Which organization will most likely aid a country that is experiencing an economically detrimental current account deficit?

C. The International Monetary Fund

B. The World Trade Organization

Q. A company doing business in a monopolistically competitive market will most likely maximize profits when its output quantity is set such that:

C. marginal revenue equals marginal cost.

B. marginal revenue equals average cost.

Q. The least likely consequence of a period of hyperinflation is the:

C. possibility of social unrest.

Q. A decrease in both the labor force participation ratio and the unemployment rate is most likely caused by:

A. an increase in discouraged workers.

B. an increase in underemployed workers.

C. a decrease in voluntarily unemployed persons.

Q. The reason analysts follow developments in the availability of credit is that:

A. loose private sector credit may contribute to the extent of asset price and real estate bubbles and subsequent crises.

B. loose credit helps reduce the extent of asset price and real estate bubbles.

C. credit cycles are of same length and depth as business cycles.

Q. Given an independent central bank, monetary policy actions are more likely than fiscal policy actions to be:

B. effective when a specific group is targeted.

C. effective when combating a deflationary economy.

Q. The marginal revenue per unit sold for a firm doing business under conditions of perfect competition will most likely be:

C. greater than average revenue.

A man earns $3,000 per month and allocates $300/month for bus travel to visit his children three times per month. The bus company lowers the cost such that he can now take four trips a month for $320, which he decides to do. His decision to visit his children more often is most likely due to which economic effect?

C. Income and substitution effects combined

A developing country that maintains a fixed value for its currency relative to the US dollar is experiencing a decline in its economic activity, and its inflation rate falls below the level of inflation in the United States. The most likely result of the developing country’s actions to maintain the fixed exchange rate target is that its:

B. short-term interest rates will fall.

A. foreign exchange reserves will decrease.

Q. Disinflation is best described as a:

C. decline in the inflation rate.

Q. Diseconomies of scale most likely result from:

B. overlap of business functions and product lines.

A. specialization in the labor force.

C. discounted prices on resources when buying in larger quantities.

Q. A forward premium indicates:

C. the interest rate is higher in the price currency than in the base currency.

A. an expected increase in demand for the base currency.

B. the interest rate is higher in the base currency than in the price currency.

A firm in a market environment characterized by monopolistic competition is most likely to:

C. have many competitors each following its own product differentiation strategy.

A. continue to experience economic profit in the long run.

B. have a well-defined supply function reflecting its marginal and average costs.

Q. Which is the most accurate statement regarding central banks and monetary policy?

A. Central bank activities are typically intended to maintain price stability.

B. Monetary policies work through the economy via four independent channels.

C. Commercial and interbank interest rates move inversely to official interest rates.

Q. Which of the following best describes the aggregate supply curve in the short run (one to two years)? The short-run aggregate supply curve is:

C. upward sloping, because input prices do not fully adjust to the price level in the short run.

A. flat, because output is more flexible than prices in the short run.

B. vertical, because wages and other input prices fully adjust to the price level.

A country having a current account deficit most likely will still be able to consume more output than it produces by:

C. increasing its net foreign liabilities.

A. adjusting interest rates to stimulate higher domestic savings.

B. restricting foreign direct investment.

Q. The numerator of the GDP price deflator reflects:

B. the value of current year output at current prices.

A. the value of base year output at current prices.

C. the value of current year output at base year prices.

As a monetary policy tool, quantitative easing (QE) will most likely help revive an ailing economy in which of the following environments?

B. Declining bank reserves and economic activity

Q. Which of the following international trade bodies was the only multilateral body governing international trade from 1948 to 1995?

C. General Agreement on Tariffs and Trade (GATT).

A. World Trade Organization (WTO).

B. International Trade Organization (ITO).

Q. In practice, both a fixed parity regime and a target zone regime allow the exchange rate to float within a band around the parity level. The most likely rationale for the band is that the band allows the monetary authority to:

C. exercise more discretion in monetary policy.

A. be less active in the currency market.

B. earn a spread on its currency transactions.

Q. The least likely goal of a government’s fiscal policy is to:

C. ensure the stability of the purchasing power of its currency.

B. influence aggregate national output.

Q. As the expansion phase of the business cycle advances from early stage to late stage, businesses most likely experience a decrease in:

C. availability of qualified workers.

Econ 1.13 Test

Quiz

•

Professional Development

•

Professional Development

•

Practice Problem

•

Medium

Education Trustville

Used 1+ times

FREE Resource

40 questions

Show all answers

1.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

Which of the following is the least likely outcome when a monopolist adopts first-degree price discrimination because of customers’ differing demand elasticities?

A. The output increases to the point at which price equals the marginal cost.

B. The monopolist shares the total surplus with consumers.

C. The price for a marginal unit decreases to less than the price for other units.

2.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

None

A. ZAR 3671 per million SEK traded.

B. SEK 4200 per million ZAR traded.

C. ZAR 4200 per million SEK traded.

3.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

None

A. C

B. B

C. A

4.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

Assume that the nominal spot exchange rate (USD/EUR) increases by 7.5%, the eurozone price level decreases by 4%, and the US price level increases by 2.5%. The change in the real exchange rate (%) is closest to:

A. 0.7%.

B. –6.3%.

C. 14.8%.

5.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

None

A. 100 .

B. 60 .

C. 20 .

6.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

Both monetary and fiscal policies can most likely be used by a government to:

A. redistribute income and wealth.

B. affect the level of interest rates.

C. influence the level of economic activity.

7.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

Q. In order to minimize the foreign exchange exposure on a euro-denominated receivable due from a German company in 100 days, a British company would most likely initiate a:

A. spot transaction.

B. forward contract.

C. real exchange rate contract.

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Econ 1.13 Test

40 questions

Which of the following is the least likely outcome when a monopolist adopts first-degree price discrimination because of customers’ differing demand elasticities?

None

None

Assume that the nominal spot exchange rate (USD/EUR) increases by 7.5%, the eurozone price level decreases by 4%, and the US price level increases by 2.5%. The change in the real exchange rate (%) is closest to:

None

Both monetary and fiscal policies can most likely be used by a government to:

Q. In order to minimize the foreign exchange exposure on a euro-denominated receivable due from a German company in 100 days, a British company would most likely initiate a:

Q. Companies most likely have a well-defined supply function when the market structure is:

Q. A price index of goods and services that excludes food and energy is most likely used to calculate:

Which organization will most likely aid a country that is experiencing an economically detrimental current account deficit?

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