quiz 12 - 1 After the 16th Amendment was passed in 1995...

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1. After the 16 th Amendment was passed in 1995 allowing the federal government to levy income taxes, tariffs were also increased to fund wars and prevent depressions. ( False ) 2. The recent international trade focus, which includes the Doha Development Agenda continues the discussions on topics of the Uruguay Round and seeks to work for the global best interest of all members. 3. Persistent U.S. current account deficits can result in the selling of U.S. businesses and other physical resources to investors outside the United States. ( True ) 4. In order to maintain a legitimate fixed exchange value, a nation must ensure that their balance of payments remain near balance. ( True ) 5. Governments sometimes artificially influence the value of their own currency by buying or selling reserve currencies to stabilize their own currency’s market value. ( True ) 6. During the past 200 years trade has not been a very important element of the American economy. ( False ) 7. The 100+ member nations in the WTO have resolved to further decrease trade barriers and to increase the standard of living throughout the world. 8. A balance of payments surplus occurs when inflows exceed outflows and results in an increase in the official settlements accounts. 9. Speculators will buy or sell currency for temporary advantage and can cause short term instability in a specific currency, but their actions in the market can send important messages about the true market value of that currency. ( True ) 10. In the early colonial period tariffs were a major source of government funding and this trend continued reaching a peak in 1865. ( True ) 11. A nation with a fixed exchange system must maintain a legitimate equilibrium in their balance of payments in order to continue a constant exchange rate. ( True ) 12. Long term trade deficits can be a problem and can necessitate fundamental changes in a nation’s economy to balance the accounts. 13. With a flexible exchange rate system, contracts can be written with relative assurance that the value of the currency will remain the same. ( False ) 14. Since the 1970’s in the U.S. all the current account values including the balance of trade are deficits and are balanced by surpluses in the capital and financial inflows.
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