Economics MCQs

Page No. 196

Suppose Canada and Switzerland were the only two countries in the world There exists an excess supply of Swiss francs on the foreign exchange market This suggests that ?


athe Canadian current account balance is in surplus

✖


bthe Swiss current account balance is in deficit

✓


cthe Canadian current account balance is in equilibrium

✖


dthe Swiss current account balance is in equilibrium

✖



When the price of foreign currency (the exchange rate) is above the equilibrium level ?


aan excess supply of that currency exists in the foreign exchange market

✓


ban excess demand for that currency exists in the foreign exchange market

✖


cthe supply of foreign exchange shifts outward to the right

✖


dthe supply of foreign exchange shifts backward to the left

✖



The high foreign exchange value of the U.S dollar in the early 1980s can best be explained by ?


aadditional investment funds made available from overseas

✓


b lack of investor confidence in U.S fiscal policy

✖


c market expectations of rising inflation in the United States

✖


d American tourists overseas finding costs increasing

✖



IF when cost $4 per bushel in the United States and 2 pounds per bushel in Great Britain then in the presence of purchasing power parity the exchange rate should be ?


a$50 per pound

✖


b$1.00 per pound

✖


c$2.00 per pound

✓


d$8.00 per pound

✖


View Answer $2.00 per pound

Assume that the United States faces a percent inflation rate while no (zero) inflation exists in Japan. According to the purchasing power parity theory over the long run the dollar would be expected to ?


aappreciate by 8 percent against the yen

✖


bdepreciate by 8 percent against the yen

✓


cremain at its existing exchange rate

✖


dNone of the above

✖



Relatively low real interest rates in the United States tend to ?


a decrease the foreign demand for dollars causing the dollar to depreciate

✓


bdecrease the foreign demand for dollars causing the dollar to appreciate

✖


cincrease the foreign demand for dollars causing the dollar to depreciate

✖


ddecrease the foreign demand for dollars causing the dollar to appreciate

✖



If the exchange rate between Swiss francs and British pounds is 5 francs per pound, then the number of pounds that can be obtained for 200 francs equals ?


a 20 pounds

✖


b40 pounds

✓


c60 pounds

✖


d80 pounds

✖


View Answer 40 pounds

Exchange rate overshooting often occurs because ?


adomestic prices adjust slowly to shifts in demand

✖


bmilitary spending during military conflicts

✖


c elasticities are smaller in the long run than the short run

✖


delasticities are smaller in the short run than the long run

✓



According to the asset market approach increased investor confidence in the Mexican economy would cause the peso to ?


aappreciate because of an increase supply of peso denominated assets

✖


b depreciate because of an increased supply of peso denominated assets

✖


cappreciated because of an increased demand for peso denominated assets

✓


ddepreciated because of an increased demand for peso denominated assets

✖



The purchasing power parity theory has limitations in forecasting exchange rate fluctuations for all of the following reasons except ?


ainflation effects exchange rates

✓


binternational capital flows affect exchange rates

✖


cgovernments sometimes impose trade restrictions such as tariffs and quotas

✖


dnot all products are internationally tradeable

✖



Goto Page No.

Page 196 of 444

Alphabetical MCQs Categories
—

Here below You find all kind of categories of MCQs in alphabetical order.


"Comprehensive Collection of MCQs: Alphabetically Organized by Subject"
—

"Discover an extensive collection of multiple-choice questions (MCQs) neatly categorized by subject from A to Z. This resource is designed for anyone eager to explore various topics in a straightforward and organized manner. Whether you're a student preparing for exams, an educator seeking supplementary materials, or simply curious about different subjects, this compilation offers a convenient way to learn and assess your knowledge. With questions arranged alphabetically, navigation is effortless, allowing you to delve into subjects of interest at your own pace. Engage, learn, and expand your understanding with this accessible and comprehensive repository of MCQs!"


BolPakistan

bolpakistan.com.pk includes Job Mcqs and Pak Mcqs is the Top Largest Mcqs Forum in World, in which you can read Mcqs of All Subjects, PPSC test preparation, FPSC, NTS and PPSC PAST PAPERS, PPSC PAST MCQS. A Collection of Repeated MCQs for JOBs seekers.

Copyright © 2024, Designed & Developed by BolPakistan