A. deficit
B. surplus
C. revaluation
D. devaluation
Economics Mcqs
Within the circular flow of income, an increase in domestic income will tend to increase ?
A. exports
B. taxes
C. inventories
D. imports
When capital mobility is perfect interest rate differentials will tend to be offset by ?
A. Price difference
B. balance of payments difference
C. current account differences
D. expected exchange rate changes
Which fixed exchange rates and no private capital flows, to correct a balance of payments deficit, the central bank will ……. and …….. ?
A. buy foreign exchange, sell domestic currency
B. sell foreign exchange buy domestic currency
C. buy foreign exchange buy domestic currency
D. sell foreign exchange sell domestic currency
In the absence of international capital controls, central banks set …….. to provide the correct incentive for speculators?
A. money supply targets
B. income policy
C. interest rates
D. inflation targets
The competitive advantage from a devaluation is likely to be offset by ……. and ……..?
A. higher import prices, higher wages increases
B. lower export prices, lower imports volumes
C. higher import prices, lower export prices
D. higher wage increases lower import volumes
Keynes liquidity preference theory of the interest rate suggests that the interest rate is determined by ?
A. aggregate supply and aggregate demand
B. the supply and demand for loanable funds
C. the supply and demand for money
D. the supply and demand for labor
In the short run the level of floating exchange rates is determined mainly by ?
A. interest rates
B. competitiveness
C. trade
D. speculation
When supply and demand for money are expressed in a graph with the interest rate on the vertical axis and the quantity of money on the horizontal axis an increase in the price level ?
A. shifts money demand to the right and increases the interest rate
B. None of these answers
C. shifts money demand to the right and decreases the interest rate
D. shifts money demand to the left and increases the interest rate
E. shifts money demand to the left and decrease the interest rate
Floating exchange rates are …. in the short run?
A. stable
B. predictable
C. volatile
D. depreciating