Question

1. An example of a progressive tax would be

a) an income tax with a 10% tax rate on low income households and 20-30% tax rates on higher income households.
b) a Social Security tax rate of 5% on earned income below $100,000 and 0% on income earned above $100,000.
c) the Medicare payroll tax of 2.9% of income for everyone, regardless of how much they earn.

2. An asset in a bank’s T-account is ________.

a) something owned by the bank
b) something the bank owes someone else
c) how much the bank is worth

3. A liability in a bank’s T-account is
a) how much the bank is worth.
b) something owned by the bank.
c) something the bank owes someone else.

4. In order to ________ the money supply, government should sell bonds in open market operations.

a) increase
b) keep up with inflation in
c) decrease

5. Governments may use protectionist policies to ________.

a) protect domestic jobs
b) lower incomes of producers
c) Increase political power

6. Overall, free trade results in ________.

a) an increase in price and an decrease in quantity
b) a decrease in price and an increase in quantity
c) a decrease in price and a decrease in quantity

7. A U.S. investment bank purchases stocks (shares) of Japanese firms on the Nikkei index. This describes a

a) hedging.
b) portfolio investment.
c) foreign direct investment.

8. If one Argentine Peso buys $0.05 and then a month later buys $0.07, then
a) The Argentine peso has appreciated against the U.S. dollar.
b) The U.S. dollar has appreciated against the Argentine peso.
c) The Argentine peso has depreciated against the U.S. dollar.

Answer 1