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WorksheetsCAD, CAS and Exchange rates - Balance of Payments
Total questions: 10
Worksheet time: 3mins
Name
Class
Date
1.
What is the impact of an appreciation of a country's currency on its current account?
a)
It leads to a current account deficit.
b)
It leads to a current account surplus.
c)
It has no impact on the current account.
d)
The impact depends on other economic factors.
2.
How does a depreciation of a country's currency affect its trade balance?
a)
It leads to an increase in exports and a current account surplus.
b)
It leads to a decrease in exports and a current account deficit.
c)
It has no impact on trade balance.
d)
It reduces imports and increases the current account surplus.
3.
In the context of exchange rates, what does a trade surplus indicate about a country's currency?
a)
It is likely to appreciate.
b)
It is likely to depreciate.
c)
There is no impact on the currency.
d)
It depends on other economic factors.
4.
How does a fixed exchange rate system influence a country's current account?
a)
It tends to reduce trade imbalances.
b)
It leads to more flexible trade balances.
c)
It has no impact on trade balances.
d)
It tends to increase trade imbalances.
5.
What is the relationship between interest rates and the current account?
a)
Higher interest rates lead to a current account surplus.
b)
Higher interest rates lead to a current account deficit.
c)
Interest rates have no impact on the current account.
d)
Interest rates only affect capital flows, not the current account.
6.
How does a preference for imported luxury goods impact a country's trade balance?
a)
It contributes to a trade surplus.
b)
It contributes to a trade deficit.
c)
It has no impact on the trade balance.
d)
It depends on the overall economic conditions.
7.
During an economic recession, what is the likely impact on a country's trade balance?
a)
It leads to a trade surplus.
b)
It leads to a trade deficit.
c)
Economic recessions have no impact on trade balances.
d)
It depends on the specific industries affected by the recession.
8.
How do protectionist trade policies, such as tariffs, influence trade balances?
a)
They contribute to trade surpluses.
b)
They contribute to trade deficits.
c)
They have no impact on trade balances.
d)
It depends on the specific products targeted by tariffs.
9.
In the context of deficits and surpluses, what role do consumer preferences play?
a)
Preferences for domestic goods contribute to a deficit.
b)
Preferences for foreign goods contribute to a surplus.
c)
Preferences have no impact on trade balances.
d)
Preferences influence trade balances depending on specific goods.
10.
How does an increase in government subsidies for export industries impact a country's trade balance?
a)
It leads to a trade surplus.
b)
It leads to a trade deficit.
c)
Subsidies have no impact on trade balances.
d)
It depends on the overall economic conditions and policies.
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