true or false questions _____1. Most tax payments increase as GDP increases. ___
ID: 1196473 • Letter: T
Question
true or false questions
_____1. Most tax payments increase as GDP increases.
____ 2. Government spending influences spending indirectly.
____ 3. If increases in government spending lead to inflation, the value of the multiplier is reduced.
____ 4. Supply-side policy is based on the assumption that people's economic behavior is not affected by taxes.
____ 5. During the 2008 presidential campaign, candidate Barack Obama argued in favor of repealing the majority of the Bush tax cuts in order to increase government revenue.
____ 6. When people trade goods for money, money is being used as a medium of exchange.
____ 7. When you pay for some purchase with a check, cash must be transferred to another account to pay for the check.
____ 13. When someone asks how much money you made this year, they are using the term "money" correctly.
____ 14. The Federal Reserve Open Market Committee includes the seven members of the Board of Governors, presidents of five of the twelve district banks, and the Secretary of the Treasury.
____ 19. One nation can gain from an exchange only at the expense of another.
____ 22. Comparative advantage is illustrated by the slopes of production possibilities frontiers.
____ 29. In 2007, the value of the American dollar rose relative to the euro.
____ 31. The dollar has depreciated if it buys less of a foreign currency.
____ 32. Interest rate differentials can cause rapid fluctuations in short-run exchange rates.
____ 33. If British government bonds pay a higher interest rate than U.S. government bonds, the dollar should appreciate.
____ 36. If the dollar appreciates, American consumers will buy more foreign goods and services.
____ 37. In an open economy, aggregate supply consists of domestic production plus imports.
Explanation / Answer
(1) True
As GDP rises, so does consumption, output & income, hence tax revenue rises.
(2) True
Higher (lower) government spending increases (decreases) GDP, which in turn increases (decreases) consumption demand.
(3) True
Multiplier measures the increase in income arising out of a unit of increase in spending. If government spending increases inflation, consumption demand decreases, leading to lower multiplier.
(4) False
Supply side economics believes in stimulating economy by increasing output, by lowering taxes or increasing de-regulation by government.
(5) True
(6) True
Money is exchanged with another good.
(7) True
To clear a check, you must have sufficient cash balance in the bank account to pay for the check.
(13) True
Here, money is being referred to as a store of value & unit of account to denote the net income.
(14) True
(19) False
Two countries can gain without causing a loss to each other.
(22) True.
Slope of PPF shows relative (opportunity) cost of two goods that an economy can produce, and this reflects in which good a country has comparative advantage.
(29) False
Dollar fell against Euro.
(31) True.
(32) False.
Interest rate differentials take some time to cause fluctuations in exchange rates. The effect cannot be instantaneous or very short term.
(33) True.
Investors will want to buy more of high-paying British bonds, and British Pound demand will increase while dollar demand will decreasing, causing a dollar depreciation.
(36) True.
Appreciating dollar will increase the price of US exports and lower the price of imports from abroad, so US consumers will buy more foreign goods.
(37) True
Total supply equals the total amount of goods & services that are produced in an economy plus the imports from abroad.
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