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

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blower export prices, lower imports volumes

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c higher import prices, lower export prices

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dhigher wage increases lower import volumes

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


amoney supply targets

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b income policy

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c interest rates

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d inflation targets

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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

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bsell foreign exchange buy domestic currency

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cbuy foreign exchange buy domestic currency

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d sell foreign exchange sell domestic currency

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


a Price difference

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bbalance of payments difference

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ccurrent account differences

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dexpected exchange rate changes

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


aexports

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btaxes

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cinventories

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dimports

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View Answer taxes

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


adeficit

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bsurplus

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crevaluation

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ddevaluation

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View Answer surplus

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


a buying reduce

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bselling, reduce

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cbuying increase

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dC and B

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View Answer C and B

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


adepreciates, appreciates

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brevalues, devalues

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cappreciates, depreciates

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dbecomes more expensive becomes cheaper

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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

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bfalls; rises; falls; surplus

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c is static; low; rises; deficit

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drises; falls; rises; deficit

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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

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bfalls; rises; falls; surplus

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cfalls; falls; falls; surplus

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dis static; low; rises; deficit

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