macroeconomics c7

macroeconomics c7

University

19 Qs

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macroeconomics c7

macroeconomics c7

Assessment

Quiz

Other

University

Practice Problem

Hard

Created by

Huyen Dinh

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19 questions

Show all answers

1.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

The LM curve shows a … relationship between the interest rate and output level

Positive

Negative

Neutral

  1. Ø

2.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

The Mundell-Fleming model assumes that:

A. prices are flexible, whereas the IS-LM model assumes that prices are fixed.

B. prices are fixed, whereas the IS-LM model assumes that prices are flexible

C. as in the IS-LM model, prices are fixed

D. as in the IS-LM model, prices are flexible

3.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

In the Mundell-Fleming model:

A. the exchange rate system must have a floating exchange rate

B. the exchange rate system must have a fixed exchange rate

C. it makes no difference whether the exchange rate system has a floating or a fixed exchange rate

D. the behavior of the economy depends on whether the exchange rate system has a floating or a fixed exchange rate.

4.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

In a small open economy, a decrease in its exchange rate will ______ net exports and shift the _____ curve.

A. increase; IS

B. decrease; IS

C. increase; LM

D. decrease; LM

5.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

The Mundell-Fleming framework studies (A) _____ , (B) _________ economies in a world with (C) _____ financial markets and (D) _____ capital mobility.

a) (A) small; (B) open; (C) integrated; (D) free

b) (A) large; (B) open; (C) integrated; (D) free

c) (A) small; (B) mercantilist; (C) integrated; (D) free

d) (A) large; (B) open; (C) restricted; (D) free

6.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Assuming there is perfect capital mobility, compared to a large open economy, a small open economy is one in which the:

A. exchange rate is fixed

B. exchange rate is floating

C. domestic interest rate equals the world interest rate

D. domestic interest rate is not equal to the world interest rate.

7.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

In the Mundell-Fleming model, the domestic interest rate is determined by the:

A. intersection of the LM and IS curves

B. domestic rate of inflation

C. world rate of inflation

D. world interest rate

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