Top 250+ Solved International Economics MCQ Questions Answer
Q. An appreciation of the currency is likely to occur if:
a. Domestic interest rates fall
b. There is an increase in demand for imports
c. There is an increase in demand for exports
d. There is an increase in the balance of payments deficit
Q. If the central bank purchases assets, it will result in:
a. An increase in the money supply.
b. An increase in the central bank's net worth.
c. A decline in the money supply.
d. A decline in the central bank's net worth.
Q. If there is a decline in output, to keep the exchange rate fixed, the central bank has to:
a. Purchase foreign assets.
b. Purchase domestic assets.
c. Sell domestic assets.
d. Sell foreign assets.
Q. What is the effect of an increase in taxes under fixed exchange rates and perfect assetsubstitutability in the short run?
a. An increase in output and no change in interest rates.
b. A decline in output and interest rates.
c. A decline in output and no change in interest rates.
d. An increase in output and interest rates.
Q. What is the effect of a currency devaluation under fixed exchange rates in the short run?
a. A decline in output.
b. An increase in imports.
c. A decline in foreign reserves.
d. An increase in exports.
Q. If a respectable source speculates that there is a possibility of devaluation:
a. Output will increase.
b. There will be a net private capital outflow.
c. The central bank's foreign reserves will increase.
d. Domestic interest rates will decline.
Q. Under imperfect asset substitutability:
a. Central banks cannot keep the exchange rate fixed.
b. Domestic interest rates should be equal to foreign interest rates.
c. Central banks cannot affect money supply.
d. Sterilized intervention affects money supply.
Q. Which of the following is true regarding the capital market development since the 1970s?
a. The extent of intertemporal trade was larger than theory predicts.
b. Onshore-offshore interest rate differentials were too large.
c. The extent of the international portfolio diversification was smaller than theory predicts.
d. The role of emerging markets declined over time.
Q. An Exchange rate is said to __________ when its short-run response to a change in marketFundamentals is greater than its long-run response. a
a. Overshoot
b. Undershoot
c. Depreciate
d. Appreciate
Q. Concerning exchange-ratedetermination, “market fundamentals” include all of the Following except:
a. Monetary policy and fiscal policy
b. Profitability and riskiness of investments
c. Speculative opinión about future Exchange rates
d. Productivity changes affecting production costs
Q. In the short run, Exchange rates respond tomarketforcessuch as:
a. Inflation rates
b. Expectations of future Exchange rates
c. Investment profitability
d. Government trade policy
Q. Long-run Exchange ratemovements are governed by all of the following except:
a. National productivity levels
b. Consumer tastes and preferences
c. Rates of inflation
d. Interest rate levels
Q. That identical godos should cost the same in all nations, assuming tis costless to ship godos between nations and there are no barriers to trade, is a reflection of the:
a. Monetary approach to exchange-rate determination
b. Law of one price
c. Fundamentalist approach to exchange-ratedetermination
d. Exchange-rate-overshooting principle
Q. The quantity of dollars supplied to the foreign Exchange market would increase if, other things remaining equal:
a. Incomerises in Canada
b. Manufacturing productivity increases in Canada
c. Prices decrease in Canada
d. Import tariffs rise in Canada
Q. The Gold Standard was prevalent in the world from:
a. 15th century to 18th century
b. 9th century to 18th century
c. From 1870 till First World War
d. From 1670 till First WorldWar