Question

Which one of the following is not a characteristic that reduces the cost of a single currency?

options:

	A high degree of labour mobility among the countries of the common currency area
	A high degree of capital mobility among the countries of the common currency area
	Synchronized economic cycles in the countries of the common currency area
	A high degree of trade integration among the countries of the common currency area
	None of the characteristics described in these answers – they are all characteristics that reduce the cost of a single currency

Which of the following people or firms would be pleased by a depreciation of the British pound?

options:

	All the people and firms mentioned in the below answers
	A French exporter of wine to the UK
	An American tourist visiting London
	A UK importer of French wine
	A UK company that wishes to expand abroad by building a factory in Poland

In open economies

options:

	as in a closed economy, saving (S) and investment (I) are not necessarily equal
	saving (S) and investment (I) are not necessarily equal as they are in a closed economy
	investment always refers to the domestic stock market
	saving (S) and investment (I) are necessarily equal
	none of the above

The CA is equal

options:

	Y + (C - I – G)
	Y - (C + I – G)
	Y + (C +I + G)
	Y - (C - I + G)
	None of the above

Question 10 (1 point)

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One argument favoring a fixed-exchange-rate system is that it

options:

	allows monetary policy to be used for stabilizing output and prices
	reduces exchange-rate uncertainty, thereby promoting more international trade
	leads to excessive growth of the money supply
	requires no actions on the part of the central bank to implement
	none of the above

How does the Life-Cycle Hypothesis resolve the puzzle of the Kuznet data?

options:

	By assuming that income shows a life-cycle variation, the Life-Cycle Hypothesis is able to explain why short term MPC falls with income, but long-term APC is constant.
	By assuming that income is low in the early years and reaches a peak in late middle age and declines on retirement.
	By smoothing consumption over a lifetime.
	All of the above
	None of the above

In the Mundell-Fleming model with fixed exchange rates, attempts by the central bank to decrease the money supply:

options:

	Lead to a lower equilibrium level of income
	Lead to a higher equilibrium level of income
	Must be abandoned in order to maintain the fixed exchange rate
	Must be offset by expansionary fiscal policy
	None of the above

Which of the following statements about trade policy is true?

options:

	A country's trade policy has no impact on the size of its trade balance
	A restrictive import quota decreases a country's net exports
	A restrictive import quota increases a country's net exports
	An abolition of a restrictive import quota increases a country's net exports
	None of the above

In the Mundell-Fleming model with fixed exchange rates, attempts by the central bank to decrease the money supply:

options:

	Lead to a lower equilibrium level of income
	Lead to a higher equilibrium level of income
	Must be abandoned in order to maintain the fixed exchange rate
	Must be offset by expansionary fiscal policy
	None of the above

The Taylor rule shows combinations of _______ and ________ which characterize the ________ set by the Central Bank.

options:

	interest rates; the real money supply; monetary targeting
	inflation; interest rates; inflation targeting
	real GDP; interest rates; fiscal policy
	inflation; real GDP; monetary policy
	None of the above

If two countries, A and B, have separate currencies and there is a shift in consumer preferences away from the goods of country A and towards those of country B, then

options:

	there will be an increase in inflation in country A
	the foreign exchange value of country A's currency is likely to rise, thus making country A's goods relatively more expensive and worsening the reduction in aggregate demand in country A
	the foreign exchange value of country A's currency is likely to fall, thus making country A's goods relatively cheaper and offsetting the reduction in aggregate demand in country A
	there will be a fall in aggregate demand in country B
	None of the above

Answer 1

QUESTION:

Which one of the following is not a characteristic that reduces the cost of a single currency:

	A high degree of labour mobility among the countries of the common currency area
	A high degree of capital mobility among the countries of the common currency area
	Synchronized economic cycles in the countries of the common currency area
	A high degree of trade integration among the countries of the common currency area
	None of the characteristics described in these answers – they are all characteristics that reduce the cost of a single currency

ANSWER: 'A high degree of labour mobility among the countries of the common currency area' Can not be a reason for reduction in cost of currency. Because for no reason labour influence currency or it's value.

how ever the rest three options deal with currency and money market and thus they influence the cost of currency

QUENTION:

Which of the following people or firms would be pleased by a depreciation of the British pound?

options:

	All the people and firms mentioned in the below answers
	A French exporter of wine to the UK
	An American tourist visiting London
	A UK importer of French wine
	A UK company that wishes to expand abroad by building a factory in Poland

ANSWER: "A UK importer of French wine" Will be pleased by a depreciation in British currency

beacause now imports have become cheaper than before.

In the rest of the cases either there is export of tourist visit in the same place. Hence they have no effect of such depriciation on such spending

QUESTION:

In open economies

options:

	as in a closed economy, saving (S) and investment (I) are not necessarily equal
	saving (S) and investment (I) are not necessarily equal as they are in a closed economy
	investment always refers to the domestic stock market
	saving (S) and investment (I) are necessarily equal
	none of the above ANSWER: "none of the above" Because non of the options are the characteristic of open economy moreover first and second options areincorrect and third option is also incorrect. QUESTION: The CA is equal options: Y + (C - I – G) Y - (C + I – G) Y + (C +I + G) Y - (C - I + G) None of the above ANSWER: "None of the above" is the correct answer. in equality, Y=C+I+G Y-C-I-G MUST be equal to CA. NONE OF THE REST OPTION CONTAINS THE SIGNS SIMILTANEOUSLY CORRECT QUESTION: One argument favoring a fixed-exchange-rate system is that it options: allows monetary policy to be used for stabilizing output and prices reduces exchange-rate uncertainty, thereby promoting more international trade leads to excessive growth of the money supply requires no actions on the part of the central bank to implement none of the above ANSWER: "reduces exchange-rate uncertainty, thereby promoting more international trade" is the argument favouring fixed exchange rate system. Fixed exchange rate system allows a country to stabilize exchange rate so that b.o.p remain balanced. It has nothing to do with price as it is fixed so it st option is incorrect Again a fixed rate helps to stimulate economic growth so third option is also incorrect but it also has some drawbacks and CB somtimes need to impliment some policies soth option is also incorrect Question: life cycle hypothesis.............. ANSWER: By smoothing consumption over lifetime because kuznet puzzell deals with only consumption over life time QUESTION: Which of the following statements about trade policy is true? options: A country's trade policy has no impact on the size of its trade balance A restrictive import quota decreases a country's net exports A restrictive import quota increases a country's net exports An abolition of a restrictive import quota increases a country's net exports None of the above ANSWER: ABOLISHION OF QOUTA INCREASES NET EXPORT ANY TRADE RESTRICTIONS AFFECT VOLUME OF TRADE AND NET EXPORTS (X-M). THUS BY AVOIDING THAT NET EXPORTS CAN BE IMPROVED QUESTION: If two countries, A and B, have separate currencies and there is a shift in consumer preferences away from the goods of country A and towards those of country B, then options: there will be an increase in inflation in country A the foreign exchange value of country A's currency is likely to rise, thus making country A's goods relatively more expensive and worsening the reduction in aggregate demand in country A the foreign exchange value of country A's currency is likely to fall, thus making country A's goods relatively cheaper and offsetting the reduction in aggregate demand in country A there will be a fall in aggregate demand in country B None of the above ANSWER: NONE OF THESE NEITHER PREFERRENCE INFLUENCE CURRENCY NOR EXCHANGE RATES. THOUGH DUE TO THIS CHANGE INFLATION MAY INCREASE IN B BUT HERE GIVEN IS A. THUS ALL OPTIONS ARE WRONG AND IRRELEVANT QUESTION: The Taylor rule shows combinations of _______ and ________ which characterize the ________ set by the Central Bank. options: interest rates; the real money supply; monetary targeting inflation; interest rates; inflation targeting real GDP; interest rates; fiscal policy inflation; real GDP; monetary policy None of the above ANSWER: inflation; real GDP; monetary policy AS INTEREST RATE IS A MONETARY POLICY SO THE OPTION IS WRONG. AND CB'S MAIN FUCTION IS TO SET MONETARY POLICY AND SO THIS TAYLOR RULE.HENCE ALL OTHER OPTIONS ARE IRRELEVANT