Question

In: Economics

1)Everything else constant, when a country’s money appreciates in value a)Its net exports tend to decrease....

1)Everything else constant, when a country’s money appreciates in value

a)Its net exports tend to decrease.

b)The demand side equilibrium GDP increases.

c)The demand side equilibrium GDP decreases.

d)a and c.

e)a and b.

2)Which of the following are true?

a)Our imports are relatively sensitive to our national income.

b)Our exports fall when our national income rises.

c)When our economy grows slower than the economies of our trading partners our net exports tends to decrease.

d)a and c.

e)b and c.

3)Which of the following is true?

a)The expenditure line shows the relationship between the total product and the general price level.

b)The expenditure line has the same components as the aggregate demand.

c)The expenditure line shows the relationship between the total product and the total spending.

d)None of the above.

e)Both b and c.

4)A recessionary gap is a result of

a) Government deficit.

b) Inadequate aggregate demand.

c) Too much expenditures.

d) Both a and b.

5)Everything else constant, inflation

a)Leads to an increase in a country’s exports.

b)Leads to a reduction in a country’s imports.

c)Increases the inventories above the desired level.

d)b and c.

e)none.

Solutions

Expert Solution

Answer 1 - d) ; as the value of currency in market will increase with rise in price it's demand will fall making exports less and the demand curve will decrease to left

Answer 2- a) imports are termed to be relatively more sensitive to national income i.e. more the fraction of imports will effect more to the cyclical forces than via national income

Answer 3- b) the components of expenditure line and aggregate demand line is same i.e. four; consumption, investment, government spending and net export

Answer 4- d) as recessionary gap can be due to - fall in consumption , investment and government spending along with rise in saving or in taxes

Answer 5 - c) will increase the inventory above desired level as people expect price to rise more in future so they will starting hoarding goods as a result companies will start keeping higher level of inventory i.e. higher the inflation higher the inventory level

Kindly please rate the answer and do feel free to ask in case of doubts

Rahul Sunny answered 1 year ago

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