Economics MCQs

Page No. 243

The competitive advantage from a devaluation is likely to be offset by _______ and ________?


a higher import prices, higher wages increases


blower export prices, lower imports volumes


c higher import prices, lower export prices


dhigher wage increases lower import volumes



In the absence of international capital controls, central banks set ________ to provide the correct incentive for speculators?


amoney supply targets


b income policy


c interest rates


d inflation targets


View Answer interest rates

Which fixed exchange rates and no private capital flows, to correct a balance of payments deficit, the central bank will _______ and ________ ?


abuy foreign exchange, sell domestic currency


bsell foreign exchange buy domestic currency


cbuy foreign exchange buy domestic currency


d sell foreign exchange sell domestic currency



When capital mobility is perfect interest rate differentials will tend to be offset by ?


a Price difference


bbalance of payments difference


ccurrent account differences


dexpected exchange rate changes



Within the circular flow of income, an increase in domestic income will tend to increase ?


aexports


btaxes


cinventories


dimports


View Answer taxes

Starting from a position of internal and external balance a reduction in aggregate demand will cause a current account ?


adeficit


bsurplus


crevaluation


ddevaluation


View Answer surplus

In a fixed exchange rate regime, the central the exchange rate ?


a buying reduce


bselling, reduce


cbuying increase


dC and B


View Answer C and B

When the $/£ exchange rate rises the pound _____ and when the $/£ rates falls the pound ________?


adepreciates, appreciates


brevalues, devalues


cappreciates, depreciates


dbecomes more expensive becomes cheaper



If the economy is in the though 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


bfalls; rises; falls; surplus


c is static; low; rises; deficit


drises; falls; rises; deficit



If the economy is at the peak of the business cycle, aggregate demand ____ unemployment _______ inflation _______ and the current account of the balance of payments is likely to move towards _______?


arise; falls; rise; deficit


bfalls; rises; falls; surplus


cfalls; falls; falls; surplus


dis static; low; rises; deficit



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