Unit 4 Review Part 1

The budget balance is equal to:

• Total spending by the government

• Taxes minus transfer payments

• Taxes minus government spending and transfer payments

• The sum of surpluses and deficits over time

• Total tax revenues collected

How can a government promote long-run economic growth? (CHOOSE 2)

• create unpredictable regulations

• invest in research and development

• encourage deforestation and desertification

• provide political stability

• make child care more difficult

Which of the following shifts demand for the US dollar in the foreign exchange market?

• US purchases of foreign goods

• US purchases of foreign services

• US purchases of foreign monetary assets

• Foreign purchases of US goods

• US tariffs on foreign goods

Which of the following will increase the supply of Mexican pesos on the foreign exchange market?

• Foreign purchases of Mexican goods increase

• Inflation rises in Mexico

• Interest rates fall in Mexico

• A quota on foreign imports, imposed by the Mexican government

• A US tariff imposed on Mexican goods

When the dollar appreciates:

• the demand for US exports increases.

• the supply of US exports increases.

• the demand for US exports decreases.

• the supply of foreign imports increases.

• the supply of US exports decreases.

Which of the following transactions is recorded as a credit entry in the country’s current account?

• Imports of capital goods

• Exports of consumer goods

• Purchases of foreign government bonds

• Sales of domestic financial assets to foreign investors

• Investments in foreign companies

In the Velocity of Money equation, what does PY equal? (CHOOSE ALL THAT APPLY)

• real GDP

• nominal GDP

• MV

• velocity of money

• money supply