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

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bdepreciate

✓


crevalue

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dbe in short supply

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View Answer depreciate

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


adepreciation

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bappreciation

✓


cfall

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ddevaluation

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View Answer appreciation

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


aenhances

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bundermines

✓


cencourages

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dfacilitates

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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

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bunaffected

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creduced

✓


d None of these

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View Answer reduced

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


a current account

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binterest rate

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ctax

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dprice

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View Answer interest rate

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


aincrease

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breduce

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c do nothing to

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d None of the above

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View Answer reduce

A current account deficit means that a country may ?


areduce its stock of foreign assets

✓


bincrease its stock of foreign assets

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cincreases its savings

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dincreases its foreign currency reserves

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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

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bfall

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cnot change

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dfluctuate

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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

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bis static; low; rises; deficit

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cfalls; rises; falls; surplus

✓


d rises; falls; rises; deficit

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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

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bis static; low; rise; deficit;

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cfalls; falls; falls; surplus

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d rise; falls; rises; deficit

✓



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