Mastery Assess It 7 E

1. How did the Internet help give rise to the "sharing economy?" (Writing Question)

2. Which of the following statements are true regarding the worldwide redistribution of wealth? Choose all that apply.

A.	Most developing nationseven those with high levels of political corruptionhave seen dramatic growth.
B.	From 1990 to 2010, the percentage of people worldwide who were living below the absolute poverty line was halved.
C.	From 1990 to 2010, China's economy grew 1,300 percent.
D.	As more of the world's economic growth comes from less developed nations, high-income nations, such as the United States, are losing their higher standard of living.

3. Which of the following are not common methods by which companies may attempt to increase productivity? Choose all that apply.

A.	allowing workers to share in profits through commission or profit sharing
B.	investing in new technology
C.	saving money by not investing in improved tools and factories
D.	having employees work on Saturdays

4. Why must governments be careful with attempts to increase standards of living through direct investment in infrastructure projects?

A.	A private-sector firm will have already made any investment worth making.
B.	Infrastructure projects are unrelated to citizens' standard of living.
C.	Investments in infrastructure rarely produce a net economic benefit.
D.	Investments in infrastructure projects can be wasteful.

5. Which of the following circumstances have helped international interdependence develop? Choose all that apply.

A.	Cheaper and easier international communication was developed.
B,	All of the nations of the world have developed a true market economy.
C.	The world agreed on the standardized shipping container.
D.	Large amounts of industry and manufacturing now take place in the developing nations of the world.

6. Which of the following is an example of increased productivity?

A.	A child cleans his room.
B.	An engineer designs a new airplane.
C.	A restaurant owner discovers a way to get more customers without spending more on advertising.
D.	A prospector discovers a gold nugget.

7. A reduction in taxes accompanied by an increase in government spending in order to stimulate the economy is known as _____.

A.	expansionary fiscal policy
B.	contractionary fiscal policy
C.	neutral fiscal policy
D.	a type of automatic stabilizer

8. Which of the following is a benefit of an American company opening a factory in a foreign nation?

A.	The price of the product will usually drop.
B.	More Americans will get jobs.
C.	The other nation will open factories in the United States.
D.	The American unemployment rate will be lower.

11. Which of the following points are true regarding the World Trade Organization (WTO)? Choose all that apply.

A.	The WTO seeks to break down protectionist tariffs, quotas, and subsidies in order to create a global free market.
B.	The WTO is controlled by and gets funding from the United States and the European Union.
C.	The WTO requires member nations to be transparent in their trading practices.
D.	Member nations of the WTO sign agreements that they will lower tariffs, quotas, and other barriers to trade.

12. Which of the following statements are true about the United States Federal Reserve? Choose all that apply.

A.	The Fed receives about $5 billion per year in operating costs from the federal government.
B.	The severe business cycles of the early 1900s led the American public to recognize the need for the Fed.
C.	Since the Great Depression, when the role of the Fed increased greatly, business cycles have been more mild and regulated.
D.	The Fed has the ability to adjust the reserve requirement, or the percentage of deposited accounts that a bank must keep in its vault.

13. Which of the following exchanges would be filed under the financial account?

A.	revenue gained from American exports
B.	money spent on imports
C.	direct investment into the U.S.
D.	transfers of assets by migrants

14. Today, power over the American money supply is vested through _____.

A.	the Second Bank of the United States
B.	the First Bank of the United States
C.	the Federal Reserve
D.	state-run banks

15. Which of the following is true of supply-side economics?

A.	It tends to promote policies that increase government regulations and provide tax cuts to producers.
B.	It tends to promote policies that decrease government regulations and provide tax cuts to producers.
C.	It tends to promote policies that decrease government regulations and provide tax increases for producers.
D.	It tends to promote income equality as measured by the Lorenz curve.

16. Which of the following is an example of both offshoring and outsourcing?

A.	An American motorcycle company hires a Japanese company to make tires for its motorcycles.
B.	An American automaker in Detroit hires a company in Indiana to make a specific part for its cars.
C.	An American company opens a call center in India for American customers.
D.	A Chinese company opens an office in California and hires American engineers to design new aircraft.

17. Which of the following exchanges would be filed under the capital account?

A.	money made from foreign businesses on U.S. soil
B.	taxes raised by the U.S. from foreign nationals
C.	net transfers
D.	portfolio investments

18. Which was not one of the three goals of the Federal Reserve when it was created in 1913?

A.	stabilizing long-term interest rates
B.	stabilizing erratic prices
C.	achieving maximum employment
D.	creating more equal distribution of wealth

20. How might an investment in physical capital affect a firm?

A.	It might decrease fixed costs and lower marginal costs of production.
B.	It might decrease fixed costs but raise variable costs of production.
C.	It might increase fixed costs but lower marginal costs of production.
D.	It might increase fixed costs and raise marginal costs of production.

21. If China had a GNI per capita rate of $11,850, the World Bank would define it as a(n) _____.

A.	lower-middle-income country
B.	high-income country
C.	low-income country
D.	upper-middle-income country

22. What effect does raising reserve requirements have on the economy?

A.	It lowers the amount of money that banks are required to keep in their vaults, raising the money supply.
B.	It lowers the price of the T-bills and increases the yield (or interest rate) on them.
C.	It raises the amount of money that banks are required to keep in their vaults, thus limiting the money supply.
D.	It raises the interest rate that banks must pay to borrow from the Federal Reserve. In turn, banks have to increase their interest rates for customers in order to maintain their profit.

23. How is productivity related to price?

A.	Higher productivity allows the same good to be sold for a higher price.
B.	Higher productivity allows the same good to be sold for less money.
C.	High productivity increases demand, which, in turn, increases price.
D.	High productivity forces consumers to be more price conscious.

24. Which of the following would most likely not occur during quantitative easing?

A.	The monetary base (MB) would increase.
B.	The dollar would strengthen in relation to other currencies.
C.	Interest rates would lower.
D.	The amount of money in circulation would increase.

25. Why are trade imbalances usually self-correcting?

A.	The World Trade Organization strictly regulates trade imbalances.
B.	The demand for the currency that is weakened by the trade imbalance will increase.
C.	It will become unprofitable for the nation with the weakened currency to trade with the nation with the stronger currency.
D.	Nations will forcefully demand that trade become balanced.

26. What is one risk to private enterprise if a government continues to spendsignificantly more money than it takes in?

A.	outsourcing
B.	crowding out
C.	deflation
D.	trade war

27. Which of the following is a benefit of international trade for developing nations?

A.	Due to lower labor costs, developing countries can attract foreign direct investment, which is when a foreign multinational company opens a factory in a developing country.
b.	International companies usually pay a very high wage and offer benefits to their factory workers in developing countries.
C.	International companies that build factories in developing nations usually go to great lengths to protect the natural resources of the developing nation.
D.	Among other nations, there will be a great deal of demand for the currency of the developing nation.

28. Which policy is most in line with the Keynesian approach to combating a deep recession?

A.	Increase taxes and decrease spending.
b.	Decrease taxes and decrease spending.
C.	Increase taxes and increase spending.
D.	Decrease taxes and increase spending.

29. What do firms in developing countries do when their currency is too unstable to invest in production technology?

A.	They attempt to attract foreign investors who will lend them a more stable currency.
B.	They attempt to convert their currency into a more stable currency.
C.	They ask their governments for a loan.
D.	No currency is too unstable to use for investment.

30. Which of the following is not an example of how a country might increase the standard of living for its own citizens?

A.	increasing research
B.	increasing Internet connectivity
C.	increasing foreign aid
D.	increasing educational opportunities