Question

1. When the exchange rate between the U.S. dollar and Japanese yen changes from $1 = 100 yen to $1 = 90 yen: All Japanese producers and consumers will lose. U.S. consumers of Japanese TV sets will benefit. U.S. auto producers and autoworkers will lose. Japanese tourists to the U.S. will benefit.

2.

The Social Security Trust Fund (OASI):

Is currently depleted.

Is currently paying out less than it is receiving in payroll taxes.

Is required by law to be balanced every year.

Is currently paying out more than it is receiving in payroll taxes.

3.

The national debt represents:

A liability of the federal government.

A form of wealth for bondholders.

An asset to bondholders.

All of the above.

4.

Supply-side economists advocate:

A reduction in the incentives to save so that more income will be spent.

A reduction in structural unemployment through worker training.

The use of minimum-wage laws to guarantee fair wages for workers.

An increase in transfer payments.

Answer 1

1.

Answer: 4^th option

Japanese tourists those who are visiting to the US will certainly get benefit. It happens because, earlier they had to spend 100 yen to purchase 1 dollar but now they can get one 1 dollar by spending only 90 yen. Therefore, there is a benefit of (100 – 90 =) 10 yen.

2.

Answer: 4^th option

This is the old-age and survivor insurance policy. It is under a great danger, since its income in terms of tax is lower than its payments. The projected depletion of this fund is in the year 2034, when only 79% obligations could be met by its income.

3.

Answer: 1^st option

This is a obligation of Federal Government, since the amount represents country’s loan from outside source.

4.

Answer: 2^nd option

Training increases workers’ productivity, which increases supply in the long-run. Supply-side followers believe that such productivity could only be improved if there is minimum welfare like minimum-wage, minimum tax and transfer income, and constant effort of improving.