WorksheetsEconomics Quiz B Part 2
Total questions: 26
Worksheet time: 18mins
If a country has a high level of foreign direct investment (FDI), what is the most likely impact on its economy?
The country will experience a significant increase in unemployment.
The country will see an increase in its GDP and job creation.
The country will face a shortage of skilled workers.
The country will experience a decline in its standard of living.
In the context of international finance, what does the term "capital flight" refer to?
The sudden withdrawal of foreign investors from a country's stock market.
The rapid increase in a country's foreign exchange reserves.
The movement of capital from a country to another country.
The reduction in a country's national debt.
If a country's central bank implements a policy of quantitative easing, what is the most likely impact on its economy?
The country's inflation rate will decrease.
The country's interest rates will increase.
The country's currency will depreciate.
The country's GDP will increase.
If a country has negative outward FDI, this means that
Outward investment as a percentage of inward investment is falling.
Sales of existing investments abroad exceed new investments abroad.
Sales of foreign assets in the country exceed sales of the country's assets abroad.
Inward FDI exceeds outward FDI.
A horizontally integrated multinational is one that
Produces various stages of production in different countries.
One which exports more than 50% of output.
Produces different products in different countries.
Produces the same product in more than one country.
Multinational corporations (MNCs) engaging in technological transfer may lead to gains elsewhere in the economy as
Other companies in the host county may try to copy the methods.
The MNC takes market share from local companies.
Workers trained by the MNC move to other parts of the economy.
A and C
If a country has negative outward FDI, this means that
Inward FDI exceeds outward FDI.
Sales of foreign assets in the country exceed sales of the country's assets abroad.
Outward investment as a percentage of inward investment is falling.
Sales of existing investments abroad exceed new investments abroad.
Poor communication between subsidiaries may cause
diseconomies of scale.
adverse selection.
economies of scope.
all the above.
If the total expenditure of the UK public sector is £650bn and revenues to the UK public sector are £325bn each year, then
the UK will have a PSNB of -£325bn.
the UK government will have a budget deficit of £325bn.
the UK will have a PSNB of £325bn.
the UK general government debt will rise by £325bn.
What effect will a successful supply-side policy have on the aggregate demand curve?
Leftward shift
Rightward shift
Movement down along
Movement up along
If Argentina has an absolute advantage in the production of wheat and Chile has an absolute advantage in the production of copper, then
neither country has anything to gain from specialisation and trade.
it is reasonable to expect that specialisation and trade will benefit both countries.
it is reasonable to expect that trade will benefit both countries, but specialisation will not.
it is reasonable to expect that specialisation will benefit both countries, but trade will not.
The main advantage of trade between two countries is that
trade makes both countries more self-sufficient.
employment in both countries will increase.
both countries can produce beyond their previous resource and productivity constraints.
both countries can consume beyond their previous resource and productivity constraints.
The trade effect of Brexit for the UK is likely to be
a reduction in trade with the EU.
either a reduction or an increase in trade between the UK and non-EU countries.
a reduction in both inward and outward capital flows between the UK and the EU.
A and B
A, B and C
Which one of the following would appear as a credit item in the UK balance of payments?
Money sent by UK residents to relatives living in Australia.
When a country hosts the Olympics this can be expected to
reduce the supply of the country's currency on the foreign exchange markets.
increase the country's exports.
reduce the country's imports.
lead to a depreciation of the host country's currency.
do all the above.
Fiscal stance refers to
a government that is running a budget deficit.
whether a government is pursuing an expansionary or contractionary fiscal policy.
a government that takes a tough stance when it comes to running the country's finances.
a government that prefers the use of fiscal to monetary policy for demand management.
If the economy were booming, we would expect
government expenditure to be low and tax revenues to be low so that the government could pay off the central government debt.
government expenditure to be low and tax revenues to be high so that the public sector might be running a surplus.
government expenditure to be high and tax revenues to be low causing a large budget deficit.
none of the above
A central bank wishing to operate a tighter monetary policy might
raise interest rates and use open-market operations to reduce the money supply.
reduce interest rates but use open-market operations to reduce the money supply.
lower interest rates to encourage spending and discourage saving.
promote investment in other countries by domestic firms.
Kathy eats five slices of pizza on a Saturday night but admits each slice of pizza doesn't taste as good as the previous one. This suggests that for Kathy.
the marginal utility of a slice of pizza is negative.
the marginal utility of a slice of pizza is positive but decreasing.
the total utility of slices of pizza is increasing by larger and larger increments.
the total utility of slices of pizza is declining.
Which of the following is an example of a tight/contractionary monetary policy?
An increase in the liquidity ratio
The central bank buying government securities in the open market
If the UK economy is experiencing a recession, the Federal Reserve is most likely to
maintain current interest rates to support the economy.
increase interest rates to curb inflation.
decrease interest rates to stimulate economic activity.
implement quantitative easing to inject liquidity into the economy.
Which of the following actions by a central bank would be considered expansionary?
Increasing reserve requirements for banks
Selling government bonds to reduce the money supply
Lowering the discount rate to encourage borrowing
Implementing a fiscal austerity program
If a country's central bank wants to stabilize the exchange rate, it might
increase interest rates to attract foreign investors.
decrease interest rates to encourage domestic investment.
intervene in the foreign exchange market to buy its own currency.
sell its own currency to increase its value.
In the context of monetary policy, what is the purpose of open-market operations?
To increase the money supply by buying government securities
To decrease the money supply by selling government securities
To stabilize the exchange rate
To implement fiscal policy
If a central bank wants to reduce inflationary pressures, it might
increase the money supply to stimulate economic activity.
decrease the money supply to slow down economic activity.
increase interest rates to discourage borrowing.
decrease interest rates to encourage borrowing.
