Question 1

Briefly describe the three types of currency convertibility.Does lack of current convertibility,completely prevent international trade?

Accepted Answer

Full convertibility is typically enjoyed

Question 2

In the early 2000s in Ecuador, the central bank financed the government deficit and created high inflation. The high level of inflation and its relationship to the government deficit are an example of:

Accepted Answer

A) an inflation tax. 
B) the underground economy. 
C) disinflation. 
D) the central bank dependency. 
A) an inflation tax. 
B) the underground economy. 
C) disinflation. 
D) the central bank dependency.

Question 3

If a currency is convertible on the current account, which of the following transactions would not be permissible?

Accepted Answer

A) The purchase of foreign currency in order to import goods or services 
B) The sale of foreign currency resulting from the export of goods or services 
C) The purchase of foreign currency in order to purchase assets abroad 
D) The sale of foreign currency resulting from the sale of assets abroad 
A) The purchase of foreign currency in order to import goods or services 
B) The sale of foreign currency resulting from the export of goods or services 
C) The purchase of foreign currency in order to purchase assets abroad 
D) The sale of foreign currency resulting from the sale of assets abroad

Question 4

In the early 1990s, Serbia, a developing country, experienced hyperinflation because its central bank increased the money supply too rapidly. Serbia's central bank most likely adopted this monetary policy because:

Accepted Answer

A) it didn't care about inflation. 
B) it believed that its actions would not trigger inflation. 
C) the Serbian government granted independence to the central bank. 
D) the Serbian government had no other way to finance its expenditures. 
A) it didn't care about inflation. 
B) it believed that its actions would not trigger inflation. 
C) the Serbian government granted independence to the central bank. 
D) the Serbian government had no other way to finance its expenditures.

Question 5

Suppose an economy consists of two sectors: a manufacturing sector and a modern agricultural sector in which most of the crops that are grown are sold for cash. Such an economy:

Accepted Answer

A) would be considered a dual economy. 
B) would not necessarily be considered a dual economy. 
C) might be considered a dual economy if its institutions are underdeveloped. 
D) might be considered a dual economy if its political system lacks institutional checks and balances. 
A) would be considered a dual economy. 
B) would not necessarily be considered a dual economy. 
C) might be considered a dual economy if its institutions are underdeveloped. 
D) might be considered a dual economy if its political system lacks institutional checks and balances.

Question 6

Since even the most advanced economies of the world are constantly evolving,or restructuring,what really differentiates the so-called "developed" economies from those that are considered "developing"?

Accepted Answer

The differences are in the existing inst

Question 7

The purpose of the IMF is to:

Accepted Answer

A) provide developing countries with short-term loans and technical assistance. 
B) buy and sell the currencies of developing countries in order to stabilize their value. 
C) determine exchange rates for developing countries. 
D) determine monetary and fiscal policy in developing countries. 
A) provide developing countries with short-term loans and technical assistance. 
B) buy and sell the currencies of developing countries in order to stabilize their value. 
C) determine exchange rates for developing countries. 
D) determine monetary and fiscal policy in developing countries.

Question 8

The movement from socialism to capitalism undertaken by Poland in the early 1990s represents:

Accepted Answer

A) a regime change. 
B) a policy change. 
C) both a policy change and a regime change. 
D) neither a policy change nor a regime change. 
A) a regime change. 
B) a policy change. 
C) both a policy change and a regime change. 
D) neither a policy change nor a regime change.

Question 9

Because the political institutions of many developing countries are weak:

Accepted Answer

A) it is easier for them to conduct activist economic policies that foster development. 
B) it is harder for them to conduct activist economic policies that foster development. 
C) it is no more difficult for them to adopt activist economic policies than it is for developed countries. 
D) a laissez-faire policy is counterproductive. 
A) it is easier for them to conduct activist economic policies that foster development. 
B) it is harder for them to conduct activist economic policies that foster development. 
C) it is no more difficult for them to adopt activist economic policies than it is for developed countries. 
D) a laissez-faire policy is counterproductive.

Question 10

What is an inflation tax,and who receives the revenues from such a tax?

Accepted Answer

An inflation tax is an implicit tax on t

Question 11

It is possible to purchase diplomas from diploma mills. The situation in which the degrees are more important than the knowledge they are supposed to represent is called:

Accepted Answer

A) accreditation. 
B) diplomacy. 
C) credentialism. 
D) cretinism. 
A) accreditation. 
B) diplomacy. 
C) credentialism. 
D) cretinism.

Question 12

Issuing money to finance budget deficits:

Accepted Answer

A) increases the resources consumed by both the government and the private sector. 
B) increases the resources consumed by the government but does not change the resources consumed by the private sector. 
C) increases the resources consumed by the government and thereby leaves fewer resources for the private sector. 
D) does not increase the resources consumed by either the government or the private sector. 
A) increases the resources consumed by both the government and the private sector. 
B) increases the resources consumed by the government but does not change the resources consumed by the private sector. 
C) increases the resources consumed by the government and thereby leaves fewer resources for the private sector. 
D) does not increase the resources consumed by either the government or the private sector.

Question 13

Which of the following economies is most likely to be a dual economy?

Accepted Answer

A) Bangladesh 
B) Canada 
C) Norway 
D) Japan 
A) Bangladesh 
B) Canada 
C) Norway 
D) Japan

Question 14

How does the existence of a dual economy affect a country's strategy of converting a developing economy to a market economy?

Accepted Answer

The traditional sector is often outside

Question 15

Almost no developing country offers full convertibility because they want to:

Accepted Answer

A) increase foreign saving to depreciate their currency. 
B) limit investment by foreign multinationals. 
C) avoid an outflow of domestic saving. 
D) encourage domestic residents to save abroad. 
A) increase foreign saving to depreciate their currency. 
B) limit investment by foreign multinationals. 
C) avoid an outflow of domestic saving. 
D) encourage domestic residents to save abroad.

Question 16

The IMF policies that accompany most IMF loans are typically:

Accepted Answer

A) contractionary in the short run. 
B) expansionary in the short run. 
C) contractionary in the long run. 
D) procyclical in the long run. 
A) contractionary in the short run. 
B) expansionary in the short run. 
C) contractionary in the long run. 
D) procyclical in the long run.

Question 17

When considering activist fiscal policy in developing countries, these governments:

Accepted Answer

A) usually have greater flexibility in determining expenditures than governments in developed countries. 
B) have about the same degree of flexibility in determining expenditures as governments in developed countries. 
C) usually have less flexibility in determining expenditures than governments in developed countries. 
D) do not have to worry about their expenditures because they have no taxes with which to finance them. 
A) usually have greater flexibility in determining expenditures than governments in developed countries. 
B) have about the same degree of flexibility in determining expenditures as governments in developed countries. 
C) usually have less flexibility in determining expenditures than governments in developed countries. 
D) do not have to worry about their expenditures because they have no taxes with which to finance them.

Question 18

The purchasing power parity (PPP)consists of a method of comparing the:

Accepted Answer

A) labor force in different countries. 
B) daily calories supplied in different countries. 
C) income in different countries by looking at the domestic purchasing power of money. 
D) life expectancy rates in different countries. 
A) labor force in different countries. 
B) daily calories supplied in different countries. 
C) income in different countries by looking at the domestic purchasing power of money. 
D) life expectancy rates in different countries.

Question 19

When governments in developing countries run budget deficits, central banks in these countries typically:

Accepted Answer

A) buy the bonds issued by the government and increase the money supply in the process. 
B) buy the bonds issued by the government and decrease the money supply in the process. 
C) sell the bonds issued by the government and increase the money supply in the process. 
D) sell the bonds issued by the government and decrease the money supply in the process. 
A) buy the bonds issued by the government and increase the money supply in the process. 
B) buy the bonds issued by the government and decrease the money supply in the process. 
C) sell the bonds issued by the government and increase the money supply in the process. 
D) sell the bonds issued by the government and decrease the money supply in the process.

Question 20

Malthus predicted that:

Accepted Answer

A) population and income would eventually grow at the same rate, so per capita income would increase over time. 
B) population and income would eventually grow at the same rate, so per capita income would eventually be constant. 
C) population would eventually grow faster than income, so per capita income would eventually begin to decrease. 
D) income would eventually grow faster than population, so per capita income would eventually begin to increase. 
A) population and income would eventually grow at the same rate, so per capita income would increase over time. 
B) population and income would eventually grow at the same rate, so per capita income would eventually be constant. 
C) population would eventually grow faster than income, so per capita income would eventually begin to decrease. 
D) income would eventually grow faster than population, so per capita income would eventually begin to increase.

Exam 38: Macro Policy in Developing Countries

Briefly describe the three types of currency convertibility.Does lack of current convertibility,completely prevent international trade?

In the early 2000s in Ecuador, the central bank financed the government deficit and created high inflation. The high level of inflation and its relationship to the government deficit are an example of:

If a currency is convertible on the current account, which of the following transactions would not be permissible?

In the early 1990s, Serbia, a developing country, experienced hyperinflation because its central bank increased the money supply too rapidly. Serbia's central bank most likely adopted this monetary policy because:

Suppose an economy consists of two sectors: a manufacturing sector and a modern agricultural sector in which most of the crops that are grown are sold for cash. Such an economy:

Since even the most advanced economies of the world are constantly evolving,or restructuring,what really differentiates the so-called "developed" economies from those that are considered "developing"?

The purpose of the IMF is to:

The movement from socialism to capitalism undertaken by Poland in the early 1990s represents:

Because the political institutions of many developing countries are weak:

What is an inflation tax,and who receives the revenues from such a tax?

It is possible to purchase diplomas from diploma mills. The situation in which the degrees are more important than the knowledge they are supposed to represent is called:

Issuing money to finance budget deficits:

Which of the following economies is most likely to be a dual economy?

How does the existence of a dual economy affect a country's strategy of converting a developing economy to a market economy?

Almost no developing country offers full convertibility because they want to:

The IMF policies that accompany most IMF loans are typically:

When considering activist fiscal policy in developing countries, these governments:

The purchasing power parity (PPP)consists of a method of comparing the:

When governments in developing countries run budget deficits, central banks in these countries typically:

Malthus predicted that:

Economics and Economic Reasoning

The Production Possibility Model, Trade, and Globalization

Economic Institutions

Supply and Demand

Using Supply and Demand

Describing Supply and Demand: Elasticities

Taxation and Government Intervention

Market Failure Versus Government Failure

Comparative Advantage, Exchange Rates, and Globalization

International Trade Policy

Production and Cost Analysis I

Production and Cost Analysis II

Perfect Competition

Monopoly and Monopolistic Competition

Oligopoly and Antitrust Policy

Real-World Competition and Technology

Work and the Labor Market

Who Gets What the Distribution of Income

The Logic of Individual Choice: the Foundation of Supply and Demand

Game Theory, Strategic Decision Making, and Behavioral Economics

Thinking Like a Modern Economist

Behavioral Economics and Modern Economic Policy

Microeconomic Policy, Economic Reasoning, and Beyond

Economic Growth, Business Cycles, and Unemployment

Measuring and Describing the Aggregate Economy

The Keynesian Short-Run Policy Model: Demand-Side Policies

The Classical Long-Run Policy Model: Growth and Supply-Side Policies

The Financial Sector and the Economy

Monetary Policy

Financial Crises, Panics, and Unconventional Monetary Policy

Deficits and Debt: the Austerity Debate

The Fiscal Policy Dilemma

Jobs and Unemployment

Inflation, Deflation, and Macro Policy

International Financial Policy

Macro Policy in a Global Setting

Structural Stagnation and Globalization

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