Economics final

Death rate of infants who die within the first year of life

Infant mortality rate

nations with relatively high standards of living and industrialized economies

developed nation

nations with little industrial development and relatively low standards of living

developing nation

governments taking over industries without paying for them

confiscation

aid in the form of engineers, teachers, and technicians to teach skills to people in other nations

technical assitance

funds, goods, and services given by a government to help other nations and their citizens

foreign aid

legal or illegal export of currency or money capital from a nation by that nations leaders

capital flight

loans and outright grants of funds or equipment to other nations

economic assistance

centralized planning system that used to be the basis for chinas economic system

five-year plans

offices and agencies of the government that each deal with a specific area

bureaucracies

One important reason why direct foreign investment in the united states is high is that…

the united states is politically stable

in the united states, a significant amount of foreign aid is channeled through the…

US Agency for International Development

What is the main cause of Chinas recent rapid economic growth?

free-market reforms

joint ventures and licensing deals are two kinds of multinational

alliances

Bonds that the US government sells

US government securities

characterized by any different ethnic groups or nationalities

multicultural society

purchase by foreigners of real estate and businesses in other countries

direct foreign investment

long distance communication, usually electronic, using communications satelites and fiber optic cables

telecommunications

open-mindedness, lack of prejudice

tolerance

interdependency among the countries of the world, especially withing financial markets and telecommunications

global integration

branches of multinational firms

foreign affiliates

increased worldwide diversity due to migration

global village

firms that do business and have offices or factories in many countries

multinationals

agreements or joint ventures by firms in different countries

corporate alliances

What is defined as the percentage of people who can read and write?

Adult literacy rate

Out of more than 190 nations in the world, how many nations are considered developed?

35

What are characteristics of most developing countries?

an agricultural economy and a low literacy rate

Foreign ownership of US debt has expanded in the past 20 years

True

Sending professionals such as engineers, teachers, technicians, and consultants to teach skills in developing countries is an example of…

technical assistance

Differences in international time zones have restricted foreign exchange markets.

False

The most important single factor leading to the global economy has been…

improvments in telecommunications

Some people fear that American culture has taken over other cultures, a development that is sometimes called…

economic imperialism

Most multinational’s invest…

in regions closest to home

traditional attitudes in developing nations…

are an obstacle to economic growth

A typical handicap for many new nations is the public debt created by the corrupt leaders of the past

True

To draw a conclusion about which nation is more industrialized, the item which most directly measures that fact is…

per capita GDP

The purchase by foreigners of real estate and businesses in another country is called…

direct foreign invesetment

due to the high infant mortality rate, families in developing countries have fewer children so that they may focus care on them and increase their chance for survival

False

economic stages of development

1. Agriculture 2. Manufacturing 3. Services

True or False: While Chinas economic growth has been dramatic in the past two decades, economists do not expect that the size of Chinas economy will ever exceed that of the US.

False

In the last two decades, foreign investment worldwide has…

expanded significantly

With a globalized financial market,

everybody feels the effects of financial panic

Why are multinationals important?

They employ millions of people worldwide.

Where are the headquarters of the federal reserve located?

Washington DC

Fractional reserve banking makes it possible for banks to…

use some deposits to make loans.

True or False: The budget deficit is a situation when government spending exceeds government revenue for a particular year.

True

True or False: Government spending has not increased that much over the past two decades.

False

Which group on the federal reserve organization chart decides whether to raise or lower interest rates?

Federal Open Market Committee

Why would a country want a tight monetary policy?

to control inflation

Federal program that provides monthly payments to people who are retired or unable to work

Social Security

system of taxation in which those with higher incomes pay more taxes than those with lower incomes

ability to pay principle

situation that occurs when the amount of government receipts is larger than its expenditures

budget surplus

income from some people through taxation and uses it to help citizens in need

income redistribution

publicly used facilities built with public money by governments

public goods

Why would the fed reduce the federal funds rate during economic weakness

to encourage banks to borrow and lend more, which can lead to economic growth

an excise tax is a tax paid on…

manufacture, use, and consumption of certain goods

what is monetary policy?

Changing the rate of growth of the money supply

What historic event made people beleive that there was a need for more government programs, particulary “safety net” programs?

the great depression

True or False: The fed buys and sells government securities in order to control the rate of growth of the money supply

True

Since the end of WW2, the size of the US government…

has grown much faster than the population

deficit financing is…

government overspending

The president of the US appoints members of which group on the Federal Reserve organization chart?

Board of governers

Who submits the federal budget to Congress?

The president

paying a gasoline tax is an example of a…

tax based of the benefits-recieved princple

What is a result of loose money policy?

People are willing to borrow money

What is defined as the rate of interest that banks charge on loans to their best business customers?

Prime rate

True or False: The federal reserve system is responsible for monetary and fiscal policy in the US.

False

If the Fed lowers the reserve requirement…

more money is available to loan

What is an example of a progressive tax?

federal income tax

What is an example of a public-assistance program that provides free health care for low-income and disabled people?

Medicaid

True or False: If the Fed implements a loose money policy, it means that credit is in short supply and expensive to obtain.

False

Most local, state, and federal government revenues come from…

taxes

In terms of the circular flow of income, savings represent…

leakages

an example of someone who might experience seasonal unemployment is a…

construction worker

flexible exchange rates are determined by…

supply and demand

A positive balance of trade results when the value of imports…

is less than the value of exports

Rather than operate with budget deficits each year, monetarists believe the government should…

balance the federal budget

What is a part of Milton Friedman’s theory about stabilizing the economy?

When the amount of money in circulation expands, people spend more

True or False: the Chinese government devalues its currency, Americans will pay more for Chinese products.

False

What is the purpose of a protective tariff?

to raise the cost of improted goods and give domestic producers an advantage

The ability of one country, using the same quantity of resources as another country, to produce a specific product at a lower cost is known as…

absolute advantage

True or False: One problem critics see with the governments efforts to manipulate fiscal policy is that of time lags, meaning by the time a policy is carried out, it might be the wrong policy.

True

The ability of one country to produce a product at a lower opportunity cost than another is known as

comparative advantage

The most commonly used barrier to free trade is

a tariff

People who do not follow federal and state laws regarding reporting of earnings are part of…

the underground economy

a tariff is a…

tax on imports

True or False: Economist Milton Friedman believed strongly that the government should stabilize he economy by using fiscal policy.

False

A situation in which increased wages drive up prices for consumers is referred to as…

Cost-push inflation

fall in the price of a currency through the aciton of supply and demand

depreciation

when forces of supply and demand are allowed to set the price of various currencies

flexible exchange rate

NAFTA has…

increased Mexico’s exports to the US

Many economists thus define full employment as having only…

6 percent unemployment

Which economist beleived that the government should step in to stimulate aggregate demand in order to avoid or shorten economic recessions?

John Meynard Keynes

Unemployment caused by fluctuation in the business cycle is called…

cyclical unemployment

in a global economy, international trade affects…

everyone

An economic condition in which rising prices and unemployment occur at the same time is called…

stagflation

What regional trade agreement made the euro a common currecy among most of its members?

EU

True or False: When the government sends money to stimulate the economy, it is practicing fiscal policy.

True

True or False: When foreign exchange rates were fixed, as they were in the 1670s, the rates were determined by supply and demand.

False

True or False: Economists build economic models to try to understand the way the economy works in the real world

True