pyro84256

pyro84256

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pyro84256University of Delhi - DU

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History1English1Biology3Statistics2Economics2Chemistry3
Answer: According to Table 8.16 in Biology Today and Tomorrow Digging Into Dat...

MCQ questions:

1. If Australia purchases web services from an Indian company, and the Indian company deposits the payments in a branch of an Australian bank, it will be reflected in the Australian balance of payments as

(a) A debit in the current account and a credit in the financial account.

(b) A debit in the current account and a debit in the financial account.

(c) A credit in the current account and a debit in the financial account.

(d) A credit in the current account and a credit in the financial account.

2. Which of the following statements is incorrect?

(a) The level of net foreign debt is determined by the Current Account of the Balance of Payments.

(b) If a Current Account deficit is financed by the Central Bank the economy’s level of wealth remains unchanged.

(c) A debit item on the Financial Account may be counterbalanced by a credit item on the same account.

(d) None of the above.

3. If foreigners are accumulating financial claims on the domestic economy the domestic economy must

(a) Be running a financial account deficit.

(b) Be running a current account deficit.

(c) Have excess national savings.

(d) None of the above.

4. If the sum of the financial account and current account is greater than zero, there will be

(a) An excess demand for foreign exchange.

(b) A reduction in international reserves under a fixed exchange rate regime.

(c) Upward pressure on the price of foreign exchange.

(d) None of the above.

5. If two closed countries have the same real rate of interest

(a) The opportunity cost of one unit of future consumption is the same in both countries.

(b) The opportunity cost of one unit of current consumption is the same in both countries.

(c) There is no incentive to engage in inter temporal trade.

(d) All of the above.

6. Which of the following statements relating to the closed economy real rate of interest is correct?

(a)The lower is the closed economy real rate of interest the lower the opportunity cost of future consumption.

(b)The lower is the closed economy real rate of interest the greater is the opportunity cost of current consumption.

(c)The lower is the closed economy real rate of interest the more likely it is that the country will run a balance of trade deficit when the economy is opened up.

(d)The lower is the closed economy real rate of interest the more likely it is that the country will run a balance of trade surplus when the economy is opened up.

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MCQ questions:

21. According to the basic absorption approach, a reduction in the value of the domestic currency

(a) Will improve the trade balance through a decrease in income and output if the economy is above full employment.

(b) Will improve the trade balance through an increase in income and output if the economy is above full employment.

(c) May improve the trade balance through an increase in direct absorption.

(d) May improve the trade balance through a reduction in direct absorption.

22. A reduction in the value of the domestic currency

(a) Is more effective at improving the trade balance once the terms of trade effect is considered.

(b) Is less effective at improving the trade balance once the terms of trade effect is considered.

(c) May lead to an increase in savings and hence a deterioration in the trade balance.

(d) May lead to an increase in absorption and hence an improvement in the trade balance.

23. If QT<CT, we can say that:

(a) A trade deficit exists.

(b) A trade surplus exists.

(c) Domestic inflation is present.

(d) None of the above.

24. Under the Australian model, changes to the level of government spending should be the policy weapon used

(a)For the objective which has the flattest balance schedule

(b)For the objective which has the steepest balance schedule

(c)To achieve internal balance

(d)To achieve external balance

25. A reduction in the value of the domestic currency

(a)Is more effective at improving the trade balance once the terms of trade effect is considered.

(b)Is less effective at improving the trade balance once the terms of trade effect is considered.

(c)May lead to an increase in savings and hence a deterioration in the trade balance.

(d)May lead to an increase in absorption and hence an improvement in the trade balance.

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