase the trade deficit. 
D) increase the exchange rate and decrease the trade deficit. 
A) be ambiguous with respect to the exchange rate but decrease the trade deficit. 
B) be ambiguous with respect to the trade deficit but decrease the exchange rate. 
C) decrease the exchange rate and increase the trade deficit. 
D) increase the exchange rate and decrease the trade deficit.

Question 12

Expansionary fiscal policy tends to:

Accepted Answer

A) increase the U.S. price level and reduce U.S. exports. 
B) increase the U.S. price level and reduce U.S. imports. 
C) decrease the U.S. price level and increase U.S. exports. 
D) decrease the U.S. price level and increase U.S. imports. 
A) increase the U.S. price level and reduce U.S. exports. 
B) increase the U.S. price level and reduce U.S. imports. 
C) decrease the U.S. price level and increase U.S. exports. 
D) decrease the U.S. price level and increase U.S. imports.

Question 13

Considering only its direct effect on income, the effect of monetary policy is that:

Accepted Answer

A) both expansionary and contractionary policies tend to increase the trade deficit. 
B) both expansionary and contractionary policies tend to decrease the trade deficit. 
C) expansionary policy tends to increase the trade deficit and contractionary policy tends to decrease it. 
D) expansionary policy tends to decrease the trade deficit and contractionary policy tends to increase it. 
A) both expansionary and contractionary policies tend to increase the trade deficit. 
B) both expansionary and contractionary policies tend to decrease the trade deficit. 
C) expansionary policy tends to increase the trade deficit and contractionary policy tends to decrease it. 
D) expansionary policy tends to decrease the trade deficit and contractionary policy tends to increase it.

Question 14

The likely effect of a contractionary monetary policy in Japan would be to:

Accepted Answer

A) decrease the value of the dollar and the U.S. trade deficit. 
B) increase the value of the dollar and the U.S. trade deficit. 
C) decrease the value of the dollar and increase the U.S. trade deficit. 
D) increase the value of the dollar and decrease the U.S. trade deficit. 
A) decrease the value of the dollar and the U.S. trade deficit. 
B) increase the value of the dollar and the U.S. trade deficit. 
C) decrease the value of the dollar and increase the U.S. trade deficit. 
D) increase the value of the dollar and decrease the U.S. trade deficit.

Question 15

Suppose the United States is entering a recession at the same time that it has agreed to work toward eliminating its trade deficit. Considering the effect of monetary policy on trade through its impact on income only:

Accepted Answer

A) an expansionary monetary policy would be the appropriate means of achieving both objectives. 
B) a contractionary monetary policy would be the appropriate means of achieving both objectives. 
C) an expansionary monetary policy would be appropriate to eliminate the trade deficit, but contractionary monetary policy is called for to deal with the recession. 
D) a contractionary monetary policy would be appropriate to eliminate the trade deficit, but expansionary monetary policy is called for to deal with the recession. 
A) an expansionary monetary policy would be the appropriate means of achieving both objectives. 
B) a contractionary monetary policy would be the appropriate means of achieving both objectives. 
C) an expansionary monetary policy would be appropriate to eliminate the trade deficit, but contractionary monetary policy is called for to deal with the recession. 
D) a contractionary monetary policy would be appropriate to eliminate the trade deficit, but expansionary monetary policy is called for to deal with the recession.

Question 16

What would make foreigners want to buy more from the United States?

Accepted Answer

A) Inflation in United States 
B) A fall in the value of the dollar in the foreign exchange market 
C) High tariffs 
D) Lower interest rates in the United States 
A) Inflation in United States 
B) A fall in the value of the dollar in the foreign exchange market 
C) High tariffs 
D) Lower interest rates in the United States

Question 17

A weak dollar would pose a potential problem for Germany and Japan, because it:

Accepted Answer

A) would make German and Japanese goods more expensive to Americans. 
B) would make German and Japanese goods less expensive to Americans. 
C) would worsen inflation for Japan and Germany. 
D) would make goods imported by Germany and Japan more expensive. 
A) would make German and Japanese goods more expensive to Americans. 
B) would make German and Japanese goods less expensive to Americans. 
C) would worsen inflation for Japan and Germany. 
D) would make goods imported by Germany and Japan more expensive.

Question 18

A country that runs a trade surplus increases current consumption at the expense of future consumption.

Accepted Answer

A) True 
 B)False

Question 19

When the euro rose relative to the dollar in the early 2000s, it:

Accepted Answer

A) encouraged European imports and exports. 
B) discouraged European imports and exports 
C) encouraged European imports and discouraged European exports. 
D) discouraged European imports and encouraged European exports. 
A) encouraged European imports and exports. 
B) discouraged European imports and exports 
C) encouraged European imports and discouraged European exports. 
D) discouraged European imports and encouraged European exports.

Question 20

Define a trade deficit,and explain why there is debate over whether or not a trade deficit should be of concern to policy makers.

Accepted Answer

A trade deficit occurs when imports are

Exam 36: Macro Policy in a Global Setting

If Japan adopts a contractionary monetary policy, then the dollar will:

In 2018, China held over $3 trillion in foreign reserves. Over 40 percent of China's reserves were in the form of U.S. Treasuries. This is an example of:

What are the paths through which monetary policy affects the trade balance?

A U.S. trade deficit will cause all of the following phenomena except:

A stronger dollar would be a good policy if the U.S. government wanted to:

When the value of the U.S. dollar fell in the mid-1990s, it:

The trade balance is:

If a country wants to prevent its exchange rate from falling, it could:

Monetary and fiscal policies have little effect on the trade deficit.

If an economy has a trade policy of a fixed exchange rate, then its monetary and fiscal policies are:

Considering only its direct effect on income, contractionary monetary policy tends to:

Expansionary fiscal policy tends to:

Considering only its direct effect on income, the effect of monetary policy is that:

The likely effect of a contractionary monetary policy in Japan would be to:

Suppose the United States is entering a recession at the same time that it has agreed to work toward eliminating its trade deficit. Considering the effect of monetary policy on trade through its impact on income only:

What would make foreigners want to buy more from the United States?

A weak dollar would pose a potential problem for Germany and Japan, because it:

A country that runs a trade surplus increases current consumption at the expense of future consumption.

When the euro rose relative to the dollar in the early 2000s, it:

Define a trade deficit,and explain why there is debate over whether or not a trade deficit should be of concern to policy makers.

Economics and Economic Reasoning

The Production Possibility Model, Trade, and Globalization

Economic Institutions

Supply and Demand

Using Supply and Demand

Describing Supply and Demand: Elasticities

Taxation and Government Intervention

Market Failure Versus Government Failure

Comparative Advantage, Exchange Rates, and Globalization

International Trade Policy

Production and Cost Analysis I

Production and Cost Analysis II

Perfect Competition

Monopoly and Monopolistic Competition

Oligopoly and Antitrust Policy

Real-World Competition and Technology

Work and the Labor Market

Who Gets What the Distribution of Income

The Logic of Individual Choice: the Foundation of Supply and Demand

Game Theory, Strategic Decision Making, and Behavioral Economics

Thinking Like a Modern Economist

Behavioral Economics and Modern Economic Policy

Microeconomic Policy, Economic Reasoning, and Beyond

Economic Growth, Business Cycles, and Unemployment

Measuring and Describing the Aggregate Economy

The Keynesian Short-Run Policy Model: Demand-Side Policies

The Classical Long-Run Policy Model: Growth and Supply-Side Policies

The Financial Sector and the Economy

Monetary Policy

Financial Crises, Panics, and Unconventional Monetary Policy

Deficits and Debt: the Austerity Debate

The Fiscal Policy Dilemma

Jobs and Unemployment

Inflation, Deflation, and Macro Policy

International Financial Policy

Structural Stagnation and Globalization

Macro Policy in Developing Countries

Filters