International Economics Unit 4 Set 1
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This set of International Economics Multiple Choice Questions & Answers (MCQs) focuses on International Economics Unit 4 Set 1
Q1 | Which of the following is true regarding the capital market development since the 1970s?
- The extent of intertemporal trade was larger than theory predicts.
- Onshore-offshore interest rate differentials were too large.
- The extent of the international portfolio diversification was smaller than theory predicts.
- The role of emerging markets declined over time.
Q2 | Which one of the following statements is the most accurate?
- A devaluation occurs when the central bank lowers the domestic currency price of foreign currency, E, and a revaluation occurs when the central bank raises E.
- A devaluation occurs when the central bank raises the domestic currency price of foreign currency, E, and a revaluation occurs when the central bank lowers E.
- Devaluation occurs when the domestic currency price of foreign currency, E, is raised, and a revaluation occurs when E is lower
Q3 | Which one of the following statements is the most accurate?
- Depreciation is a rise in E when the exchange rate is fixed, and devaluation is a rise in E when the exchange rate floats.
- Depreciation is a decrease in E when the exchange rate floats, and devaluation is a rise in E when the exchange rate is fixed.
- Depreciation is a rise in E when the exchange rate floats, and devaluation is a rise in E when the exchange rate is fix
Q4 | Which one of the following statements is the most accurate?
- Appreciation is a rise in e when the exchange rate floats, and revaluation is a fall in e when the exchange rate is fixed.
- Appreciation is a fall in e when the exchange rate floats, and revaluation is a fall in e when the exchange rate is fixed.
- Appreciation is a fall in e when the exchange rate is fixed, and revaluation is a fall in e when the exchange rate is flexible.
- Appreciation is a fall in e when the exchange rate floats, and revaluation is a rise in e when the exchange rate is fixed.
Q5 | Which one of the following statements is the most accurate?
- Devaluation reflects a deliberate government decision.
- Depreciation reflects a deliberate government decision.
- Devaluation reflects a deliberate government decision, and depreciation is an outcome of government actions and market forces acting together.
- Depreciation reflects a deliberate government decision, and devaluation is an outcome of government actions and market forces acting together.
Q6 | Which one of the following statements is the most accurate?
- Revaluation reflects an outcome of government actions and market forces acting together, and appreciation reflects a deliberate government decision.
- Revaluation reflects a deliberate government decision, and appreciation is an outcome of government actions and market forces acting together.
- Revaluation reflects a deliberate government decision, and appreciation is an outcome of government actions.
- Revaluation and appreciation have the same meaning and the same causes.
Q7 | Under fixed exchange rate, which one of the following statements is the most accurate?
- Devaluation causes a decrease in output, a decrease in official reserves, and a contraction of the money supply.
- Devaluation causes a rise in output, a rise in official reserves, and an expansion of the money supply.
- Devaluation causes a rise in output and a rise in official reserves.
- Devaluation causes a rise in output and an expansion of the money supply.
Q8 | Under fixed exchange rate, which one of the following statements is the mostaccurate?
- Devaluation causes a rise in output.
- Devaluation causes a decrease in output.
- Devaluation has no effect on output.
- Devaluation causes a rise in output and a decrease in official reserves.
Q9 | Under fixed exchange rate, which one of the following statements is the mostaccurate?
- Devaluation causes a reduction of the money supply.
- Devaluation has no effect on the stock of money.
- Devaluation causes an expansion of the money supply.
- Devaluation causes a reduction in output.
Q10 | The main reason(s) why governments sometimes chose to devalue their currencies is (are):
- Devaluation allows the government to fight domestic unemployment despite the lack of effective monetary policy.
- Devaluation improves in the current account.
- Devaluation increases foreign reserves held by the central bank.
- All of the above.
Q11 | At negative nominal interest rates, which one of the following statements is the most accurate?
- People would find money strictly preferable to bonds.
- People would find money strictly preferable to bonds and bonds therefore would be in excess supply.
- People would find money strictly preferable to bonds and bonds therefore would be in excess dema
Q12 | Which of the following exchange rate policies uses a target exchange rate, but allowsthe target to change?
- fixed exchange rate
- flexible exchange rate
- crawling peg
- moving target
Q13 | Which among the following could be said to be an 'Open Economy'?
- A nation that follows the doctrine of Free-market and Laissez-faire economics
- A nation that trades with other nations in goods and services and financial assets
- An economy that operates without government intervention
- None of the above
Q14 | The records of exports and imports in goods and services and transfer payments is known as
- Current account
- Budget surplus
- Economic leakage
- degree of openness
Q15 | The ratio of foreign rates to domestic rates measured in the 'same' currency is known as:
- Real exchange rate
- Nominal exchange rate
- Superfluous exchange rate
- None of the above
Q16 | Which among the following is taken as the real measure of a country's international competitiveness?
- Real exchange rate
- Nominal exchange rate
- Superfluous exchange rate
- None of the above
Q17 | When the exchange rate is determined by the market forces of demand and supply, it is known as :
- Real exchange rate
- Nominal exchange rate
- Superfluous exchange rate
- Floating exchange rate
Q18 | The Gold Standard was prevalent in the world from:
- 15th century to 18th century
- 9th century to 18th century
- From 1870 till First World War
- From 1670 till First World War
Q19 | An increase in foreign income generally leads to:
- increased exports, increased domestic output
- decreased exports, increased domestic output
- decreased exports, decreased domestic output
- increased exports, decreased domestic output
Q20 | What records a country's transactions (made by individuals, firms and government bodies.) with the rest of the world?
- Trade deficit
- Capital Budget
- Foreign imports
- Balance of Payments or BoP
Q21 | Under a fixed exchange rate system, a contractionary fiscal policy leads to a worsening in a nation’s balance-of-payments position if the resulting:
- Trade-account deficit more than offsets the capital-account surplus
- Trade-account deficit more than offsets the capital-account deficit
- Capital-account deficit more than offsets the trade-account surplus
- Capital-account deficit more than offsets the trade-account deficit
Q22 | Given a system of floating Exchange rates, falling income in the United States wouldtrigger:
- An increase in the demand for imports and an increase in the demand for foreign currency
- An increase in the demand for imports and a decrease in the demand for foreign currency
- A decrease in the demand for imports and an increase in the demand for foreign currency
- A decrease in the demand for imports and a decrease in the demand for foreign currency
Q23 | Under a system of floating Exchange rates, relatively low productivity and high inflation rates in the United States result in:
- An increase in the demand for foreign currency, a decrease in the supply of foreign currency, and a depreciación in the dollar
- An increase in the demand for foreign currency, an increase in the supply of foreign currency, and an appreciation in the dollar
- A decrease in the demand for foreign currency, a decrease in the supply of foreign currency, and a depreciation in thedollar
- A decrease in the demand for foreign currency, an increase in the supply of foreign currency, and an appreciation in the dollar
Q24 | Which example of market expectations causes the dollar to appreciate against the yen?Expectations that the U.S. economy will have:
- Faster economic growth tan Japan
- Higher future interest rates than Japan
- More rapid money supply growth tan Japan
- Higher inflation rates than Japan
Q25 | Starting at the point of equilibrium between the money supply and the money demand, an increase in the domestic money supply causes the value of the home currency to:
- Depreciate relative to other currencies
- Appreciate relative to other currencies
- Not change relative to other currencies
- None of the above