(1.) In order to offset interest rate increases as a result of government borrowing, the Federal Reserve would __________.

• a.)
• lower the reserve requirement
• b.)
• sell bonds to the public
• c.)
• increase the Fed Funds rate
• d.)
• decrease the money supply

(2.) Government expenditures create demand for goods and services.

This is known as __________ and will cause AD to shift to the __________.

• a.)
• contractionary monetary policy; left
• b.)
• expansionary monetary policy; left
• c.)
• expansionary fiscal policy; right
• d.)
• contractionary fiscal policy; right

(3.)Which of the following is a reason why monetary policy might NOT be helpful in resolving an economic crisis?

• a.)
• Changes in interest rates can only affect unemployment, doing little to curb inflation.
• b.)
• Monetary policy can sometimes affect the economy too quickly, as people respond overnight to changes in interest rates.
• c.)
• Businesses may have invested in capital based on predictions of future revenues that might not turn out to be profitable.
• d.)
• At high levels of unemployment, expansionary policy will increase economic growth.

(4.) Which of the following describes what will happen to international trade when the dollar is weak?

• a.)
• A decrease in the amount of goods Americans can buy abroad
• b.)
• A negative effect on GDP in the U.S.
• c.)
• A decrease in net exports for the U.S.
• d.)
• An increase in the U.S. standard of living

(5.) China has a __________ with the United States, meaning that it exports more than it imports.

• a.)
• trader barrier
• b.)
• trade surplus
• c.)
• floating rate
• d.)
• trade deficit

(6.) Which of the following, relating to comparative advantage, is true?

• a.)
• It will always belong to the country with the absolute advantage in production of a good.
• b.)
• It is the best rationale for quotas and import taxes.
• c.)
• It occurs when a country's production of a good is less efficient that its trading partner's.
• d.)
• It occurs when a country has a lower opportunity cost for production of a good than its trading partner.

(7.) Which of the following represents the advantages of using trade barriers?

• a.)
• They can be useful during economic downturns.
• b.)
• They create greater competition among businesses.
• c.)
• They are most useful when the economy is at full employment.
• d.)
• They are not involved in a political process so the time to implement them is minimal.

(8.) Which statement is true regarding sustainable economic growth?

• a.)
• It emphasizes the importance of current consumption over future consumption.
• b.)
• It is not affected by developments in technology.
• c.)
• It considers the impact over time due to natural resource depletion.
• d.)
• It does not factor in the cost of production based waste.

(9.) Which of the following is anonprofit organization of economists who conduct cost/benefit analyzes on policies that address global issues?

• a.)
• Conference of Parties
• b.)
• Kyoto Protocol
• c.)
• Copenhagen Consensus
• d.)
• United Nations Intergovernmental Panel on Climate Change

(10.) Which of the following involves assessing all costs of production, including at a firm's production site and along the entire supply chain?

• a.)
• Philanthropy
• b.)
• Socially responsible investing
• c.)
• Environmental management
• d.)
• Corporate governance