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Multiple Choice Quiz
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1
Which of the following refers to goods and services produced abroad and consumed in the United States?
A)imports
B)exports
C)net foreign investment
D)net exports
2
Which of the following refers to net saving or investment abroad and is approximately equal to the value of net exports?
A)imports
B)exports
C)net foreign investment
D)none of the above.
3
Which of the following refers to the increase in the dollar value of imports that results from a dollar increase in GDP?
A)marginal propensity to import
B)open-economy multiplier
C)an overvalued currency
D)convergence criteria
4
Which of the following is true about the open-economy multiplier?
A)The open-economy multiplier is smaller than the multiplier in a closed economy.
B)The open-economy multiplier is 1/(MPS+MPm).
C)Both a and b.
D)Neither a nor b.
5
Country A is a small country. Country B is a large country. If Country A's currency is pegged to Country B's currency,
A)Country B's interest rates will be determined by Country A's monetary policy.
B)Country A's interest rates will be determined by Country B's monetary policy.
C)Country B's monetary will have no effect on Country A.
D)None of the above.
6
In the full-employment closed economy, _______ government deficits _______ investment.
A)higher; lower
B)higher; increase
C)lower; lower
D)lower; increase
7
We would expect that an increase in government spending would result in a(n) _______ in the exchange rates and a(n) _______ in net exports.
A)increase; increase
B)increase; decrease
C)decrease; increase
D)decrease; decrease
8
We would expect that an increase in investment demand would result in a(n) _______ in the exchange rates and a(n) _______ in net exports.
A)increase; increase
B)increase; decrease
C)decrease; increase
D)decrease; decrease
9
Which of the following is true about national competitiveness?
A)Countries are inherently uncompetitive.
B)Countries only become uncompetitive when they lose the absolute advantage in the production of their primary export.
C)Countries only become uncompetitive when they have prices that are out of line with those of their trading partners as a result of an overvalued exchange rate.
D)None of the above.
10
What do we call a group of regions that has high labor mobility or has common and synchronous aggregate supply or demand shocks?
A)EMS
B)a monetary union
C)an optimal currency area
D)none of the above







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