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1) An export subsidy should have the opposite effect of ? a. A government budget deficit b. Capital flight c. An increase in Private saving d. A tariff
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2) Which of the following groups would not benefit from an EU imports quota on Japanese cars ? a. Eu consumers who buy electronics from Japan b. EU farmers who export grain c. employees of EU car manufacturers d. Shareholders of German carmaker BMW
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3) Which of the following statements about trade policy is true ? a. A country’s trade policy has no impact on the size of its trade balance b. None of these answers c. A restrictive import quota decreases a country’s net exports d. A restrictive imports quota increases a country’s net exports
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4) Suppose, due to political instability, Russians suddenly choose to invest in UK assets as opposed to Russian assets Which of the following statements is true regarding UK net foreign investment ? a. UK net foreign investment is unchanged because only UK residents can after UK net foreign investment b. UK net foreign investment rises c. UK net foreign investment falls d. None of the above
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5) If the EU imposes a quota on the importing of clothing produced in China, so reducing UK imports of clothing Which of the following is true regarding the market for foreign currency exchange ? a. The demand for pounds decreases and the pound depreciates b. The Supply of pounds increases, and the pound depreciates c. The Supply of pounds decreases, and the pound appreciates d. The demand for Pounds increases and the pound appreciates
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6) An increasing in Europe’s taste for UK produced Hondas would cause the pound to ? a. depreciate and would increase UK net exports b. appreciate and would increase UK net exports c. depreciate and would decrease UK net exports d. appreciate, but the total value of UK net export stays the same
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7) An increase in the government budget deficit ? a. has no impact on the real interest rate and fails to crowed out investment b. decreases the real interest rate and crowds out investment c. None of these answers d. Increases the real interest rate and crowds out investment
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8) Capital flight ? a. decreases a country’s net exports and increases its long-run growth path b. increases a country’s net exports and increases its long-run growth path c. increases a country’s net exports and decreases its long-run growth path d. decreases a country’s net exports and decreases its long-run growth path
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9) Which of the following groups would be most harmed by a UK government budget deficit ? a. Foreigners who wish to buy assets in the UK b. BAe Systems wishing to sell aircraft to Saudi Arabia c. UK residents wishing to buy foreign Produced cars d. Lenders of loanable funds
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10) An example of a trade policy is ? a. A tariff on sugar b. All are examples of trade policy c. capital flight because it increases a country’s net exports d. an increase in the government budget deficit because it reduces a country’s net exports
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11) An increase in Pakistan’s private saving ? a. increase Pakistan’s net exports and Pakistan’s net capital outflow the same amount b. Increase Pakistan’s net exports and decrease Pakistan’s net capital outflow c. decreases Pakistan’s net exports and Pakistan’s net capital outflow the same amount d. decrease Pakistan’s net exports and increase Pakistan’s net capital outflow
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12) Suppose, due to political instability, Russians suddenly choose to purchase UK assets as opposed to Russian assets Which of the following statements is true regarding the value of the pound and UK net exports ? a. The pound appreciates, and UK net exports rise b. The pound appreciates, and UK net exports fall c. The pound depreciates, and UK net exports rise d. The pound depreciates, and UK net exports fall
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13) If the EU imposes a quota on the importing of clothing produced in China, so reducing UK imports of clothing, which of the following is true regarding UK net exports ? a. Net exports will rise b. None of these answers c. Net exports will fall d. Net exports will remain unchanged
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14) Which of the following statements regarding the market for foreign currency exchange is true ? a. An increase in Pakistan’s net capital outflow increase the supply of rupees and the rupees depreciate b. An increase in Pakistan’s net capital outflow increase the demand of rupees and the rupees appreciate c. An increase in Pakistan’s net capital outflow increase the demand of rupees and the rupees depreciate d. An increase in Pakistan’s net capital outflow increase the supply of rupees and the rupees appreciate
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15) Which of the following statements regarding the market for foreign currency exchange is true ? a. An increase in Pakistan’s net exports decreases the supply of rupees and the rupees depreciates b. An increase in Pakistan’s net exports increase the demand for rupees and the rupees appreciates c. An increase in Pakistan’s net exports increases the Supply of rupees and the rupees depreciates d. An increase in Pakistan’s net exports decrease the demand for rupees and the rupees appreciates
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16) The Phrase “twin deficits” refers to ? a. A country’s trade deficit and its government budget deficit b. The fact that if a country has a trade deficit, its trading partners must also have trade deficits c. the equality of a country’s saving deficit and its investment deficit d. a country’s trade deficit and its net capital outflow deficit
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17) An increase in the Pakistan’s government budget deficit ? a. Increase Pakistan’s net exports and decrease Pakistan’s net capital outflow b. decreases Pakistan’s net exports and Pakistan’s net Capital outflow the Pakistan’s same amount c. Increase Pakistan’s net exports and Pakistan’s net capital outflow the same amount d. decreases Pakistan’s net exports and increase Pakistan’s net capital outflow
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18) Which of the following statement regarding the loanable funds market is true ? a. A decrease in the government budget deficit increase the real interest rate b. An increase in the government budget deficit shifts the supply of loanable funds to the right c. An increase in private saving shifts the supply of loanable funds to the left d. An increase in the government budget deficit shifts the supply of loanable funds to the left
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19) Which of the following statements regarding the loanable funds market is not true ? a. A decrease in a country’s net capital outflow shifts the demand for loanable funds to the left b. An increase in domestic investment shifts the demand for loanable funds to the right c. An increase in a country’s net capital outflow shifts the supply of loanable funds to the left d. An increase in a country’s net capital outflow raises its real interest rate
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