1143 Questions & Blanks

Question 1

International trade has ________ since it began

Answer 1

increased

Question 2

International trade decreased during the Great Depression because of _______

Answer 2

decreased income and increased trade restrictions

Question 3

The value of a nation’s exports in generally _____

Answer 3

about the same as the value of its imports

Question 4

A nation that can produce a good at a lower cost than another nation has an _______ in the _____ of that good

Answer 4

absolute advantage

production

Question 5

________ advantage is more common than __________

Answer 5

Comparative

absolute

Question 6

All nations benefit if each produces and exports goods in which it has the ___________ and imports goods in which it has the _________

Answer 6

greatest relative efficiency

least relative efficiency

Question 7

If one nation has a comparative advantage in producing one good,

Answer 7

the other nation must have a comparative advantage in the other good

Question 8

When there is more competition,

Answer 8

citizens receive the gains

Question 9

Nations with the __________ realize more gains

Answer 9

greatest economies of scale

Question 10

________ nations tend to receive a larger percentage of the gains.

Answer 10

smaller

Question 11

When trade occurs between a large and a small nation, the ___________ receives more benefit from the trade because

Answer 11

smaller

trade provides more opportunities and therefore more relative gains for that nation

Question 12

Almost no nation allows completely ______

Answer 12

free trade

Question 13

Tariffs usually result in a _______ for both domestic and imported goods.

Answer 13

price increase

Question 14

A _____ forces producers to become more efficient

Answer 14

tariff

Question 15

Most economists prefer

Answer 15

free trade

Question 16

Restrictions protect infant:

Answer 16

foreign industries

Question 17

Restrictions protect ________ workers

Answer 17

domestic

Question 18

Restrictions protect national

Answer 18

security

Question 19

Restrictions provide increased ________

Answer 19

government revenue

Question 20

Free trade ________ total output

Answer 20

increases

Question 21

Free trade encourages

Answer 21

international competition

Question 22

Free trade benefits ____

Answer 22

everyone

Question 23

Free trade encourages peace.

Answer 23

.

Question 24

Trade restrictions are seldom ______

Answer 24

beneficial

Question 25

Since 1976 the United States has been running a ________, and today it has a larger ___________ than any other nation

Answer 25

trade deficit | national debt

Question 26

The factors determining whether a nation runs a trade surplus or deficit are ____

Answer 26

its competitiveness and the relative state of its economy

Question 27

An increase in the trade deficit reduces the __________

Answer 27

income of an average worker

Question 28

Domestic production _________ during a trade deficit

Answer 28

decreases

Question 29

Free trade allows

Answer 29

more people to enjoy economic freedom and prosperity the laws of supply and demand to control the international market businesses and nations to produce competitive and profitable goods all consumers to benefit from high-quality, low-priced goods

Question 30

Although free trade is preferable, governments impose trade restrictions because __________ such as low inflation, high growth, and low unemployment are important to them

Answer 30

domestic interests

Question 31

International finance is more complicated than domestic finance because ______

Answer 31

it involves the exchange of one currency for another

Question 32

The price of everything in an economy is dependent on the ___________.

Answer 32

value of its currency

Question 33

The value of a nation's currency and its _____ affect other nations

Answer 33

monetary and fiscal policies

Question 34

Because a nation's monetary and fiscal policies influence ___________, income, and price levels, they ultimately affect _______.

Answer 34

interest rates | exchange rates

Question 35

Any increase in ____ or in _____ decreases the value of a nation's currency

Answer 35

price | income

Question 36

Payments coming into a nation are

Answer 36

credits

Question 37

Payments going out of a nation are

Answer 37

debits

Question 38

On a balance of payments account, incoming payments are indicated by a + and outgoing payments are indicated by a -

Answer 38

.

Question 39

The combined value of all transactions listed on a balance of payments account _____

Answer 39

must equal zero

Question 40

The three major categories of a balance of payments are __________, ____________, and the _____________

Answer 40

capital account current account official transactions account

Question 41

No ____________ has the power to set economic policies by taxation, redistribution of income, imposition of regulations, or enforcement of property rights.

Answer 41

international organization

Question 42

Adherence to international economic policies is purely _______

Answer 42

voluntary

Question 43

Money is a highly ______ that makes the economy function smoothly

Answer 43

liquid financial asset

Question 44

Three functions of money

Answer 44

medium of exchange measure of value store of wealth

Question 45

For money to function in a modern economy,

Answer 45

all people must believe that all other people will accept it in exchange for other goods

Question 46

To prevent fluctuations in the money supply, the money _________ must control the supply.

Answer 46

issuer

Question 47

The ____________ issues money in the U.S.

Answer 47

Federal Reserve Bank

Question 48

Any measurement of money is meaningful because it conveys a ____________

Answer 48

relative price

Question 49

Banks __________ by using deposited funds as the basis for additional deposits in the form of loans

Answer 49

create money

Question 50

The economic problems that may result from the creation of money by banks include

Answer 50

an increase in prices and a decrease in the value of money a financial panic when depositors all demand their money at once bank failures

Question 51

Included as disadvantages to government insurance of deposits are the facts that ______

Answer 51

they are very expensive | they remove an effective restraint on bank lending policies

Question 52

Fannie Mae and Ginnie Mae are government-organized companies that ___________ from banks

Answer 52

sell bonds and purchase mortgages

Question 53

The Bible teaches that we are to lay up treasures in _______ rather than accumulate _________

Answer 53

Heaven | earthly wealth

Question 54

the ___________ guarantees bank deposits through the FDIC and various bonds

Answer 54

government of the US

Question 55

A ____ asset offers a higher rate of return but it less liquid and takes more than one year to mature

Answer 55

capital market

Question 56

a loan secured by real estate

Answer 56

mortgage

Question 57

FDIC

Answer 57

Federal Depository Insurance Corporation

Question 58

EMU

Answer 58

European Monetary Union

Question 59

An S&L is a ___________

Answer 59

savings and loan institution

Question 60

sale to a third party to avoid trade restrictions

Answer 60

transshipment

Question 61

Arguments in favor of trade restrictions

Answer 61

protection of domestic industries and workers protection of national security increased revenue