International Economics

• A

• B

• C

• D

Which one of the following is an expenditure switching policy that would help to reduce a deficit on the balance of payments on current account?

An increase in

• government expenditure on public goods.

• income tax to reduce consumer expenditure.

• quotas on exports of demerit goods.

• tariffs to raise the price of imports.

• A

• B

• C

• D

• companies buying factories in the UK.

• exports of manufactured goods to the UK.

• interest rates relative to those in the UK.

• productivity growth relative to that in the UK.

• The natural rate of unemployment is falling

• The price level is increasing more slowly

• The volume of exports is increasing

• There is an inverse relationship between unemployment and inflation

The UK’s labour productivity increases by only 10% over a five-year period. Over the same period its main trading partners increase their productivity by 25%. All other things being equal, the most likely consequence for the UK is

• a decline in UK imports from its main trading partners.

• a 15% deterioration in its balance of trade on the current account.

• a loss of competitiveness against its main trading partners.

• the imposition of a 15% tariff on imports to maintain international competitiveness.

A country experiences a large net capital outflow. All other things being equal, the most likely consequence of this in the short run will be a decrease in

• its exchange rate.

• its net income from overseas investments.

• its rate of interest.

• the value of exports and imports.

• EFGH

• JFGK

• P_WP_TGK

• Q₂FGQ₃

• The Australian Dollar has appreciated by 24% against the US Dollar.

• The Brazilian Real has been devalued by 32% against the US Dollar.

• The Chinese Yuan has depreciated the most against the US Dollar.

• The Danish Krone has the closest purchasing power parity to the US Dollar.

Globalisation can make some product markets more contestable.

Which one of the following characteristics of globalisation is the most likely explanation for such an increase in contestability?

• A reduction in protectionism

• Greater synchronisation of economic cycles between countries

• Higher levels of labour migration

• The growth of employment in emerging market economies