74 + Mcqs in Macroeconomic Issues & Analysis Mcqs Page 1 McqOptions

1.	Aggregate demand is the total demand for all goods and services in an economy from ?
A.	the household and government sectors
B.	the household sector.
C.	all sectors of except the rest of the world
D.	all sectors of the economy including the rest of the world.
Answer» E.

Discussion

2.	Fiscal policy is weak under floating exchanges rates as fiscal expansion ?
A.	crowds out imports
B.	crowds out public consumption
C.	crowds out exports
D.	reduces the budget deficit
Answer» D. reduces the budget deficit

Discussion

3.	In the ERM, each country fixed participant Collectively the group ________ against the rest of the world?
A.	a nominal exchange rate, floated
B.	a real exchange rate, pegged
C.	a purchasing power parity, pegged
D.	a real exchange rate, floated
Answer» B. a real exchange rate, pegged

Discussion

4.	A current account deficit means that a country may ?
A.	reduce its stock of foreign assets
B.	increase its stock of foreign assets
C.	increases its savings
D.	increases its foreign currency reserves
Answer» B. increase its stock of foreign assets

Discussion

5.	A rise in the real exchange rate will ________ the competitiveness of the domestic economy?
A.	increase
B.	reduce
C.	do nothing to
D.	None of the above
Answer» C. do nothing to

Discussion

6.	Government policies that focus on changing taxes and government spending are called ?
A.	fiscal policies
B.	incomes policies
C.	supply-side policies
D.	monetary policies
Answer» B. incomes policies

Discussion

7.	All of the following are benefits of the single market except ?
A.	it allows countries to exploit their comparative advantage, more fully
B.	firm could more readily exploit
C.	economies of scal
D.	it intensified competition
E.	it is easier to book holidays in member countries
Answer» F.

Discussion

8.	Under floating exchange rates, expectations of higher interest rates are likely to cause an ____ of the exchange rate?
A.	depreciation
B.	appreciation
C.	fall
D.	devaluation
Answer» C. fall

Discussion

9.	If one country, with floating exchange rates, has higher inflation than its competitors we would expect its exchange rate to ?
A.	appreciate
B.	depreciate
C.	revalue
D.	be in short supply
Answer» C. revalue

Discussion

10.	With fixed exchange rates and no private currency flows, when the central bank buys domestic currency the domestic money supply is ?
A.	increased
B.	unaffected
C.	reduced
D.	None of these
Answer» D. None of these

Discussion

11.	A fixed exchange rate, plus perfect capital mobility ________ the scope for monetary policy ?
A.	enhances
B.	undermines
C.	encourages
D.	facilitates
Answer» C. encourages

Discussion

12.	perfect international capital mobility suggests that international funds will be responsive to ________ differentials?
A.	current account
B.	interest rate
C.	tax
D.	price
Answer» C. tax

Discussion

13.	If British residents want more French francs to purchase more French cloths other things equal, then the equilibrium value of the pound against the French franc will ?
A.	rise
B.	fall
C.	not change
D.	fluctuate
Answer» C. not change

Discussion

14.	Starting from a position of internal and external balance a reduction in aggregate demand will cause a current account ?
A.	deficit
B.	surplus
C.	revaluation
D.	devaluation
Answer» C. revaluation

Discussion

15.	Government policies that focus on increasing production rather than demand are called ?
A.	fiscal policies
B.	monetary policies
C.	supply-side policies
D.	incomes policies
Answer» D. incomes policies

Discussion

16.	If interest rates rise then costs are likely to _______ and demand is likely to _________?
A.	rise, fall
B.	rise; rise
C.	fall; fall
D.	fall; rise
Answer» B. rise; rise

Discussion

17.	As prices rise, there will be costs of constantly changing price-tags and reprinting price-lists This is called ?
A.	real balance effect
B.	menu costs of inflation
C.	money illusion.
D.	cost-push inflation.
Answer» C. money illusion.

Discussion

18.	The natural rate of unemployment is generally thought of as the ?
A.	ratio of the frictional unemployment rate to the cyclical unemployment rate.
B.	Sum of structural unemployment and cyclical unemployment.
C.	Sum of frictional unemployment and cyclical unemployment
D.	sum of frictional unemployment and structural unemployment.
Answer» E.

Discussion

19.	Unemployment resulting from changes in the pattern of demand or supply in the economy is called _______ unemployment?
A.	regional
B.	technological
C.	structural
D.	demand-deficient
Answer» D. demand-deficient

Discussion

20.	In the short run the level of floating exchange rates is determined mainly by ?
A.	interest rates
B.	competitiveness
C.	trade
D.	speculation
Answer» E.

Discussion

21.	Unemployment resulting from real wages being above their equilibrium level is called _________ unemployment?
A.	natural
B.	frictional
C.	disequilibrium
D.	structural
Answer» D. structural

Discussion

22.	Floating exchange rates are ____ in the short run?
A.	stable
B.	predictable
C.	volatile
D.	depreciating
Answer» D. depreciating

Discussion

23.	The competitive advantage from a devaluation is likely to be offset by _______ and ________?
A.	higher import prices, higher wages increases
B.	lower export prices, lower imports volumes
C.	higher import prices, lower export prices
D.	higher wage increases lower import volumes
Answer» B. lower export prices, lower imports volumes

Discussion

24.	In the absence of international capital controls, central banks set ________ to provide the correct incentive for speculators?
A.	money supply targets
B.	income policy
C.	interest rates
D.	inflation targets
Answer» D. inflation targets

Discussion

25.	Which fixed exchange rates and no private capital flows, to correct a balance of payments deficit, the central bank will _______ and ________ ?
A.	buy foreign exchange, sell domestic currency
B.	sell foreign exchange buy domestic currency
C.	buy foreign exchange buy domestic currency
D.	sell foreign exchange sell domestic currency
Answer» C. buy foreign exchange buy domestic currency

Discussion

26.	When capital mobility is perfect interest rate differentials will tend to be offset by ?
A.	Price difference
B.	balance of payments difference
C.	current account differences
D.	expected exchange rate changes
Answer» E.

Discussion

27.	Within the circular flow of income, an increase in domestic income will tend to increase ?
A.	exports
B.	taxes
C.	inventories
D.	imports
Answer» C. inventories

Discussion

28.	Which does the government not control directly ?
A.	Spending on health
B.	Spending on defence
C.	Firms investment decisions
D.	Spending on education
Answer» D. Spending on education

Discussion

29.	Which of the following can the government not use directly to control the economy ?
A.	Pay rates within the private sector
B.	pay rates in the public sector
C.	investment in education
D.	Benefits available for the unemployed and sick
Answer» B. pay rates in the public sector

Discussion

30.	Since 1998 many government have defined unemployment using ?
A.	a labour force survey.
B.	the number out of work and claiming benefit
C.	the percentage of the labour force not in work
D.	the ILO/OECD standardised unemployment measurement
Answer» E.

Discussion

31.	Which of the following is a possible government objective as opposed to a policy ?
A.	Lower interest rates
B.	Lower taxation rates
C.	Lower government spending
D.	Lower inflation
Answer» B. Lower taxation rates

Discussion

32.	In the EMU a country’s competitiveness can change because of ?
A.	interest rate adjustment
B.	central bank intervention in the Forex
C.	domestic wage and price adjustment
D.	devaluation
Answer» D. devaluation

Discussion

33.	What is meant by an objective ?
A.	A policy
B.	A way of reaching a target
C.	A target
D.	A strategy
Answer» E.

Discussion

34.	The Maastricht criteria for entry to the EMU are that applicants should have ?
A.	low inflation
B.	low interest rates
C.	stable nominal exchange rates
D.	budget deficits and government debt under control
E.	all of the above
Answer» F.

Discussion

35.	A monetary union means ________, ________ and ________?
A.	permanently fixed capital movements floating exchange rates a fixed structure of interest rates
B.	permanently fixed exchange rates, free capital movements, a single interest rates
C.	a common currency a single central bank, common monetary policy
D.	a common currency floating exchange rates common monetary policy
Answer» C. a common currency a single central bank, common monetary policy

Discussion

36.	If currency dealers expect the value of the pound to fall, the exchange value will tend to ?
A.	depreciate
B.	not be affected
C.	fluctuate more than it would do therwise
D.	appreciate
Answer» B. not be affected

Discussion

37.	The single European Act committed ________ governments to a ________ in 1992?
A.	European union, single market
B.	Western European, single currency area
C.	European Union, single currency area
D.	Western European, single market
Answer» B. Western European, single currency area

Discussion

38.	As prices rise. People will want to keep more money as cash and in bank accounts This is called ?
A.	real balance effect.
B.	cash ratio.
C.	money illusion.
D.	menu costs of inflation.
Answer» B. cash ratio.

Discussion

39.	Government policies that focus on changing interest rates are called ?
A.	fiscal policies
B.	monetary policies
C.	supply-side policies
D.	incomes policies
Answer» C. supply-side policies

Discussion

40.	The demand for ice-cream is lower outside of summer causing lower demand for ice-cream salesman if they cannot find other work, this is called _______ unemployment?
A.	Regional
B.	structural
C.	seasonal
D.	demand-deficient
Answer» D. demand-deficient

Discussion

41.	An individual who is not working and who has given up looking for work is classfied as ?
A.	a discouraged worker:
B.	unemployed.
C.	hard core unemployed.
D.	unemployable
Answer» B. unemployed.

Discussion

42.	Unemployment resulting from imperfect information in the labour market is called ____ unemployment?
A.	Frictional
B.	natural
C.	real-wage
D.	disequilibrium
Answer» B. natural

Discussion

43.	Cyclical unemployment is the ?
A.	Portion of unemployment that is due to the normal working of the labour market
B.	Portion of unemployment that is due to changes in the structure of the economy that results in a significant loss of jobs in certain industries.
C.	Unemployment that results when people become discouraged about their chances of finding a job so they stop looking for work.
D.	Unemployment that occurs during recessions and depressions.
Answer» E.

Discussion

44.	If the economy is in the recessionary phase of the business cycle, aggregate demand ___ unemployment ____ inflation ___ and the current account of the balance of payments is likely to move towards ____?
A.	falls; falls; falls; surplus
B.	is static; low; rises; deficit
C.	falls; rises; falls; surplus
D.	rises; falls; rises; deficit
Answer» D. rises; falls; rises; deficit

Discussion

45.	If the economy is in the expansionary phase of the business cycle, aggregate demand ____ unemployment ____ inflation ____ payments is likely to move towards ____?
A.	falls; rise; falls; surplus
B.	is static; low; rise; deficit;
C.	falls; falls; falls; surplus
D.	rise; falls; rises; deficit
Answer» E.

Discussion

46.	If the US economy is forecast to come out of recession because military expenditure has increase then the exchange value of the UK pound will tend to ?
A.	depreciate
B.	not be affected
C.	fluctuate more than it would do therwise
D.	appreciate
Answer» E.

Discussion

47.	If a nation’s interest rates are relatively low compared to those of other countries. then the exchange value of its currency will tend to ?
A.	not be affected
B.	appreciate
C.	depreciate
D.	fluctuate more than if interest rates were high
Answer» D. fluctuate more than if interest rates were high

Discussion

48.	If the Pakistan receives larger than expected revenues from exports then the exchange value of its currency will tend to ?
A.	not be affected
B.	fluctuate more than if exports were lower
C.	depreciate
D.	appreciate
Answer» E.

Discussion

49.	The main features of the European Monetary system are ?
A.	The ECU
B.	currency swap agreement between member
C.	the exchange rate mechanism
D.	all of the above
Answer» E.

Discussion

50.	The record of country’s transfers of land inter-government payments and money sent by migrants to and from abroad is called its ?
A.	balance of payments
B.	capital account of the balance of payments
C.	financial account of the balance of payments
D.	balance of payments on current account
Answer» C. financial account of the balance of payments

Discussion

Explore topic-wise MCQs in Economics Mcqs.

Aggregate demand is the total demand for all goods and services in an economy from ?

Fiscal policy is weak under floating exchanges rates as fiscal expansion ?

In the ERM, each country fixed participant Collectively the group ________ against the rest of the world?

A current account deficit means that a country may ?

A rise in the real exchange rate will ________ the competitiveness of the domestic economy?

Government policies that focus on changing taxes and government spending are called ?

All of the following are benefits of the single market except ?

Under floating exchange rates, expectations of higher interest rates are likely to cause an ____ of the exchange rate?

If one country, with floating exchange rates, has higher inflation than its competitors we would expect its exchange rate to ?

With fixed exchange rates and no private currency flows, when the central bank buys domestic currency the domestic money supply is ?

A fixed exchange rate, plus perfect capital mobility ________ the scope for monetary policy ?

perfect international capital mobility suggests that international funds will be responsive to ________ differentials?

If British residents want more French francs to purchase more French cloths other things equal, then the equilibrium value of the pound against the French franc will ?

Starting from a position of internal and external balance a reduction in aggregate demand will cause a current account ?

Government policies that focus on increasing production rather than demand are called ?

If interest rates rise then costs are likely to _______ and demand is likely to _________?

As prices rise, there will be costs of constantly changing price-tags and reprinting price-lists This is called ?

The natural rate of unemployment is generally thought of as the ?

Unemployment resulting from changes in the pattern of demand or supply in the economy is called _______ unemployment?

In the short run the level of floating exchange rates is determined mainly by ?

Unemployment resulting from real wages being above their equilibrium level is called _________ unemployment?

Floating exchange rates are ____ in the short run?

The competitive advantage from a devaluation is likely to be offset by _______ and ________?

In the absence of international capital controls, central banks set ________ to provide the correct incentive for speculators?

Which fixed exchange rates and no private capital flows, to correct a balance of payments deficit, the central bank will _______ and ________ ?

When capital mobility is perfect interest rate differentials will tend to be offset by ?

Within the circular flow of income, an increase in domestic income will tend to increase ?

Which does the government not control directly ?

Which of the following can the government not use directly to control the economy ?

Since 1998 many government have defined unemployment using ?

Which of the following is a possible government objective as opposed to a policy ?

In the EMU a country’s competitiveness can change because of ?

What is meant by an objective ?

The Maastricht criteria for entry to the EMU are that applicants should have ?

A monetary union means ________, ________ and ________?

If currency dealers expect the value of the pound to fall, the exchange value will tend to ?

The single European Act committed ________ governments to a ________ in 1992?

As prices rise. People will want to keep more money as cash and in bank accounts This is called ?

Government policies that focus on changing interest rates are called ?

The demand for ice-cream is lower outside of summer causing lower demand for ice-cream salesman if they cannot find other work, this is called _______ unemployment?

An individual who is not working and who has given up looking for work is classfied as ?

Unemployment resulting from imperfect information in the labour market is called ____ unemployment?

Cyclical unemployment is the ?

If the economy is in the recessionary phase of the business cycle, aggregate demand ___ unemployment ____ inflation ___ and the current account of the balance of payments is likely to move towards ____?

If the economy is in the expansionary phase of the business cycle, aggregate demand ____ unemployment ____ inflation ____ payments is likely to move towards ____?

If the US economy is forecast to come out of recession because military expenditure has increase then the exchange value of the UK pound will tend to ?

If a nation’s interest rates are relatively low compared to those of other countries. then the exchange value of its currency will tend to ?

If the Pakistan receives larger than expected revenues from exports then the exchange value of its currency will tend to ?

The main features of the European Monetary system are ?

The record of country’s transfers of land inter-government payments and money sent by migrants to and from abroad is called its ?

If interest rates rise then costs are likely to _ and demand is likely to ___?

The competitive advantage from a devaluation is likely to be offset by _ and __?

Which fixed exchange rates and no private capital flows, to correct a balance of payments deficit, the central bank will _ and __ ?

A monetary union means , and ?

The single European Act committed governments to a in 1992?

If the economy is in the recessionary phase of the business cycle, aggregate demand _ unemployment inflation _ and the current account of the balance of payments is likely to move towards ____?

If the economy is in the expansionary phase of the business cycle, aggregate demand unemployment inflation payments is likely to move towards ?