Question 1

If an official of a host government visited an American embassy and requested assistance from the U.S. in setting up an environmental monitoring and measuring system, the embassy officer would

Accepted Answer

A)  contact the Department of State to transmit the request to the United Nations Environment Programme for assistance
B)  contact the U.S. Environmental Protection Agency and request a mission to aid the country in establishing an environmental monitoring and measuring system
C)  explain the foreign policy role of the Department of State and suggest that the country send its ambassador to the U.S. to the U.S. Environmental Protection Agenc
D)  contact the Department of State, the U.S. Environmental Protection Agency, the U.S. Agency for International Development, and the Trade Development Agency to determine what assistance might be provided D

Question 2

The Massachusetts state legislature banned any Massachusetts company or individual from trading with Burma. In terms of legality, this action is

Accepted Answer

A)  legal, if approved by the U.S. Secretary of State
B)  illegal under the U.S. Constitution
C)  legal if approved by the President's National Economic Council
D)  illegal under the Foreign Trade (Development and Regulation)  Act, 1992 B

Question 3

Euroequity is a stock that is:

Accepted Answer

A)  traded in Europe
B)  issued in Europe
C)  traded outside its country of origin
D)  never denominated in U.S. dollars C

Question 4

Which of the following would not be associated with the study of macroeconomics?

Accepted Answer

A)  Inflation
B)  National unemployment rates
C)  Production factors
D)  Individual consumer practices

Question 5

Which best defines laissez-faire capitalism?

Accepted Answer

A)  Business activity and natural resource usage and distribution are not regulated by the government
B)  Government controlled distribution of natural resources with little involvement in other sectors of the economy
C)  Ownership of the means of productions is split between public and private entities
D)  Existence of extensive legislation governing internal trade

Question 6

If you purchase a 10 year, $15000.00 bond with an annual coupon rate of 6%, what is your total return at maturity?

Accepted Answer

A)  $900.00
B)  $9,000.00
C)  $15,900.00
D)  $24,000.00

Question 7

The Cuban Liberty and Democratic Solidarity (Libertad) Act (Helms-Burton) provides for sanctions against foreign companies involved in what sorts of transactions in Cuba?

Accepted Answer

A)  Any commercial trade
B)  Trade involving food and medicine
C)  Any direct investment
D)  Investment in nationalized property

Question 8

The Franklin/Templeton mutual funds company recently introduced a new mutual fund that invests in companies in four rapidly developing countries. The fund, called the BRIC fund, refers to which set of countries?

Accepted Answer

A)  Belarus, Rwanda, Ireland, Czech Republic
B)  Belgium, Romania, Indonesia, Chile
C)  Bolivia, Romania, Italy, Colombia
D)  Brazil, Russia, India, China

Question 9

Under the Generalized System of Preferences of the U.S., the U.S. establishes an exception to the Most Favored Nation principle of international trade law by giving special access to the U.S. market to:

Accepted Answer

A)  countries with which the U.S. has signed bilateral trade agreements
B)  developing countries for certain categories of products
C)  countries in the Western Hemisphere that respect human rights
D)  a list of countries that produce low-cost textiles and apparel

Question 10

Which of the following is the least likely to contribute to economic growth?

Accepted Answer

A)  Technological advances
B)  Labor force education
C)  Increased access to resources
D)  Tighter government regulation

Question 11

If a drought severely reduces the amount of corn available to consumers, what would you expect to happen?

Accepted Answer

A)  The supply of corn would go up
B)  The demand for corn would go down
C)  The price of corn would stay the same
D)  The price of corn would go down
E)  The price of corn would go up

Question 12

Which of the following industries in the United States is not an example of monopolistic competition?

Accepted Answer

A)  Electric service providers
B)  Fast food restaurants
C)  Cosmetics companies
D)  Athletic shoe manufacturers

Question 13

Companies such as Moody's and Standard & Poor's provide the service of:

Accepted Answer

A)  regulating public companies for the SEC
B)  determining credit ratings for public and private companies
C)  conducting stock transactions for traders
D)  calculating the DOW Jones average daily

Question 14

Assume that the federal required reserve ratio is 20 percent and the discount rate is 5 percent. If 1000 is deposited into a bank, what will be the total increase to the money supply?

Accepted Answer

A)  4000
B)  5000
C)  6667
D)  20,000

Question 15

What do most economists view as the main economic problem facing the world, the reason for the study of economics?

Accepted Answer

A)  Scarcity
B)  Currency inflation
C)  Trade imbalance
D)  Recession

Question 16

Consumer or investor behavior in which bargains are accepted that are low risk and low potential payoff and bargains are avoided which are higher risk, but potentially higher payoff is known as:

Accepted Answer

A)  Risk tolerance
B)  Risk aversion
C)  Risk neutral
D)  Risk premium

Question 17

The Foreign Corrupt Practices Act prohibits corrupt payments by

Accepted Answer

A)  U) S. companies overseas
B)  foreign lobbyists in the U.S.
C)  foreign companies operating in the U.S.
D)  U) S. companies operating in Western Hemisphere countries

Question 18

In the United States changes in the money supply are controlled by:

Accepted Answer

A)  the U.S. Treasury Department
B)  the Federal Reserve Bank
C)  the House Committee on Financial Services
D)  the Bureau of Engraving and Printing

Question 19

Economist and philosopher Adam Smith's expression, "the invisible hand" refers to a theory or belief that:

Accepted Answer

A)  the greed of capitalists seeking wealth actually helps the poor in society
B)  the world economy is governed by a series of natural laws
C)  outside forces beyond human control influence the economy
D)  governments should not impose economic regulation

Question 20

The government of Country ABC has decided to decrease the money supply after initially achieving equilibrium in the real and financial sectors. How will this decision affect the IS-LM model?

Accepted Answer

A)  The IS curve will shift to the left
B)  The IS curve will shift to the right
C)  The LM curve will shift to the left
D)  The LM curve will shift to the right

Exam 2: Economics