QUESTIONS - ECON EXAM 3

UNLV is located in

Paradise

Most States, including Nevada, have a fiscal year that begins on

July 1st

Fiscal year means

budget year

According to the constitution, the govn't must publish a statement of its account

from time to time

The constitution says the prez must submit a proposed budget to congress at their requiem after the state of the union address

false

what is the largest category of federal spending

mandatory spending

Since he is the commander in chief, the prez decides on the amount the defense budget and what its spent on

false

The constitution requires congress to plan ahead for budgets over how many years?

none
- constitution doesn't mention it

what is the system that created a balanced federal budget in the 1990s

PAYGO

What is specifically named in the constitution as something the federal govnt can pay for?

Post office, army, state militias (enumerated power)

An export from the US requires that money enter the US, it does not require that a good leaves the US

True

The sale of corn from the US to Japan would appear in what account of the Balance of Payments?

current account

If JK Rowling licenses a publisher to print her book in the US, the money from that agreement would appear in what account of the balance of payments?

capital account

when the dollar goes from $1 = 400 yen in 1970 to $1= 100 yen today, we say this dollar has

depreciated

When the value of the dollar rises against the yen, Japanese tourists going to Hawaii will find the hotel rooms have

risen in price

congress has the power to

collect tariffs, regulate commerce with foreign countries, control exchange rates

The Bretton Woods Agreement

made the US dollar the key currency in the world

When the US has a trade deficit with China, it will go into debt to china to fund that deficit

true

US tariffs

are generally low, but may go above 300%

Tariffs constitutionally require passage by Congress, but President Trump put all his tariffs on by declaring that there was a national security issue with each country and not getting Congress to pass them.

true

The primary tactic a monopoly will employ to use its power is to

restrict output

When a restaurant gives 10 % off that is a _____ degree price discrimation

3rd

The lesson of the prisoner's dilemma is that businesses in an oligopoly should _____ if possible

collude

the anti-trust laws are constitutional bc they r based on the power to

regulate interstate commerce

The Sherman Act makes it illegal to be a monopoly, try to become a monopoly, or conspire to become a monopoly.

true

You operate a restaurant chain (say, Taco Bell). Your food is so good that every other restaurant in the world goes out of business. You have not violated the Sherman Act because of the:

rule of reason

Who is exempt from truth in advertising laws?

politicians

The _____ Act permits the government to approve or disapprove corporate mergers

Clayton act

There are advantages to a company when all of its employees use the same word processor and other software (lowering training costs, ease of sharing files, etc.). These advantages are collectively known as:

network externalities

what is excepted from anti-trust?

Major League Baseball

in the past 40 years, how many times did congress follow the agreed budget process?

4 times

in the constitution the prez has the power to

negotiate treaties

congress has the power to

set tariffs handset the value of the dollar

If the US has a trade deficit with China, what happens to the value of the dollar compared to the yuan

it should fall

US has a trade deficit

most years

modern exchange rates are supposed to be

floating

an oligopoly is an industry that has

a few companies

What was the first big company broken up the govnt for being a monopoly?

standard oil

why did ppl argue for tariffs?

it would create jobs in the country, which means workers r paid more and prices increase instead of having clothes be cheap (Ex: when its made in another country for less money)

how is the budget set?

prez sets up the budget and sends it to congress. congress then looks through it and sends it back to him to see if he passes it or vetos it

is there a budget process in the constitution?

No
- therefore congress passed a law to see what the budget would be (not followed)

The sale of raisins from cali to Japan would show up in what account of the balance of payment?

current account

the sale of amc theaters to a Chinese investor would show up in what account of the balance of payment?

financial (permanent)/capital (buying assets in another counter)account

all of the part of the balance of payments must add up to?

zero

The US overall has a trade deficit in goods, but a trade surplus in services?

true

if the US begins to export more goods to china, ceteris paribus, the dollar should ___ against the yuan

appreciation

Appreciation

Supply and Demand (the market) cause a currency to rise in value

Depreciation

supply and Demand (the market) cause a currency to fall in value

revaluation

The government causes a currency to rise in value

devaluation

The government causes a currency to fall in value

If $1 equals 0.5 pounds than 1 pound is equal to

$2

If the dollar appreciates against the yuan, prices of Chinese goods in theUS will

fall

the average tariff the US imposes on goods today is

less than 5%

The US does not impose quotas on goods, nor does it restrict foreign ownership of US companies in general

false

The general agreement on tariffs and trade has become the

WTO (world trade organization)

What best describes the economic problem?

scarcity

Factors of production used by entrepreneurs to produce goods?

land, labor and capital

an economic good is something that

makes no one unhappy

Term that economists use that means happiness

utility

Opportunity cost of buying a good includes

the value of everything giving up to obtain it

-includes money and time

When 1 person takes an action that causes another person to pay a cost is called?

externality

The scientific method properly applied can

prove and disprove theories

economists believe that the best decisions are made when consumers only consider the benefits of their actions, and businesses consider the costs in the transaction.

true

Globalization is

high levels of trade between nations

economic integration of nations

permanent trade connections between nations

created winners and losers

Mercantilist philosophy we make our country stronger by

exporting a lot, but limiting imports

(more money coming in then out)

Comparative Advantage theory argues that everyone gains from an exchange of a good for money, while Mercantilists believe the person who gets the money "wins" the exchange.

true

did Britain follow mercantilist philosophy in its dealings with American colonies?

true

in comparative advantage philosophy we make out country stronger by

specializing and trading

Efficiency is maximizing the amount of output from the inputs used to produce it.

true

Invisible hand by Adam Smith means

competition - makes us do the right thing

In capitalism ____ answers the 3 economic questions

the market
- capitalism
-self-interest
-guiding motivation

In socialism_____ answers the 3 economic questions

the government
-govnt ownership of capital
-planning as the allocation mechanism

What is the 3 basic questions asked in microeconomics?

what to produce?
how to produce?
who benefits?

a decrease in the price of bread will

move the demand curve for bread to the right

An increase in supply causes the equilibrium price to

fall

The tourist would appear in what account of the balance of payments?

capital

The license fees paid by a US book publisher to publish Harry Potter show up in the ______ account of the Balance of Payments.

current

salary paid to an employee of Wynn resorts who works in china but is paid from Las Vegas

capital

True of Bretton Woods Agreement

- the US negotiator was a Russian spy
-made the US dollar the key currency in the wolrd
-created a bank and a fund that are both still operating today

name of the redevelopment fund that was created in Bretton woods

international monetary system

an increase in imports to the US from China should raise the value of the dollar against the yuan

false (it should fall)

When the US dollar falls relative to the Chinese currency, goods we buy from China would become more expensive for US consumers.

true

If the US has a trade deficit, how will it be corrected if markets are free to work?

the government must correct the exchange rate, markets won't work

When China pegs its currency to keep the dollar from falling, it acquires dollars, which it then uses to buy assets in the United States.

true

Why do economists prefer capitalism to socialism?

Innovation, freedom efficiency etc.

Capitalism relies on the market to work, which creates competition, which leads the economy to prosper, while socialism is under govn't control

If economists believe that free trade makes everyone better off, why do some countries still follow Mercantilism?

Mercantilism allows a single nation to prosper over another, restriiting imports while increasing exports.

mandatory spending

Required govt spending by permanent laws

BIGGEST

interest on the national debt

Paying money into taxes but you eventually get some back (those that own the federal bonds)

Low income ppl don't get this money back, but high and middle class gets some

Interest INCREASES

discretionary spending

Money that is flexible — adjustable by Congress
Not required to be anything

CUTTING

where do all spending bills start?

in the house

who increased the debt by triple?

Ronald Raegan

who was the only person on the plus side (adding surplus - aging more money than spending) in a budget deficit?

Clinton

(after him was bush and then there was a recession)

Fixed Exchange Rate

Government deciding what their currency of money is going to be except for the US

Bretton Woods

Town in new hampshire where harry, john and other countries gathered together to figure out what to do when the war ended

Harry Dexter Woods

In charge of the US
#2 person in the treasury department, but also a russian spy (spilling secrets and tea)

Believed in communism

Ok with John's idea of tying the money together, but it should be towards the american dollar and not the british pound

John Maynard Keynes

In charge of england

Knew what was going to happen during this war and what led to it

Doesn't like americans

Said to let the government decide what their currency is going to be
Tie the money to the British power

Stated we needed 2 things (A bank for the whole world and a development fund)

trade deficits

the amount by which the cost of a country's imports exceeds the value of its exports.

Funded by going into debt and or selling your assets to the other country

imports>exports

why do we care?

Export = Demand
Import = supply

Scare currency is valuable currency

Export raise the value of a currency

Imports lower the value of a currency

Imports and exports changes the value of our money

When we export = our money becomes more valuable

When we import = our money becomes less valuable

US is the greatest importer on earth, so the dollar should be becoming less valuable, however, this isn't this case at all
Countries bring their money here, bc its the place to invest

trade balance

exports=imports

exchange rates (value of our currency internationally) ...

translate to domestic prices of foreign goods and services

affected by imports and exports

Value of the dollar changes the prices of the things we buy

Becomes more expensive or cheaper depending if the value of the dollar goes up or down