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Class 12 Economics (Macro Economics) Chapter 6 Open Economy Macroeconomics Quiz 4 (25 MCQs)

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1. You buy a new car built in Sweden. Other things the same, your purchase by itself
2. Suppose a cup of coffee is 1.5 Euros in Germany and $ 0.50 in the United States. Ifpurchasing-power parity holds, what is the nominal exchange rate between Euros anddollars?
3. What is the effect of tight monetary policy on the LM curve?
4. Assume perfect capital mobility. Under a fixed exchange rate system, expansionary fiscal policy causes income to ..... , while under flexible exchange rates expansionary fiscal policy causes income to .....
5. What is the effect of an increase in government expenditures on the IS curve?
6. If a resident of the United States buys stock in a Japanese corporation, this is an example of U.S.
7. What is the effect of a budget surplus on the economy?
8. If a country has a trade surplus
9. U.S. imports account for about what percentage of GDP?
10. Which of the following factors might make capital mobility less than perfect?
11. Suppose that purchases of Irish assets by foreigners exceed Irish purchase of foreign assets. Ireland has
12. After 1980, U.S. Net Foreign Investment fell dramatically, but the U.S. economy did not experience a similar fall in domestic investment. Hence, saving in the United States must
13. What is the principle of effective market classification?
14. A depreciation of the U.S. real exchange rate induces U.S. consumers to buy
15. In the Mundell-Fleming model with perfect capital mobility, the domestic interest rates are determined by
16. What is the primary focus of the Mundell-Fleming model?
17. Assume perfect capital mobility and a fixed exchange rate system. Then, an increase in government spending would shift the
18. A country purchases $ 3 billion of foreign-produced goods and services and sells $ 2 billion dollars of domestically produced goods and services to foreign countries. It has
19. While making investment decisions, investors
20. What is the relationship between the interest rate and capital flows?
21. When Microsoft establishes a distribution center in France, U.S. net capital outflow
22. If a dollar currently purchases 10 pesos and someone forecasts that in a year it will be 11 pesos, then the forecast is given in
23. If saving is greater than domestic investment, then
24. Within a fixed exchange rate system, the effect of an expansionary fiscal policy action on the balance of payments will be to
25. What is the primary focus of monetary policy?
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