MCQOPTIONS
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MCQOPTIONS
This section includes 80 Mcqs, each offering curated multiple-choice questions to sharpen your Economics Mcqs knowledge and support exam preparation. Choose a topic below to get started.
| 1. |
For the first time since World War I, in the mid-1980s the United States became a net international ? |
| A. | exporter |
| B. | importer |
| C. | debtor |
| D. | creditor |
| Answer» D. creditor | |
| 2. |
When a country has a trade deficit it ? |
| A. | purchases more stocks and bonds from the rest of the world than it sells |
| B. | purchases more goods from the rest of the world than it sells |
| C. | sells more goods to the rest of the world than it purchases |
| D. | sells more stocks and bonds to the rest of the world than it purchases |
| Answer» C. sells more goods to the rest of the world than it purchases | |
| 3. |
Injection into the circular flow are ______ and __________? |
| A. | consumption investment exports |
| B. | investment exports transfer payments |
| C. | investment government expenditure exports |
| D. | taxes exports, transfer payments |
| Answer» D. taxes exports, transfer payments | |
| 4. |
In the circular flow we would expect leakages to ___________ injections? |
| A. | equal |
| B. | be less than |
| C. | be greater than |
| D. | be less or greater than |
| Answer» B. be less than | |
| 5. |
The multiplier is calculated as___________? |
| A. | 1(1-MPC) |
| B. | 1/MPS |
| C. | 1/MPC |
| D. | a or b |
| Answer» E. | |
| 6. |
The balance of trade is a record of ? |
| A. | exports and imports of financial assets |
| B. | the current account plus capital account |
| C. | the net export of goods and services |
| D. | the value of merchandise exports minus imports |
| Answer» E. | |
| 7. |
The differences between a country’s merchandise exports and its merchandise imports is the ? |
| A. | balance of payments |
| B. | capital account |
| C. | current account |
| D. | balance of trade |
| Answer» E. | |
| 8. |
A nation will a current account deficit will be ? |
| A. | lending more money to other nations |
| B. | experiencing a surplus in exports of goods an services |
| C. | reducing its indebtedness to other nations |
| D. | going further into debt with other nations |
| Answer» E. | |
| 9. |
_______ is needed to balancell the balance of payments statements? |
| A. | credit transactions |
| B. | debit transactions |
| C. | unilateral transfers |
| D. | statistical discrepancy |
| Answer» E. | |
| 10. |
In the balance of payments travels and tourism are included in the category of ? |
| A. | unilateral transfers |
| B. | capital account |
| C. | merchandise account |
| D. | services account |
| Answer» E. | |
| 11. |
Historically countries at early stages of rapid economic development have tender to experience ? |
| A. | trade deficit and an excess of investment over domestic saving |
| B. | trade surplus and an excess of investment over domestic saving |
| C. | trade deficits and an excess of domestic savings over investment |
| D. | trade surpluses and an excess of domestic saving over investment |
| Answer» B. trade surplus and an excess of investment over domestic saving | |
| 12. |
A current account surplus implies that ? |
| A. | the country is a net lender to the rest of the world |
| B. | the country is running a net capital account surplus |
| C. | foreign investment in domestic securities is at very low levels |
| D. | All of the above |
| Answer» B. the country is running a net capital account surplus | |
| 13. |
When investment is assumed to autonomous the slope of the AD schedule is determined by the ? |
| A. | marginal propensity to invest |
| B. | disposable incomes |
| C. | marginal propensity to consume |
| D. | average propensity to consume |
| Answer» D. average propensity to consume | |
| 14. |
The difference between a country’s balance of payments and its balance of international indebtedness? |
| A. | is equal to official reserve transactions |
| B. | occurs because of foreign exchange fluctuations |
| C. | reflects statistical discrepancies |
| D. | reflects the difference between flow and stock concepts |
| Answer» E. | |
| 15. |
When we refer to the hidden economy we mean unrecorded income owing to ? |
| A. | tax evasion |
| B. | poor statistics |
| C. | the lags between statistical collection and publication |
| D. | smuggling |
| Answer» B. poor statistics | |
| 16. |
Real GNP measures income ? |
| A. | including non-market activities |
| B. | adjusted for inflation |
| C. | including externalities |
| D. | including tax evasion |
| Answer» C. including externalities | |
| 17. |
If a result of households wish to save more there is a change in equilibrium income and no change in equilibrium saving this is an example of ? |
| A. | market imperfection |
| B. | the law of diminishing returns |
| C. | the paradox of thrift |
| D. | market failure |
| Answer» D. market failure | |
| 18. |
Short-run equilibrium output means that aggregate demand __________ actual output? |
| A. | is less than |
| B. | equals |
| C. | is greater than |
| D. | fluctuates around |
| Answer» C. is greater than | |
| 19. |
Leakages from the circular flow are _________ and __________? |
| A. | investment, savings, government expenditure |
| B. | savings, taxes net of subsidies imports |
| C. | consumption investment government expenditure |
| D. | consumption taxes imports |
| Answer» C. consumption investment government expenditure | |
| 20. |
Purchasing power parity exchange rates are used to ? |
| A. | compare living standards of different countries |
| B. | pay wages b multinational companies |
| C. | estimate the costs of economic growth |
| D. | convert nominal GDP to real GDP |
| Answer» B. pay wages b multinational companies | |
| 21. |
Real GNP is a crude measure of national welfare because it excludes ? |
| A. | consumption |
| B. | investment |
| C. | exports |
| D. | work in the home |
| Answer» E. | |
| 22. |
The key issues of macroeconomics are ? |
| A. | unemployment |
| B. | inflation |
| C. | economic growth |
| D. | All of the above |
| Answer» E. | |
| 23. |
In an economy measuring (1) total value added (2)total spending on final goods and (3)total factor earning gives the result that ? |
| A. | 3>2>1 |
| B. | 3=2=1 |
| C. | 3<2<1 |
| D. | any measure can be larger or smaller than any other |
| Answer» C. 3<2<1 | |
| 24. |
Nominal GNP measures income ? |
| A. | At the present time |
| B. | corrected for tax changes |
| C. | corrected for changes in interest rates |
| D. | At current prices |
| Answer» E. | |
| 25. |
Real GDP is nominal GDP measured in constant ? |
| A. | taxes |
| B. | prices |
| C. | exchange rates |
| D. | interest rates |
| Answer» C. exchange rates | |
| 26. |
All of the following are credit items in the balance of payments except ? |
| A. | investment inflows |
| B. | merchandise exports |
| C. | payments for American services to foreigners |
| D. | private gives to foreign residents |
| Answer» E. | |
| 27. |
In the economy when a steel producer sells steel to car producer it is regarded as ? |
| A. | a final good |
| B. | an intermediate good |
| C. | an injection |
| D. | a leakage |
| Answer» C. an injection | |
| 28. |
A capital account surplus might be expected to cause a current account deficit because the associated ? |
| A. | capital outflow would cause the nation’s currency to depreciate contributing to a trade deficit |
| B. | capital inflow would cause the nation’s currency to depreciate contributing to a trade deficit |
| C. | capital inflow would cause the nation’s currency to appreciate contributing to a trade deficit |
| D. | capital outflow would cause the nation’s currency to appreciate contributing to a trade deficit |
| Answer» D. capital outflow would cause the nation’s currency to appreciate contributing to a trade deficit | |
| 29. |
In the balance of payments the statistical discrepancy is used to ? |
| A. | insure that the sum of all debits matches the sum of all credits |
| B. | insure that trade imports equals the value of trade exports |
| C. | obtain an accurate account of a balance of payments deficit |
| D. | obtain an accurate account of a balance of payments surplus |
| Answer» B. insure that trade imports equals the value of trade exports | |
| 30. |
In an Open economy leakage to imports ____________ the value of the multiplier ? |
| A. | reduce |
| B. | increase |
| C. | do not change |
| D. | None of the above |
| Answer» B. increase | |
| 31. |
A country that is a net international debtor initially experiences a (an) ? |
| A. | larger savings pool available to finance domestic spending |
| B. | higher interest rate which leads to lower domestic investment |
| C. | loss of funds to trading partners overseas |
| D. | decrease in its services exports to other countries |
| Answer» B. higher interest rate which leads to lower domestic investment | |
| 32. |
Credit (-) items in the balance of payments correspond to anything that ? |
| A. | involves receipts from foreigners |
| B. | involves payments to foreigners |
| C. | increases the domestic money supply |
| D. | decreases the demand for foreign exchange |
| Answer» C. increases the domestic money supply | |
| 33. |
Referring to the above table, the U.S balance of international indebtedness suggests that the U.S is a net ? |
| A. | debtor |
| B. | creditor |
| C. | spender |
| D. | exporter |
| Answer» C. spender | |
| 34. |
For given government spending and taxation the government budget deficit will grow in _________ and decline in __________? |
| A. | booms, booms |
| B. | recession, recession |
| C. | booms, recessions |
| D. | recessions, booms |
| Answer» E. | |
| 35. |
The total multiplier for the economy will reflect ? |
| A. | MPC and MPT |
| B. | MPT and MPZ |
| C. | MPC and MPZ |
| D. | MPC, MPT and MPZ |
| Answer» E. | |
| 36. |
The record of a country’s transactions in goods, services and assets with the rest of the world is its ? |
| A. | balance of trade |
| B. | capital account |
| C. | current account |
| D. | balance of payments |
| Answer» E. | |
| 37. |
If the government increases spending and raises taxes by just enough to finance this increase it will ? |
| A. | leave output unchanged |
| B. | increase output |
| C. | reduce output |
| D. | increase the MPC |
| Answer» C. reduce output | |
| 38. |
The argument that U.S current account deficits cause net job losses for Americans ? |
| A. | is true by definition in all possible circumstances |
| B. | is supported by recent U.S history |
| C. | focuses only on the overall economy and is thus always true |
| D. | fails to recognize that a current account deficit is matched by an equal inflow of foreign funds which finances employment increasing investment spend |
| Answer» E. | |
| 39. |
Direct investment and security purchases are classified as ? |
| A. | capital account transactions |
| B. | current account transactions |
| C. | unilateral transfer transactions |
| D. | merchandise trade transactions |
| Answer» B. current account transactions | |
| 40. |
In balance of payments accounting tourism and travel are classified in the ? |
| A. | merchandise trade account |
| B. | services account |
| C. | unilateral transfers account |
| D. | capital account |
| Answer» C. unilateral transfers account | |
| 41. |
Purchases of government securities in the United States by foreigners is ? |
| A. | a credit item in the current account |
| B. | a debit item in the capital account |
| C. | a credit item in the capital account |
| D. | a debit item in the current account |
| Answer» D. a debit item in the current account | |
| 42. |
A nation wishing to reduce its current account deficit would be advised to ? |
| A. | engage in more government spending |
| B. | reduce government taxes |
| C. | increases private investment spending |
| D. | decrease domestic consumption |
| Answer» E. | |
| 43. |
In the calculation of gross domestic product net exports are ? |
| A. | the sum of merchandise trade and services |
| B. | the current account plus long-term capital |
| C. | the value of merchandise exports minus imports |
| D. | short-term capital plus the basic balance |
| Answer» B. the current account plus long-term capital | |
| 44. |
Current account deficit are offset by______________? |
| A. | merchandise trade deficits |
| B. | merchandise trade surpluses |
| C. | capital/financial account surpluses |
| D. | capital/financial account deficits |
| Answer» D. capital/financial account deficits | |
| 45. |
Debit entries on the balance of payments are the entries that would ? |
| A. | mean a loss of foreign exchange |
| B. | bring foreign exchange into the country |
| C. | indicate a surplus exist |
| D. | exist at the bottom line after all accounts are totaled |
| Answer» B. bring foreign exchange into the country | |
| 46. |
The role of _______ is to direct one nation’s savings into investments of another nation? |
| A. | merchandise trade flows |
| B. | services flows |
| C. | current account flows |
| D. | capital flows |
| Answer» E. | |
| 47. |
The U.S balance of payments is constructed by ? |
| A. | the U.S Department of labor |
| B. | the U.S Department of Agriculture |
| C. | the U.S Department of commerce |
| D. | the council of Economic Advisers to the President |
| Answer» D. the council of Economic Advisers to the President | |
| 48. |
A country’s transactions with the rest of the world are recorded in the ? |
| A. | balance of international indebtedness |
| B. | balance of financial transactions |
| C. | balance of payments |
| D. | income statements |
| Answer» D. income statements | |
| 49. |
All of the following are debit items in the balance of payments except ? |
| A. | capital outflows |
| B. | merchandise exports |
| C. | private gifts to foreigners |
| D. | foreign aid granted to other nations |
| Answer» C. private gifts to foreigners | |
| 50. |
Credit (+) items in the balance of payments correspond to anything that ? |
| A. | involves receipts from foreigners |
| B. | involves payments to foreigners |
| C. | increases the domestic money supply |
| D. | decreases the demand for foreign exchange |
| Answer» B. involves payments to foreigners | |