Top 250+ Solved International Economics MCQ Questions Answer
Q. What is the effect of a currency devaluation under fixed exchange rates in the short run?
a. A decline in output.
b. A decline in foreign reserves.
c. An increase in exports.
d. An increase in imports.
Q. Reducing a current account deficit requires a country to:
a. Increase the government’s deficit and increase private investment relative to saving
b. Increase the government’s deficit and decrease private investment relative to saving
c. Decrease the government’s deficit increase private investment relative to saving
d. Decrease the government’s deficit and decrease private investment relative to saving
Q. Reducing a current account surplus requires a country to:
a. Increase the government’s deficit and increase private investment relative to saving
b. Increase the government’s deficit and decrease private investment relative to saving
c. Decrease the government’s deficit and increase private investment relative to saving
d. Decrease the government’s deficit and decrease private investment relative to saving
Q. Concerning a country’s business cycle, rapid growth of production and employment iscommonly associated with:
a. Large or growing trade deficits and current account deficits
b. Large or growing trade deficits and current account surpluses
c. Small or shrinking trade deficits and current account deficits
d. Small or shrinking trade deficits and current account surpluses
Q. The burden of a current account deficit would be the least if a nation uses what itborrows to finance:
a. Unemployment compensation benefits
b. Social Security benefits
c. Expenditures on food and recreation
d. Investment on plant and equipment
Q. A major difference between the spot market and the forward market is that the spot market deals with:
a. The immediate delivery of currencies
b. The merchandise trade account
c. Currencies traded for future delivery
d. Hedging of international currency risks
Q. The relationship between the exchange rate and the prices of tradable goods is known asthe:
a. Purchasing-power-parity theory
b. Asset-markets theory
c. Monetary theory
d. Balance-of-payments theory
Q. Low real interest rates in the United States tend to:
a. Decrease the demand for dollars, causing the dollar to depreciate
b. Decrease the demand for dollars, causing the dollar to appreciate
c. Increase the demand for dollars, causing the dollar to depreciate
d. Increase the demand for dollars, causing the dollar to appreciate
Q. Assume that the United States faces an 8 percent inflation rate while no (zero) inflation existsin Japan. According to the purchasing-power-parity theory, the dollar would be expected to:
a. Appreciate by 8 percent against the yen
b. Depreciate by 8 percent against the yen
c. Remain at its existing exchange rate
d. None of the above
Q. Suppose Mexico and the United States were the only two countries in the world. There exists anexcess supply of pesos on the foreign exchange market. This suggests that:
a. Mexico’s current account is in surplus
b. Mexico’s current account is in deficit
c. The U.S. current account is in deficit
d. The U.S. current account is in equilibrium
Q. If Canada runs a current account surplus and exchange rates are floating:
a. The value of other currencies will rise relative to the dollar
b. The dollar will depreciate relative to other currencies
c. The price of foreign goods will become cheaper for Canadians
d. The price of foreign goods will rise for Canadians
Q. Gold standard means:
a. Currency of the country is made of gold
b. Paper currency is not used
c. Currency of the country is freely convertible into gold
d. (a) & (c) of above
Q. If a country decreases the external value of its currency, it will affect:
a. Volume of exports
b. Volume of imports
c. General price level
d. All of the above
Q. Rich countries have deficit in their balance of payments:
a. Sometimes
b. Never
c. Alternate years
d. Always
Q. Balance of payments means:
a. The balance of receipts and payments of all banks
b. The balance of receipts and payments of State Bank
c. The balance of receipts and payments of foreign exchange by a country
d. The balance of govt. receipts and payments