Question

What typically rises during a recession?

Select one:

a. the price level

b. house sales

c. stock market indices

d. unemployment

What are the effects of a change in taxes on consumption and aggregate demand?

Select one:

a. If taxes increase, consumption decreases and aggregate demand shifts left.

b. If taxes decrease, consumption increases and aggregate demand shifts left.

c. If taxes increase, consumption increases and aggregate demand shifts right.

d. If taxes decrease, consumption decreases and aggregate demand shifts right.

According to the liquidity-preference theory, equilibrium in the money market is achieved by adjustments in which of the following?

Select one:

a. the exchange rate

b. government spending

c. the interest rate

d. the inflation rate

Hungary buys railroad engines from a Canadian firm and pays for them with forints (Hungarian currency). What happens to Canadian net exports and net foreign investment due to this transaction?

Select one:

a. It decreases both Canadian net exports and Canadian net foreign investment.

b. It increases Canadian net exports and decreases Canadian net foreign investment.

c. It decreases Canadian net exports and increases Canadian net foreign investment.

d. It increases both Canadian net exports and Canadian net foreign investment.

A decrease in expected inflation shifts which of the following curves, and in what direction?

Select one:

a. It shifts the long-run Phillips curve left.

b. It shifts the long-run Phillips curve right.

c. It shifts the short-run Phillips curve right.

d. It shifts the short-run Phillips curve left.

Mexico suffered from capital flight in 1994. What happened to Mexico's net exports?

Select one:

a. They did not change.

b. They increased.

c. They decreased.

d. They decreased until the peso appreciated; then they increased.

A Canadian firm opens a factory that produces climbing equipment in Austria. What are the effects of this transaction?

Select one:

a. Only Albanian net capital outflow increases.

b. Canadian net capital outflow increases, and Albanian net capital outflow decreases.

c. Canadian net capital outflow decreases, and Albanian net capital outflow increases.

d. Only Canadian net capital outflow increases.

Answer 1

Q.1

Answer : Option no. d) Unemployment

During recession, unemployment is rises and the shock market indices, house sales and price level decreases during the recession period.

Q.2

Answer Option no. a) if taxes increases, Consumption decreases and aggregate demand shifts left.

When government increases tax on products, prices of products increases and consumption get decreases results aggregate demand shifts left. And vise versa for taxes decreases.

Q 3

Answer : Option no. c) The interest rate

A/C to the liqudity preference theory, equilibrium in money market is achieved by adjustment of interest rate. So option c is correct answer.

Q.4

Answer : Option no. d) it increases both candian net export and candian net foreing investment.

When canda exports railroad engine then its net export increases and net foreing investment also increases.

Q.5

Answer : Option no. It shifts the short run phillips curve left.

When expected inflation decreases, then short run phillips curve shifts left.

Q.6

Answer : Option no. b) They increased.

Q.7

Answer : option no. B) is correct answer