Economics 10th Edition Stephen Slavin - Solutions

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12. If you could buy a market basket of goods and services in the United States for $10,000 and those same goods and services cost you $7,000 in Russia after you converted your dollars into rubles, (a) is the ruble undervalued or overvalued relative to the dollar? (b) by what percent? (LO3)
11. If you could buy a market basket of goods and services in the United States for $1,000 and those same goods and services cost you $1,200 after you converted your dollars into euros, (a) is the euro undervalued or overvalued relative to the dollar?(b) by what percent? (LO3)
10. Brazil ran a current account defi cit of $55 billion.What is its balance on the capital account? (LO3)
9. A country had exports of $100 billion, imports of$90 billion, net transfers from abroad of 2$10 billion, and 2$5 billion of net income from foreign investments. What is the country’s current account balance? (LO2)
8. Use the exchange rates listed in Figure 6 to fi nd how much it would cost in the currency specifi ed to make the purchases listed A bottle of Viagra priced at $40 is sold in Berlin. (LO3)
7. Use the exchange rates listed in Figure 6 to fi nd how much it would cost in the currency specifi ed to make the purchases listed A Cadillac priced at $20,000 is sold in London. (LO3)
6. Use the exchange rates listed in Figure 6 to fi nd how much it would cost in the currency specifi ed to make the purchases listed Windows Vista priced at $100 is sold in China. (LO3)
5. Use the exchange rates listed in Figure 6 to fi nd how much it would cost in the currency specifi ed to make the purchases listed A DVD priced at $10 is sold in Mexico City. (LO3)
4. Use the exchange rates listed in Figure 6 of the chapter to fi nd how much it would cost in U.S. dollars and cents to make the purchases listed A German camera priced at 250 euros. (LO3)
3. Use the exchange rates listed in Figure 6 of the chapter to fi nd how much it would cost in U.S. dollars and cents to make the purchases listed A British book priced at 12 pounds. (LO3)
2. Use the exchange rates listed in Figure 6 of the chapter to fi nd how much it would cost in U.S. dollars and cents to make the purchases listed A carton of Canadian paper priced at $9.00 Canadian. (LO3)
1. Use the exchange rates listed in Figure 6 of the chapter to fi nd how much it would cost in U.S. dollars and cents to make the purchases listed A Toyota Corolla priced at 1.4 million yen. (LO3)
10. The main difference between our being a debtor nation in the 19th century and our being a debtor nation since the early 1980s was that in the 19 th century we ran up a debt by buying _____________ goods; since the early 1980s we have run up a debt buying _____________ goods. (LO4)
9. If Tim Matray wanted to buy wine from a French merchant, he would pay her with _____________ . (LO1)
8. Today exchange rates are set by _____________ and _____________ . (LO3)
7. Under the gold standard, if country K’s price level declines, its imports will _____________ and its exports will _____________ . (LO3)
6. Under the gold standard, if country J imports more than it exports, it has to ship to the trading partners with whom it has trade defi cits. This will depress country J’s _____________ , and its price level will _____________ . (LO3)
5. To be on the gold standard, a nation must maintain a fi xed ratio between its gold stock and _____________ . (LO3)
4. A nation is on the gold standard when it _____________ . (LO3)
3. The basis for international fi nance is the exchange of _____________ . (LO1)
2. Most all the dollars that foreigners have earned from trading with the United States have been in the form of _____________ . (LO2)
1. The entire fl ow of U.S. dollars and foreign currencies into and out of the country constitutes our _____________ . (LO2)
33. Suppose that last month the U.S. dollar was trading on the foreign-exchange market at 0.85 euros per dollar. Today the U.S. dollar is trading at 0.88 euros per dollar. (LO3)a) The dollar has depreciated and the euro has appreciated.b) The euro has depreciated and the dollar has appreciated.c)
32. If a Japanese DVD player priced at 12,000 yen can be purchased for $60, the exchange rate is (LO3)a) 200 yen per dollar.d) 200 dollars per yen.b) 20 yen per dollar.e) none of the above.c) 20 dollars per yen.
31. Running mounting current account defi cits is analogous to . (LO4)a) running up debt on a credit cardb) taking money out of one pocket and putting it in anotherc) owing money to ourselvesd) borrowing money that never has to be repaid
30. Which is the most accurate statement? In early 2008 there was strong evidence that the . (LO3)a) yuan and yen were overvalued against the dollarb) yuan and yen were undervalued against the dollarc) yuan was undervalued against the yend) yen was undervalued against the yuan
29. According to the “Big Mac Index,”. (LO3)a) the U.S. dollar is too highly valued relative to virtually all other currenciesb) the U.S. dollar is valued too low relative to virtually all other currenciesc) you will be able to buy a Big Mac much more cheaply in China or Russia than in the
28. The most accurate statement would be: (LO4)a) The current account defi cit is high, but falling.b) The current account defi cit will bankrupt us by 2020.c) If our trade defi cit begins falling, the current account defi cit will fall.d) Our trade defi cit is much higher than our current account
27. Suppose that in the year 2014 we run a trade defi cit of $900 billion. Our current account defi cit would be about billion. (LO4)a) $600d) $1,000b) $800e) $1,200c) $900
26. Suppose the world was on the gold standard. If Peru ran persistent trade defi cits, . (LO3)a) Peru would be able to continue doing so with no consequencesb) Peru’s money stock would decline, its prices would fall, and its trade defi cit disappearc) Peru would soon suffer from infl ationd)
25. Which is the most accurate statement? (LO2)a) Our balance on the current account is negative.b) Since our balance of payments is always zero, there is little to worry about.c) The income Americans receive from their foreign investments is much greater than the income foreigners receive for
24. If you were going to spend time in Italy, France, and Germany, you would be paying for things with. (LO1)a) lira, francs, and marksb) dollarsc) eurosd) gold
23. Which of these is the most accurate statement? (LO4)a) There is no basis for the claim that the United States is living beyond its means.b) Our current account defi cit is not a serious problem.c) Our trade defi cit is a major economic problem.d) Since 2002 the dollar has been rising against
22. Which is the most accurate statement? (LO2)a) Since our current account defi cit is matched by our capital account surplus, we have no problem with respect to our international transactions.b) Foreigners invest all the dollars they receive from our capital account defi cit to buy American
21. The main reason why we are the world’s largest debtor nation is . (LO4)a) our military spendingb) our trade defi citc) infl ationd) high taxes
19. Devaluation would tend to . (LO3)a) make the devaluating country’s goods cheaperb) make the devaluating country’s goods more expensivec) have no effect on the value of the devaluating country’s goods
18. The most important infl uence on the exchange rate between two countries is . (LO3)a) the relative price levels of the two countriesb) the relative growth rates of the two countriesc) the relative level of interest rates in both countriesd) the relative wage rates of both countries
15. The gold exchange standard was in effect from. (LO3)a) 1900 to 1944c) 1955 to 1980b) 1944 to 1973d) 1973 to the present
14. Which of the following is false? (LO3)a) The gold standard will work only when the gold supply increases as quickly as the world’s need for money.b) The gold standard will work only if all nations agree to devaluate their currencies simultaneously.c) The gold standard will work only if
11. Today international fi nance is based on. (LO3)a) the gold standardb) mainly a relatively free-fl oating exchange rate systemc) fi xed rates of exchange
9. The total of our current and capital accounts. (LO2)a) will always be zerob) will always be negativec) will always be positived) may be positive or negative
8. An American importer of Italian shoes would pay in. (LO1)a) dollarsc) eurosb) goldd) lira
7. Which one of the following statement is the most accurate? (LO4)a) As a percentage of GDP, the United States has the highest current account surplus of any nation.b) As a percentage of GDP, the United States has the highest current account defi cit of any nation.c) As a percentage of GDP, our
6. Which statement is true? (LO4)a) Foreigners own most of the assets in the United States.b) We own more assets in foreign countries than foreigners own in the United States.c) Foreigners are driving up interest rates in the United States.d) None of these statements is true.
5. The world’s leading debtor nation is. (LO4)a) Argentinac) Mexicob) Brazild) the United States
4. During the 1980s, . (LO4)a) both American investment abroad and foreign investment in the United States increasedb) both American investment abroad and foreign investment in the United States decreasedc) American investment abroad increased and foreign investment in the United States decreasedd)
3. Which one of the following is the most accurate statement? (LO5)a) The American empire, like the Romans, the Spanish, and the British before us, uses its military might to force other nations to provide us with low-cost goods.b) No one would ever suggest that there is such a thing as an American
2. In 2009 our net foreign debt was over $trillion. (LO4)a) twoc) sixe) tenb) fourd) eight
1. We became a debtor nation in . (LO4)a) 1975c) 1985b) 1980d) 1990
15. Web Activity: Melissa Larmon bought a German camera for 300 euros. How much would she have paid in U.S. dollars? Go to www.x-rates.com/calculator.html
14. Web Activity: Jennifer Saxton bought a microwave oven made in China for $200. How much would she have paid in Chinese yuan? Go to www.x-rates.com/calculator.html
13. Practical Application: Anne Hilbert has been hired by a Washington think tank to predict the trend over the next decade in the weighted average exchange value of the U.S. dollar. Its record from 1972 through early 2010 is shown in Figure 5 (A);she needs to provide evidence to back up her
12. Practical Application: Foreigners are buying up hundreds of billions of dollars a year in American assets. In what ways should this be a matter of concern to Americans?
11. Who demands Japanese yen? Who supplies yen?
10. How is the exchange rate determined in a freely fl oating rate system?
9. What is a foreign exchange rate? Provide a few examples.
8. Explain why a currency depreciation leads to an improvement in a nation’s balance of trade.
7. If the dollar depreciates relative to the Japanese yen, will the Sony DVD player you wanted become more or less expensive? What effect will this have on the number of Sony DVD players that Americans buy?
6. For several months before your vacation trip to Germany you fi nd that the exchange rate for the dollar has increased relative to the euro. Are you pleased or saddened? Explain.
5. Can there be a defi cit on Current Account and a defi cit on Capital Account at the same time? Explain.
4. How did the United States go from being the world’s largest creditor nation to the world’s largest debtor?
3. Why does the dollar fl uctuate with other currencies?
2. What is the gold standard? How does it work?
1. What is meant by our balance of payments? Explain what current account and capital account are.
4. How much is the percentage of income received by the middle three quintiles on line S? Percent of income 100 80 60 40 20 0 0 10 20 100 S R 30 40 50 60 70 80 90 100 Percent of households
3. How much is the percentage of income received by the highest quintile on line R? Percent of income 100 80 60 40 20 0 0 10 20 100 S R 30 40 50 60 70 80 90 100 Percent of households
2. How much is the percentage of income earned by the highest quintile on Lorenz curve Q? Percent of income 100 80 60 40 20 0 0 10 20 100 S R 30 40 50 60 70 80 90 100 Percent of households
1. How much is the percentage of income received by the lowest quintile on line R? Percent of income 100 100 80 60 40 20 0 100 S R 0 10 20 30 40 50 30 40 50 60 70 80 90 100 Percent of households
7. The richest quintile of humanity spends about ___________times as much on consumption as the world’s poorest quintile. (LO 1 )
6. The poverty line is set by the ___________. (LO 4 )
5. The basic problem with the absolute concept of poverty is fi nding the ___________. (LO 4 )
4. About ___________percent of all poor people are black. (LO 4 )
3. About one out of every ___________black Americans is poor. (LO 4 )
2. The two biggest benefi t programs aimed solely at the poor are and ___________. (LO 6 )
1. The richest 1 percent of our population owns over ___________percent of our wealth. (LO 2 )
48. Which one of the following people would stand the least chance of being poor during her or his lifetime? (LO 11)a) Someone with less than 12 years of educationb) Someone with more than 12 years of educationc) Someone whited) Someone black
47. Which statement best refl ects the views of Charles Murray? (LO8)a) The main cause of poverty can be traced to the heritage of slavery.b) Poverty is caused largely by government antipoverty programs.c) Poverty can be substantially reduced by providing government jobs to all who want to work.d)
46. Which is the most accurate statement? (LO6, 10)a) Most poor people receive public assistance(formerly called welfare).b) Public assistance has been discontinued.c) The number of people receiving public assistance is less than one-third as high as it was in 1993.d) Because of the 2007–2009
45. Who would most likely receive food stamps before the age of 20? (LO6)a) A white personb) A black personc) An Asian-American persond) A person who grew up in a two-parent household
44. Which one of the following statements is false? (LO 5 )a) Nearly half of all poor Americans own their own homes.b) A poor person today has roughly the same standard of living as a middle-income person 30 years ago.c) The reported consumption spending of people in the lowest income quintile is
43. Who made this statement? “I still have the audacity to believe that people everywhere can have three meals a day.” (LO 4, 8 )a) Charles Murrayb) William Julius Wilsonc) Barbara Bush (mother of President George W.Bush)d) Martin Luther King, Jr.e) Lisbeth B. Schorr
42. Which is the most accurate statement? (LO 6 )a) Because of the efforts of the Veterans Administration, only a handful of veterans are homeless.b) Most military families have to get by on food stamps and help from food pantries and soup kitchens.c) Military pay is high enough to keep virtually
41. Which one of these is the most accurate statement about real median family income? (LO1, 2)a) It has declined steadily over the last fi ve years.b) It has fallen during nearly every recession since the 1960s.c) It is about twice as high as it was in 1970.d) It increased steadily since 2000.
40. Which one of the following statements is the most accurate? (LO 9 )a) Our nation provides cradle-to-grave security for our military personnel and their families.b) Because of the relative high pay and benefi ts provided by the military, very few military families run into fi nancial problems.c)
39. What would be the most effective way of raising people out of poverty? (LO 9 )a) Cut off welfare payments to every family with at least one adult member between the ages of 18 and 64.b) Raise the minimum hourly wage.c) Eliminate the earned income tax credit.d) Have the government put welfare
38. Which one of the following is the most accurate statement? (LO4)a) Our poverty rate is somewhat higher today than it was in 1999.b) Our poverty rate is over 15 percent.c) If it were not for the 2007–2009 recession, our poverty rate would probably be below 10 percent.d) Our poverty rate is
37. Which statement is true? (LO 6 , 9 )a) Over 90 percent of the families receiving public assistance are headed by people who are employed.b) Nearly 90 percent of those in the workforce earn at least $10 an hour.c) The welfare rolls are much lower today than they were in 1994.d) If every adult on
36. Which statement is true? (LO 6 , 10 )a) Most of the nation’s poor receive welfare benefi ts.b) Since the Welfare Reform Act of 1996, no new welfare cases have been accepted.c) More people than ever are receiving welfare benefi ts.d) Most single mothers who have recently left the welfare rolls
35. Which one of the following people would most likely experience at least a year of poverty after her or his 20th birthday? (LO 5 )a) A high school dropoutb) A black personc) A white persond) A college dropout
34. The largest government program aimed exclusively at helping the poor is . (LO 6 )a) the earned income tax creditb) public assistancec) food stampsd) Social Security
33. Which statement is true? (LO 1 , 2 )a) If we redistributed income every year so that everyone would get the same amount, this would hurt the effi ciency of our economy.b) Virtually everyone agrees that we should redistribute most of the income received by the rich to the poor.c) The poor get a
32. Which is the most accurate statement? (LO 4 , 5 )a) Although there are poor children in the U.S., our child poverty problem is not nearly as bad as that of most other rich countries.b) The reason so many people in poor countries still don’t have safe drinking water is that it would cost at
31. Which statement is true? (LO 2 )a) All of the 10 richest Americans inherited their fortunes.b) In order to make the top ten list of American billionaires, you need a fortune of over $15 billion.c) The two richest families in the United States today are the Rockefellers and the Fords.d) Most of
30. Which of the following statements is the most accurate? (LO 5 , 6 )a) The welfare rolls today are much lower than they were in 1996.b) About 1 in 8 Americans lives below the poverty line.c) Without Social Security benefi ts, at least 75 percent of all senior citizens would be poor.d) The
29. Real median family income in the U.S. has. (LO 1 , 2 )a) grown each year since 2000b) declined each year since 2000c) risen by about 20 percent since the late 1960sd) become lower today than it was in 1975
28. Between 1968 and 2008, our income distribution has. (LO 1 )a) became more equalb) stayed about the samec) became less equal
27. Between 1968 and 2008, the percentage share of total income grew for the . (LO 1 , 3 )a) lowest two quintilesb) the middle three quintilesc) the highest quintiled) the highest quintile and the lowest quintile
12. The perfect competitor has a __________ demand curve. ( LO1 )
11. Only the __________ in the __________ produces at the minimum point of its ATC. ( LO1 )
10. An oligopoly is an industry with __________ . ( LO4 )

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Economics 10th Edition Stephen Slavin - Solutions

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