Policy A is likely to be supported by politicians even though it makes society worse off. Which of these is a form of fiscal policy? Only countries with low wages will export b. If Tyler and Alex are trading partners, do their gains from trade depend on whether Tyler and Alex live in the same country? Se connecter S'inscrire; Masquer. These two types of gains from trade can be shown through Fig. In the presence of crowding out, fiscal policy that would have shifted aggregate demand from AD0 to AD2 will only move the economy to point: Increases in government spending financed through additional borrowing will typically have the largest impact on aggregate demand when: increased uncertainty causes a decrease in private sector investing. The United States currently has a net _____ with the rest of the world. Why might domestic producers also gain from free trade policies over those that impose tariffs on all goods? 11/8/2020 Econ 681 International Economics Flashcards | Quizlet 28/30 B. occurs when a firm sets an export price (net of trade costs) that is lower than its domestic price. International trade is similar to local trade because: both are based on the concept of comparative advantage. The first payment of Social Security benefits began in: Government spending as a percentage of GDP in the United States today is: one of the smallest among developed countries. both destroy jobs in the short run but increase the standard of living in the long run. You can skip questions if you would like and come back to Econ 380: International Trade. According to the median voter theorem, politicians will converge upon a spending bill of: Which of the following theories works to explain which voters will get their way in a democratic election? 0 0 297 views. (Figure: Foreign Trade 2) Refer to the figure. because domestic producers also consume at least some imported goods that cost less. In 2011, most of the 2009 federal stimulus package had been spent, but the unemployment rate remained exceptionally high at nearly 10%. 3. If official reserves are zero, a current account deficit of $1 million will cause a: What would cause a shift of the demand curve from D1 to D2 in the figure? Governments are more responsive to food crises: What explains the close connection between the economic boost just before Election Day and a politician winning reelection? Model Building and Gains from Trade (continued) 0 0 215 views. The national debt held by the public decreased. Which of the following best explains why special interest groups maintain so much power in the United States political process? Assume the government cancels a large infrastructure program, causing construction firms in the area to earn less and lay off workers. This is an example of the: Under which circumstance should an economic advisor for a small economy recommend a large increase in government spending? If the federal government spends 12% of GDP and collects revenues of 10% of GDP, what is the deficit as a percentage of GDP? The U.S. price of sugar is higher than the world price of sugar due primarily to a: (Figure: International Trade 1) Refer to the figure. Econ-202: PPF and Gains from Trade Worksheet Name: ID: 1. reduce income, increasing the necessity of child labor. Of the following, which is the smallest part of the United States budget? Based on the data in this chart, the country with the lowest level of economic freedom is: Democracy typically brings about more efficient outcomes because: citizens in democracies are better informed and have power to vote. If it chooses to increase government spending growth by 4percentage points, it should expect the economy to: The time necessary for Congress to propose and pass a fiscal policy plan is called the: When consumers reduce spending, the reduction in the velocity of money is split between: a decrease in growth and a decrease in inflation. During a recession, consumers hold more money by cutting back on their spending, resulting in _____ in inflation and _____ in real growth. If the Central Bank of China decides to hold more dollars as reserves, the: Assume that the initial real exchange rate for a country and its trading partner is 1:1. (Figure: Foreign Trade with a Tariff) Refer to the figure. If there are only two candidates, A and B, and an open market for kidney trading is the only issue being debated in this election, which candidate will win the election? In the long run, an increase in the growth rate of the money supply causes _____ in the real exchange rate and _____ in the real GDP growth rate. What is the dollar value of the lost consumer surplus as a result of prohibiting trade in this market? the costs of becoming informed are greater than the benefits of being informed. Se connecter S'inscrire; Masquer. Which of the following statements is TRUE? P. 169. ii. Trade improves consumer choice and total welfare. Why do studies show that food distribution is not better in economies with higher political competition? Nonetheless, one can show that trade, and gains from trade, will occur, even between countries with identical tastes, technology, and factor endowments. Japan increases its purchases of U.S. corn. Determine the opportunity cost of a good using the slope of the PPF and begin explanation of economic growth. Which provides an automatic stabilizer when the economy is declining? According to the figure, which of the following statements is TRUE? A negative real shock causes the LRAS curve to: In order for fiscal policy to effectively offset a $1 million decrease in consumer spending, the government would MOST likely have to: increase spending by less than $1 million. But let's say they decide that they want, instead of those 20 pants, they would want to trade 15 of them away for shirts. They both target aggregate demand to overcome business fluctuations. ----- 1?" A decrease in consumption growth will cause: Fiscal policy is a good option to stimulate an economy when: The case when an increase in government spending isn't large enough to significantly increase aggregate demand is called: If an increase in government spending of $100 million causes an increase in aggregate spending of less than $100 million, we call this phenomenon: Government spending is BEST for the economy when it is worth incurring some: long-run costs to get a short-run economic boost. Which of the following statements is NOT true about the sugar quota imposed by the United States government? Economic theory suggests that free trade between two countries generally benefits only one country, the other is harmed. As GDP per capita increases, child labor tends to. 202-663-5671 email@example.com ... Gain expertise in financial analytics, economic consulting, international trade, or market research to bolster your career. Trade should cause countries to specialize more in production and to export goods distinctly di⁄erent from … The multiplier concept is important because it shows: how small changes in government spending may have large impacts on overall output. Gain Attributes of International Trade: It further follows that when countries A and В enter into trade, both will gain. government spending or taxes in an attempt to influence the overall economy. The income tax exemption for each individual in 2014 is: On average, U.S. households with incomes in the top 20% pay: about 25% of their income in federal income tax. Trade should be greatest between countries with the greatest di⁄erences between them. The legislation Congress passed in 1969 to make sure that the rich pay at least some income taxes was called the: Suppose the tax rate on the first $20,000 of income is 0%; 10% on the next $20,000 earned; and 20% on any additional income earned. The economist John Maynard Keynes said, "In the long run, we are all _____.". International trade currently involves about $20 trillion worth of goods and services moving around the globe. The labor theory of value *b. Today Amy makes 25%more than she did in pharmaceutical sales and enjoys her new job much more than her old job. The rise in the international trade is essential for the growth of globalization. STUDY. gains from trade the extra production and consumption benefits that countries can achieve through INTERNATIONAL TRADE.Countries trade with one another basically for the same reasons as individuals, firms and regions engaged in the exchange of goods and services - to obtain the benefits of SPECIALIZATION.By exchanging some of its own products for those of other nations, a country can … Which refers to the decrease in private spending when government spending increases? Which of the following four items is the biggest expenditure in the federal government's budget? ... International Trade 2) Refer to the figure. individual income taxes, corporate income taxes, and Social Security and Medicare taxes. Economics 181: International Trade The Heckscher-Ohlin Framework, Part II I. Recap from last class, distribution of gains and losses Recap: * Edgeworth Box diagrams: what happens when the endowment of one factor increases? (Figure: Trade 2) Refer to the figure. What demographic change in the United States will cause government spending to increase in the next 50 years? P. 168. c. The World Price and Comparative Advantage i. James R. Markusen (1984), ‘Multinationals, Multi-Plant Economies, and the Gains from Trade’, Journal of International Economics, 16 (3–4), May, 205–26 123 9. Which transactions cause the U.S. capital account to increase? Geoff Riley FRSA has been teaching Economics for over thirty years. If A, B, and C are all candidates in the election, and a smoking ban is the only issue being debated, based on the median voter theorem which candidate will win the election? The primary concern of economists worried about the crowding out effect is the: upward pressure that increased borrowing places on interest rates. International Trade. Suppose that a special interest group makes up 2% of the population. It can accelerate capital outlays in an economic downturn. Which federal government policy influences business cycle fluctuations by taking action on taxes, spending, and borrowing? Econ exam 1 quizlet. How much the autarky price differs from international terms of trade change c. The fact that a country must lose from trade. After a real shock, the economy is operating at point Y in the figure. Suppose the economy is initially at point A in the diagram. Figure 1: The Equilibrium without International Trade. When the two individuals have to exchange two things, the case is one of bilateral monopoly. To fight a recession, the government can: President Obama's fiscal policy response to the 2008 recession involved changes in: Which theory states that a tax cut does NOT affect aggregate demand because people save all they gain from the tax cut? the market price). What kind of rising costs will mostly cause U.S. government spending to skyrocket in the future? Governments can set up extensive trade restrictions to limit the impact of foreign firms on domestic production. When the government conducts fiscal policy, it makes up for a decreaseC in with: As the savings rate in the private sector rises: increases in government spending become a more effective means of stimulating aggregate demand. when the median voter changes his or her preferences. Figure 1:The Production Possibilities Curve If there is no trade, t 8 h efa rm c o s this production and consumption. Imposing a restrictive quota on the import of sugar will likely: increase the price of sugar and decrease the quantity consumed. Assume that each individual earns an income of exactly $37,000 and there are no deductions or exemptions that need to be applied.Table: A Cross-Country Comparison. When a country's inflow of foreign capital is less than its outflow of domestic capital to other countries, then the country runs a: All else held constant, an increase in U.S. exports will cause the U.S. current account to: Suppose an increase in the demand for dollars has caused an appreciation of the dollar. Why do countries trade? ECON 220 Intl Economic Principles credit: 3 Hours. Which is NOT a way to accelerate aggregate demand during an economic slowdown? Which of the following would be recorded as a debit in the U.S. current account? What primary benefit can a temporary investment tax credit have? **comparative advantage** | the ability to produce a good at a lower opportunity cost than another entity. Voter 1 supports government spending of $20. A rising standard of living increases the demand for democracy.II. (Figure: Foreign Trade) Refer to the figure. Which of the following is TRUE about cross-country evidence on the relationship between economic freedom, standard of living, and democracy? U.S. government spending on Social Security, defense, Medicare, and Medicaid makes up approximately _____ of federal government spending. If foreign reserves are fixed, the balance of payments requires that a: country must have a capital surplus when it has a trade deficit. When the battle of presidential elections is done, historians mark one personality and set of issues as having won the day and reflected the will of the: Special interest groups have an incentive to be: Evidence suggests that voters are myopic, meaning they are responsive to economic conditions: There is a strong correlation between economic freedom and: Suppose that a special interest group makes up 10% of the overall population. * If land endowment rises, then production of good that uses land intensively (food) increases by more and Total spending will rise more rapidly than the total revenue. A tariff ______ the amount of output produced by domestic firms and ______ the amount of goods bought by domestic consumers. Of course, you traded only if the perceived benefits (grapes gained) outweighed the perceived costs (crackers lost). However the implications of traditional trade theory were found to be at odds with data. Suppose that a special interest group makes up 0.5% of the population. Assuming there is no crowding out, fiscal policy that shifts aggregate demand from AD0 to AD2 will move the economy to point: The time between which an economic shock is recognized and when the government passes a plan to carry out a policy response is called the: Expansionary fiscal policy can reduce real growth if the increase in government spending: causes a large enough decrease in private spending. Political business cycles are due primarily to ______ voters. The biggest factor in the 1990s productivity boom in the United States was: technological advance in the retail sector. United States exports $5 million in corn to Canada. If there are only two candidates, A and B, and a smoking ban is the only issue being debated in this election, which one of the voters is the median voter? Fiscal policy under the 2009 American Recovery and Reinvestment Act took the form of: a mix of government spending and tax cuts. In spite of general recognition that trade creates wealth, the history of international trade is largely a series of attempts by different nations to gain some elusive advantage in the trading game by erecting trade barriers. We construct a new linked data set with over one thousand offshoring events by matching Trade Adjustment Assistance program petition data to micro-data from the U.S. Census Bureau. False, generally benefits both countries benefits 2. Which of the following would be the most likely outcome if a college professor awards grades based on average test scores and assigns the same grade to everyone in the class? 3 Lecture Hours. Some nations prefer to produce one thing while others produce another *b. T 3. The money, however, will come from increased taxes on consumers of chicken (a new "chicken tax"). Model Building and Gains from Trade. The first half of course, international trade, covers such topics as comparative advantage, protectionism (tariff and nontariff), impact on income distribution, and industrial policies. Based on this chart, we can conclude that: there is a positive relationship between economic freedom and GNI per capita. What are the three main sources of funds for the U.S. federal government? It doesn't matter in which country Tyler and Alex live. Which of the following is NOT a function of the International Monetary Fund? Policy A adversely affects 50 million people at a cost of $1 per person. Gains from Trade – Understanding Comparative Advantage. A Beijing antique dealer opens a store in downtown New York City. Which of the following provides the most reasonable explanation for why agricultural interests lobby for higher farm subsidies and price supports? Which is the MOST effective fiscal policy for influencing the economy? Countries that engage in international trade benefit from economic growth and a rising standard of living. **comparative advantage** | the ability to produce a good at a lower opportunity cost than another entity. Let's check on whether you are rationally ignorant. Which of the following conditions best predicts when the incumbent party will NOT win the presidential election? crowding out, a drop in the bucket, a matter of timing, and real shocks. Which statement is NOT a major limit to the effectiveness of fiscal policy? Consumers are more likely to spend tax rebates that they believe are: is less significant when consumers deem tax cuts or rebates as permanent. Chapter 4 Mindtap answers. A situation in which the value of a country's exports exceeds the value of its imports is called a(n): A capital surplus occurs when the value of a country's: inflow of foreign capital exceeds the outflow of its domestic capital. Why did the President do this? Trade re-allocates jobs across industries. Which of the following would NOT prevent purchasing power parity from holding? Trade is driven by economies of scale, which are internal to firms. An economic union is a common market with coordinated fiscal and monetary policy. For each watch Denmark produces, it gives up the opportunity to make 50 pounds of cheese. _____ is federal government policy on taxes, spending, and borrowing that is designed to influence business fluctuations. As a result of consumption smoothing, a temporary tax rebate tends to create a: small increase in spending over many years. the total tax payment divided by total income. A $1 tariff results in: a decrease in imports of 80 million units. an increase in the export of U.S. beef to China. A multiplier effect is associated with changes in spending and taxation. Spending can lower inflation and keep prices and wages steady. Yes, the benefits of $600 outweigh the costs of $500. When a country becomes more attractive for foreign investment, we would expect a(n): appreciation of the country's exchange rate. If a new proposal stands to generate $2 million in additional benefits to the group, the group will: only support this proposal if the costs are less than $200,000. the difference between the amount a producer of a good receives and the minimum amount the producer is willing to accept for the good. This is true even if one nation has an absolute advantage over another country. This opens up important potential gains from specialisation and trade leading to a more efficient allocation of scarce resources. The ban was encouraged, in part, by the makers of the more expensive CFLs. For example, in a single day, Owen can embroider $10$ pillows and Penny can embroider $15$ pillows, so Penny has absolute advantage in embroidering pillows. Politicians have a strong incentive to support projects even when their costs outweigh their benefits if: the costs of the project are spread widely across taxpayers and the benefits are concentrated on a small group.
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