All True or False question

1. Economic analysis shows that not every individual within an economy gains from international trade.

2. The price of one country's currency in terms of another country's currency is called the exchange rate.

3. Money serves three basic functions.It is a medium of exchange, a store of value, and a unit of account.

4. Assume that you just bought a $1,000 bond that will mature in 10 years.If overall interest rates start to fall in the next several years, the market value of your bond will likely decrease in the open market.

5. If a country with a civilian population of 1,000 has 100 people who are currently unemployed and another 700 people who are unemployed, then the labor force participation rate is 80%.

6. Inflation is defined as a continuing rise in the general level of prices of goods and services.

7. A secondary effect of policies that restrict imports into a particular nations is that they decrease the demand for the nation's exports.

8. Economic theory suggest that free trade between people in two countries only benefits those in one country; the other is harmed.

9. Inflation is defined as a continuing fall in the general level of prices of goods and services.

10. If you go to the bank and notice that a U.S. Dollar buys fewer Mexican Pesos than it used to, this means the dollar has depreciated and the peso has appreciated in the Foreign Exchange Market.

11. A reserve requirement of 25 percent implies a potential deposit expansion multiplier of 4.

12. History shows that greater unemployment insurance benefits made to job seekers by the government tend to increase the actual rate of unemployment that is measured in the economy.

13. M1 is the broadest definition of the money supply, because it includes currency, demand deposits, other checkable deposits, and traveler's checks.

14. An investor from China purchasing a U.S. government bond creates a supply of Chinese yuan and a demand for U.S. dollars in the Foreign Exchange Market.

15. If an economy is operating at a point above its potential output level, this means the actual unemployment rate measured will likely be greater than the natural unemployment rate.

16. When the Treasury Department issues new bonds in the primary market, this usually results in a decrease in the overall money supply.

17. Within the Aggregate Demand/Aggregate Supply model, the variable on the horizontal axis in the aggregate goods and services market is the overall price level in the economy.

18. The purchase of U.S. corporate bonds in the secondary market by an investor from Japan is recorded as a debit in the U.S. Balance of Payments accounts.

19. If the reserve requirement is 5 percent and you deposit $100 in your bank account, this means the bank will have to keep $95 in required reserves.

20. A trade surplus is a situation that occurs when a country's imports of goods and services are less than its exports.

21. If a country with a civilian population of 1,000 has 100 people who are currently unemployed and another 700 people who are unemployed, then the employment rate is 70%.