Economics and Trade Policy
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Questions and Answers

A trade deficit is likely to cause what in import industries?

  • No change in employment
  • A decrease in production
  • An increase in unemployment (correct)
  • An increase in employment

    • What is the purpose of an appropriations bill?

  • To set a price ceiling
  • To increase trade
  • To reduce the federal debt
  • To allocate funds for specific government activities (correct)

    • What is an advantage of flexible exchange rates?

  • They increase the federal debt
  • They automatically correct trade deficits (correct)
  • They prevent trade deficits
  • They lead to a balanced budget

    • What is the federal budget?

    <p>A plan outlining proposed revenues and expenditures for the coming year</p> Signup and view all the answers

    What is the result of a surplus in a market?

    <p>The quantity supplied is greater than the quantity demanded</p> Signup and view all the answers

    What is the purpose of a balanced budget amendment?

    <p>To require that annual spending not exceed revenues</p> Signup and view all the answers

    What is entrepreneurship?

    <p>The ability to take risks and manage a business</p> Signup and view all the answers

    What is the federal debt?

    <p>The amount borrowed to finance deficit spending</p> Signup and view all the answers

    What is a price ceiling?

    <p>A maximum price set by the government</p> Signup and view all the answers

    What is a price floor?

    <p>A minimum price set by the government</p> Signup and view all the answers

    Study Notes

    Discretionary Spending

    • Programs that require annual authorization are part of discretionary spending.

    Trade Barriers

    • Protectionists argue that trade barriers prevent a nation from becoming too dependent on other countries.
    • Tariffs and quotas reduce trade deficits, increase prices consumers pay, and protect domestic industry.

    Wage Rates

    • Regional differences in wage rates are influenced by the cost of living, labor mobility, and location.
    • The traditional theory of wage determination holds that differences in wage rates can be explained by supply and demand.

    Unions

    • Right-to-work laws prohibit mandatory union membership.
    • Unions use methods such as boycotts, picketing, and strikes.
    • Unions are important in today's economy because they played a major role in promoting legislation and affecting wages today.

    Economics Concepts

    • The branch of economics that examines the choices of individuals concerning one product, one firm, or one industry is microeconomics.
    • Scarcity occurs because people’s wants and needs are unlimited, while the resources needed to produce goods and services to meet these wants and needs are limited.
    • The change in the mix of goods purchased as a result of increasing or decreasing relative prices is known as the substitution effect.

    Government Spending

    • Spending authorized by law that continues without the need for annual approvals of Congress is called mandatory spending.
    • Spending in excess of revenues collected is called deficit spending.
    • Trust funds are accounts used to fund types of expenditures.

    International Trade

    • The foreign exchange rate is the price of one country's currency in terms of another country's currency.
    • The international agency that administers trade agreements and settles trade disputes is the WTO.

    Labor Relations

    • The National Labor Relations Board was created by the Wagner Act.
    • The theory of negotiated wages states that differences in wage rates are determined by collective bargaining.

    Economy

    • The economic system is the combination of social and individual decision-making a society uses to answer the three economic questions.
    • Social benefits are the benefits received by a society from a social choice.

    Budget and Appropriations

    • An act of Congress that allows federal agencies to spend money for specific purposes is an appropriations bill.
    • Annual plan outlining proposed revenues and expenditures for the coming year is defined as the federal budget.
    • A balanced budget amendment is a constitutional amendment requiring that annual spending not exceed revenues.

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    Related Documents

    Economics Study Guide PDF

    Description

    This quiz covers various aspects of economics, including discretionary spending, trade barriers, wage rates, tariffs, and labor laws. Test your understanding of these key concepts.

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