Macroeconomics I

When our national import increases, _________.

• demand for foreign exchange increase

• demand for foreign exchange decrease

• supply for foreign exchange increase

• supply for foreign exchange decrease

What is the consequence when foreign income increases?

• Increase in foreign demand by foreign residents.

• Increase in domestic demand by foreign residents.

• Increase in foreign demand by domestic residents.

• Increase in domestic demand by domestic residents.

When foreign interest rate higher than domestic interest rate, what is the consequences?

• Domestic residents will buy foreign assets.

• Foreign residents will buy domestic assets.

• Domestic residents will buy domestic assets.

• Foreign residents will buy assets.

In Mundell-Fleming model (IS-LM-BP), assuming that the slope of BP is flatter than LM and the exchange rate is fixed. An increase in government spending will cause _______ .

• Deficit in BP

• Capital outflow

• Exchange rate will be depreciated.

• Surplus in BP

Increase in exchange rate will causes:

• Export price relatively expensive

• BP curve shift to the right

• IS curve shift to the right

• BP curve shift to the left

Increase in interest rate will causes:

• Capital outflows

• Increase in exchange rate

• Capital inflows

• Increase in export

When export increase, what are the consequences?

• Supply of foreign exchange increase and BP curve shift to the left.

• Demand of foreign exchange increase and IS curve shift to the right.

• Supply of foreign exchange increase and IS curve shift to the right.

• Exchange rate fall and BP curve to the right.

In fixed exchange rate, when Ringgit currency is overvalued, central bank will be:

• sell foreign exchange by using foreign reserve asset in foreign

• buy foreign exchange by using foreign reserve asset in Malaysia

• buy foreign exchange by increasing the money supply

• sell foreign exchange by using foreign reserve asset in Malaysia