Economics MCQs

Page No. 239

If one country, with floating exchange rates, has higher inflation than its competitors we would expect its exchange rate to ?


aappreciate


bdepreciate


crevalue


dbe in short supply


View Answer depreciate

Under floating exchange rates, expectations of higher interest rates are likely to cause an ____ of the exchange rate?


adepreciation


bappreciation


cfall


ddevaluation


View Answer appreciation

A fixed exchange rate, plus perfect capital mobility ________ the scope for monetary policy ?


aenhances


bundermines


cencourages


dfacilitates


View Answer undermines

With fixed exchange rates and no private currency flows, when the central bank buys domestic currency the domestic money supply is ?


aincreased


bunaffected


creduced


d None of these


View Answer reduced

perfect international capital mobility suggests that international funds will be responsive to ________ differentials?


a current account


binterest rate


ctax


dprice


View Answer interest rate

A rise in the real exchange rate will ________ the competitiveness of the domestic economy?


aincrease


breduce


c do nothing to


d None of the above


View Answer reduce

A current account deficit means that a country may ?


areduce its stock of foreign assets


bincrease its stock of foreign assets


cincreases its savings


dincreases its foreign currency reserves



If British residents want more French francs to purchase more French cloths other things equal, then the equilibrium value of the pound against the French franc will ?


arise


bfall


cnot change


dfluctuate


View Answer fall

If the economy is in the recessionary phase of the business cycle, aggregate demand ___ unemployment ____ inflation ___ and the current account of the balance of payments is likely to move towards ____?


a falls; falls; falls; surplus


bis static; low; rises; deficit


cfalls; rises; falls; surplus


d rises; falls; rises; deficit



If the economy is in the expansionary phase of the business cycle, aggregate demand ____ unemployment ____ inflation ____ payments is likely to move towards ____?


afalls; rise; falls; surplus


bis static; low; rise; deficit;


cfalls; falls; falls; surplus


d rise; falls; rises; deficit



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