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1 | |
When capital mobility is perfect, interest rate differentials will tend to be offset by ________ |
|
| | A) | price differences |
| | B) | balance of payments differences |
| | C) | current account differences |
| | D) | expected exchange rate changes |
|
2 | |
If British residents want more euros to purchase more French wine, other things being equal, then the equilibrium value of the pound against the euro will ___________ |
|
| | A) | rise |
| | B) | fall |
| | C) | not change |
| | D) | fluctuate |
|
3 | |
When the $/£ exchange rate rises the pound ___________, and when the $/£ rate falls the pound __________ |
|
| | A) | depreciates, appreciates |
| | B) | revalues, devalues |
| | C) | appreciates, depreciates |
| | D) | becomes more expensive, becomes cheaper |
|
4 | |
In a fixed exchange rate regime, the central bank will intervene by _____ pounds to ________ the exchange rate |
|
| | A) | selling, increase |
| | B) | buying, reduce |
| | C) | selling, reduce |
| | D) | buying, increase |
| | E) | a and b |
| | F) | c and d |
|
5 | |
A current account deficit means that a country may ___________ |
|
| | A) | reduce its stock of foreign assets |
| | B) | increase its stock of foreign assets |
| | C) | increase its savings |
| | D) | increase its foreign currency reserves |
|
6 | |
Starting from a position of internal and external balance, a reduction in aggregate demand will cause a current account _____________ |
|
| | A) | deficit |
| | B) | surplus |
| | C) | revaluation |
| | D) | devaluation |
|
7 | |
A rise in the real exchange rate will ____________ the competitiveness of the domestic economy |
|
| | A) | increase |
| | B) | reduce |
| | C) | do nothing to |
|
8 | |
Within the circular flow of income, an increase in domestic income will tend to increase |
|
| | A) | exports |
| | B) | taxes |
| | C) | inventories |
| | D) | imports |
|
9 | |
Perfect international capital mobility suggests that international funds will be responsive to _____________ differentials |
|
| | A) | current account |
| | B) | interest rate |
| | C) | tax |
| | D) | price |
|
10 | |
When a government follows a fixed exchange rate regime it allows the exchange rate to be determined by market forces |
|
| | A) | TRUE |
| | B) | FALSE |
|
11 | |
Under floating exchange rates, a current account deficit must be exactly matched by a capital account surplus |
|
| | A) | TRUE |
| | B) | FALSE |
|
12 | |
The current account will differ from trade balance because of interest flows from foreign assets and debts |
|
| | A) | TRUE |
| | B) | FALSE |
2002 A McGraw-Hill Online Learning Centre