Y13 Assessment Sept 2020

Which of these describes what you would expect to happen when a currency appreciates

• imports rise, exports falls, unemployment rises , inflation falls

• imports rise, exports fall, unemployment falls , inflation falls

• imports fall, exports rise, unemployment rises , inflation rises

• imports rise, exports fall, unemployment falls , inflation rises

Which of these is most likely when a currency depreciates

• imports fall, exports rises, trade deficit falls, inflation rises

• imports fall, exports rise, trade deficit falls, inflation falls

• imports rise, exports fall, trade deficit falls, inflation falls

• imports falls, exports rise, trade deficit rises, inflation falls

Which of these would appear in the capital and financial account. TICK ALL CORRECT OPTIONS

• Sale of US treasury bonds to a UK citizen

• Sale of US treasury bonds to an American citizen

• Sale of French property to a UK citizen

• Sale of a shares in a UK company to a Chinese company

• Payment of dividend by a US company to French shareholder

Which of these would appear in the capital and financial account. TICK ALL CORRECT OPTIONS

• The flow of hot money from the UK to America

• Interest payments made to Chinese holders of UK government debt

• The purchase of a London house by a British business woman

• The sale of the rights to the Rolling Stones music from a UK company to one in the Cayman Islands

• Rent payments from London residents living in flats owned by a Japanese company

Which of these would appear in the capital and financial account. TICK ALL CORRECT OPTIONS

• UK foreign aid to help disaster relief following an earthquake in Malaysia

• The purchase of a German football club by a Saudi prince

• Purchase of US government bonds by a UK investment fund

• Interest paid to a UK investment fund that owns USE government bonds

• Purchase of shares in Apple Corp by a Swiss investment fund.

If the Marshall Lerner Condition is met...

• A depreciation leads to an improvement in the current account

• A depreciation leads to a worsening in the current account

• There will be a J Curve effect

• A depreciation leads to an improvement in the budget deficit

The J Curve is best described as saying

• The current account may improve in the long run, even if it gets worse in the short run

• When sterling falls the current account will get better

• The Marshall Lerner Condition is not met

• The Marshall Lerner is met in the short run but not in the long run.

WHAT IS A NEGATIVE IMPACT OF TARIFFS. Click all correct answers.

• LOWER PRICES

• MORE CHOICE

• INFANT INDUSTRIES MAY SUFFER

• REDUCES DOMESTIC EMPLOYMENT

• MAY CAUSE RETALIATION FROM OTHER COUNTRIES

What represents the level of imports before any tariff?

• Q1 - Q2

• Q1 - Q4

• Q2 - Q3

• Q3 - Q4

The diagram shows that, a tariff of $20 

• Is not high enough to have any effect 

• Reduces imports to zero

• Is lower than the one that has been imposed