WHSS Economics 2281: Recap 1st Week

• A

• B

• C

• D

• A

• B

• C

• D

In recent years, the US has experienced a deficit on its overall current account of the balance of payments. What could have led to an increase in the size of the deficit?

A increased earnings by US investors in foreign companies

B increased numbers of overseas visitors to the US

C increased spending on US military bases abroad

D increased competitiveness of goods made in the US

• A

• B

• C

• D

A country has a debit balance of $10 million in Balance of Goods and Services, a surplus of $20 million in Net Income and a Current Account deficit of $10 million. What is the balance of net transfers?

A $10 million surplus

B $10 million deficit

C $0

D $20 million surplus

• A

• B

• C

• D

Remittances flowing into a country would be recorded in the Balance of Payments as:

A Debit entry in Net Incomes

B Credit entry in Net Incomes

C Debit entry in Net Transfers

D Credit entry in Net Transfers

• A

• B

• C

• D

Which one of the points mentioned below is not an advantage of the floating exchange rate:

A Reduces the burden of maintaining foreign reserves

B Certainty

C Automatic Stabilization

D Reflects market forces

• A

• B

• C

• D

US Dollar started to increase in value against the Pakistani Rupee in the first three months of 2019. What could be one of the possible reasons for this?

A Imports from US to Pakistan started to fall

B More people from US started visiting Pakistan

C Pakistani exports to US started to rise

D Pakistani Speculators started to buy more Dollars

• A

• B

• C

• D

A government devalued its currency with the aim of improving its current account deficit. But the deficit did not improve even after devaluation. What could be one of the most appropriate reasons, assuming all other things are constant?

A exports became cheaper but are price elastic

B exports became cheaper but are price inelastic

C exports became expensive but are price inelastic

D exports became expensive but are price elastic

• A

• B

• C

• D

Profits made by MNCs operating in a country X are sent back to their parent countries. How would this be recorded in the Current Account of country X?

A debit item in Net Transfers

B credit item in Net Transfers

C debit item in Primary Income

D credit item in Secondary Income

• A

• B

• C

• D

Current Account Deficit due to domestic companies becoming uncompetitive against foreign businesses could be described as:

A Structural Deficit

B Cyclical Deficit

C Frictional Deficit

D Automatic Stabilization

• A

• B

• C

• D