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macroeconomic issues and analysis MCQs

Practise focused macroeconomic issues and analysis questions with marked answers for exam preparation and subject revision.

macroeconomic issues and analysis Mcqs
1. The price of one countrys currency in terms of another countrys currency is the ?
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A. balance of trade

B. terms of trade

C. exchange rate

D. currency validation

2. Reducing inflation is a more important objective than economic growth is an example of ?
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A. Normative economics

B. Positive economics

C. Reality economics

D. Objective economics
3. If the economy is in the expansionary phase of the business cycle, aggregate demand ____ unemployment ____ inflation ____ payments is likely to move towards ____?
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A. rise; falls; rises; deficit

B. falls; falls; falls; surplus

C. is static; low; rise; deficit;

D. falls; rise; falls; surplus

4. If one country, with floating exchange rates, has higher inflation than its competitors we would expect its exchange rate to ?
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A. appreciate

B. revalue

C. depreciate

D. be in short supply

5. If VAT rates rise, then costs are likely to ___ and demand is likely to ____?
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A. fall; fall

B. fall; rise

C. rise; rise

D. rise; fall
6. The situation when a country imports more than it exports is ?
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A. a trade surplus

B. a trade deficit

C. an expansion.

D. a recession

7. If the economy is in the recessionary phase of the business cycle, aggregate demand ___ unemployment ____ inflation ___ and the current account of the balance of payments is likely to move towards ____?
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A. falls; rises; falls; surplus

B. is static; low; rises; deficit

C. rises; falls; rises; deficit

D. falls; falls; falls; surplus

8. When capital mobility is perfect interest rate differentials will tend to be offset by ?
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A. current account differences

B. expected exchange rate changes

C. balance of payments difference

D. Price difference

9. If the Pakistan receives larger than expected revenues from exports then the exchange value of its currency will tend to ?
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A. depreciate

B. appreciate

C. fluctuate more than if exports were lower

D. not be affected

10. A current account deficit means that a country may ?
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A. increase its stock of foreign assets

B. increases its foreign currency reserves

C. reduce its stock of foreign assets

D. increases its savings

11. When the $/ exchange rate rises the pound _____ and when the $/ rates falls the pound ________?
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A. depreciates, appreciates

B. appreciates, depreciates

C. becomes more expensive becomes cheaper

D. revalues, devalues

12. If currency dealers expect the value of the pound to fall, the exchange value will tend to ?
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A. fluctuate more than it would do therwise

B. not be affected

C. depreciate

D. appreciate

13. Within the circular flow of income, an increase in domestic income will tend to increase ?
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A. inventories

B. exports

C. taxes

D. imports

14. If Pakistans incomes rise faster than those in most other countries the the exchange value will tend to ?
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A. depreciate

B. appreciate

C. fluctuate more than it would do otherwise

D. not be affected

15. Which of the following can the government not use directly to control the economy ?
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A. investment in education

B. Pay rates within the private sector

C. Benefits available for the unemployed and sick

D. pay rates in the public sector

16. If the economy is in the though phase of the business cycle, aggregate demand ____ unemployment ______ inflation ______ and the current account of the balance of payments is likely to move towards ________?
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A. rises; falls; rises; deficit

B. falls; rises; falls; surplus

C. is static; low; rises; deficit

D. falls; falls; falls; surplus
17. In the ERM, each country fixed participant Collectively the group ________ against the rest of the world?
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A. a real exchange rate, floated

B. a real exchange rate, pegged

C. a purchasing power parity, pegged

D. a nominal exchange rate, floated
18. Under floating exchange rates, expectations of higher interest rates are likely to cause an ____ of the exchange rate?
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A. depreciation

B. fall

C. devaluation

D. appreciation
19. In the absence of international capital controls, central banks set ________ to provide the correct incentive for speculators?
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A. income policy

B. money supply targets

C. inflation targets

D. interest rates
20. The main features of the European Monetary system are ?
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A. currency swap agreement between member

B. The ECU

C. all of the above

D. the exchange rate mechanism