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1 | |
A currency depreciation causes a |
| | A) | leftward shift of the LM curve. |
| | B) | leftward shift of the BP curve. |
| | C) | rightward shift of the BP curve. |
| | D) | rightward shift of the LM curve. |
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2 | |
In a situation of perfect capital immobility and flexible exchange rates, |
| | A) | both fiscal and monetary policy will be effective at changing the level of national income. |
| | B) | neither fiscal nor monetary policy will be effective at changing the level of national income. |
| | C) | fiscal policy will be effective at changing the level of national income, but monetary policy will not. |
| | D) | monetary policy will be effective at changing the level of national income, but fiscal policy will not. |
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3 | |
In a situation of perfect capital mobility and flexible exchange rates, |
| | A) | both fiscal and monetary policy will be effective at changing the level of national income. |
| | B) | neither fiscal nor monetary policy will be effective at changing the level of national income. |
| | C) | fiscal policy will be effective at changing the level of national income, but monetary policy will not. |
| | D) | monetary policy will be effective at changing the level of national income, but fiscal policy will not. |
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4 | |
In a flexible exchange rate system, the effectiveness of fiscal policy is greatest when |
| | A) | short-term capital is perfectly immobile. |
| | B) | short-term capital is relatively mobile. |
| | C) | short-term capital is perfectly mobile. |
| | D) | none of the above. |
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5 | |
In a flexible exchange rate system, a fiscal contraction will lead to a currency depreciation when |
| | A) | short-term capital is perfectly mobile. |
| | B) | short-term capital is relatively mobile. |
| | C) | short-term capital is perfectly immobile. |
| | D) | none of the above. |
| | E) | a and b only. |
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6 | |
When short-term capital is relatively immobile, LM curve is |
| | A) | steeper than the BP curve, and fiscal policy is not dampened by a currency appreciation. |
| | B) | flatter than the BP curve, and fiscal policy is not dampened by a currency appreciation. |
| | C) | steeper than the BP curve, and fiscal policy is dampened by a currency appreciation. |
| | D) | flatter than the BP curve, and fiscal policy is dampened by a currency appreciation. |
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7 | |
In a flexible exchange rate system, monetary policy is effective in changing the level of national income in the case of |
| | A) | perfect short-term capital mobility. |
| | B) | relative short-term capital mobility. |
| | C) | relative short-term capital immobility. |
| | D) | perfect short-term capital immobility. |
| | E) | all of the above. |
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8 | |
Suppose a foreign price shock occurs, such that the level of foreign prices suddenly increases. We should expect |
| | A) | an appreciation of the domestic currency and an initial leftward shift of the BP curve. |
| | B) | a depreciation of the domestic currency and an initial leftward shift of the BP curve. |
| | C) | an appreciation of the domestic currency and an initial rightward shift of the BP curve. |
| | D) | a depreciation of the domestic currency and an initial rightward shift of the BP curve. |
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9 | |
Which of the following statements is true about the period since 1973? |
| | A) | Real commodity prices have increased relatively steadily and, while U.S. real GDP has increased, there has been a great deal of variability. |
| | B) | Real U.S. GDP has increased relatively steadily and, while real commodity prices have increased, there has been a great deal of variability. |
| | C) | Real commodity prices and U.S. real GDP have both increased relatively steadily. |
| | D) | While U.S. real GDP and real commodity prices have increased, there has been a great deal of variability in both. |
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10 | |
The seven richest countries that meet annually to coordinate international macroeconomic policy are known as the |
| | A) | Dynamic 7 countries. |
| | B) | G-7 countries. |
| | C) | gold-standard countries. |
| | D) | IMP-7 countries. |
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