Question 1

Which of the following is not included in the 'current account'?

Accepted Answer

A)  Exports of goods 
B)  Income received on investments 
C)  Transfer of migrants' income 
D)  Overseas debt relief by the Australian government 
A)  Exports of goods 
B)  Income received on investments 
C)  Transfer of migrants' income 
D)  Overseas debt relief by the Australian government

Question 2

A 'floating exchange rate system' is one in which

Accepted Answer

A)  the central bank intervenes in the currency exchange market to influence, but not fix, the exchange rate. 
B)  trading firms establish the exchange rates for individual transactions in the foreign exchange market. 
C)  the central bank allows private banks to manage their exchange rates. 
D)  the central bank intervenes in the currency exchange market to fix the exchange rate. 
A)  the central bank intervenes in the currency exchange market to influence, but not fix, the exchange rate. 
B)  trading firms establish the exchange rates for individual transactions in the foreign exchange market. 
C)  the central bank allows private banks to manage their exchange rates. 
D)  the central bank intervenes in the currency exchange market to fix the exchange rate.

Question 3

Under the gold standard,a chance discovery of gold such as a gold rush would

Accepted Answer

A)  decrease the general price level. 
B)  increase the general price level. 
C)  increase the rate of unemployment. 
D)  decrease the rate of economic growth. 
A)  decrease the general price level. 
B)  increase the general price level. 
C)  increase the rate of unemployment. 
D)  decrease the rate of economic growth.

Question 4

In 2015/2016,Australia

Accepted Answer

A)  had a trade surplus due to the booming mining sector. 
B)  had less income flowing overseas than was coming into Australia. 
C)  had a trade deficit due to a fall in commodity prices. 
D)  imported more services than it exported. 
A)  had a trade surplus due to the booming mining sector. 
B)  had less income flowing overseas than was coming into Australia. 
C)  had a trade deficit due to a fall in commodity prices. 
D)  imported more services than it exported.

Question 5

When a currency's exchange rate is pegged to the US dollar and the value is fixed below the equilibrium exchange rate as expressed in US dollars per the currency,then in order to maintain the peg,the country's central bank must

Accepted Answer

A)  raise interest rates to raise the demand for the domestic currency. 
B)  not interfere in the foreign exchange market. 
C)  buy up the excess domestic currency with US dollars. 
D)  sell the surplus domestic currency for US dollars. 
A)  raise interest rates to raise the demand for the domestic currency. 
B)  not interfere in the foreign exchange market. 
C)  buy up the excess domestic currency with US dollars. 
D)  sell the surplus domestic currency for US dollars.

Question 6

Australia's net foreign debt rose from less than 5 per cent of GDP in the mid-1970s to over 50 per cent in 2013.

Accepted Answer

A) True 
 B)False

Question 7

When can foreign debt become a problem for a country?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

When the interest repayments on the debt

Question 8

In the late 1960s,speculators were counting on the value of the German mark to ________ and the German central bank responded by ________ marks.

Accepted Answer

A)  increase; selling more 
B)  increase; selling less 
C)  decrease; buying more 
D)  decrease; buying less 
A)  increase; selling more 
B)  increase; selling less 
C)  decrease; buying more 
D)  decrease; buying less

Question 9

A federal budget deficit may ________ exchange rates (foreign currency per domestic currency)and ________ the balance of trade for goods and services.

Accepted Answer

A)  raise; reduce 
B)  raise; raise 
C)  reduce; reduce 
D)  reduce; raise 
A)  raise; reduce 
B)  raise; raise 
C)  reduce; reduce 
D)  reduce; raise

Question 10

If a country's exchange rate is pegged above the equilibrium exchange rate,the country must

Accepted Answer

A)  sell domestic currency at the pegged rate. 
B)  buy domestic currency at the pegged rate. 
C)  purchase surplus domestic currency at the equilibrium exchange rate. 
D)  decrease the pegged exchange rate. 
A)  sell domestic currency at the pegged rate. 
B)  buy domestic currency at the pegged rate. 
C)  purchase surplus domestic currency at the equilibrium exchange rate. 
D)  decrease the pegged exchange rate.

Question 11

The record of a country's transactions in goods,services,and assets with the rest of the world is its _________.

Accepted Answer

A)  current account 
B)  financial account 
C)  balance of payments 
D)  balance of trade 
A)  current account 
B)  financial account 
C)  balance of payments 
D)  balance of trade

Question 12

If the value of goods and services exported from Australia is smaller than the value of goods and services imported,then

Accepted Answer

A)  Australia's balance of payments will be in deficit. 
B)  Australia's balance of trade on goods and services will be in deficit. 
C)  Australia will have a current account surplus. 
D)  Australia will have a financial account deficit. 
A)  Australia's balance of payments will be in deficit. 
B)  Australia's balance of trade on goods and services will be in deficit. 
C)  Australia will have a current account surplus. 
D)  Australia will have a financial account deficit.

Question 13

The ________ account records flows of funds into and out of a country.

Accepted Answer

A)  financial 
B)  capital 
C)  current 
D)  net errors and omissions 
A)  financial 
B)  capital 
C)  current 
D)  net errors and omissions

Question 14

What is the 'theory of purchasing power parity'?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

The theory of purchasing power

Question 15

Australia's net foreign debt as a proportion of GDP has

Accepted Answer

A)  fallen from 60 per cent in the 1970s to less than 20 per cent by 2016. 
B)  risen from approximately 20 per cent in the 1970s to over 30 per cent by 2016. 
C)  risen from less than 5 per cent in the 1970s to over 60 per cent by 2016. 
D)  risen from approximately 30 per cent in the 1970s to approximately 80 per cent by 2016. 
A)  fallen from 60 per cent in the 1970s to less than 20 per cent by 2016. 
B)  risen from approximately 20 per cent in the 1970s to over 30 per cent by 2016. 
C)  risen from less than 5 per cent in the 1970s to over 60 per cent by 2016. 
D)  risen from approximately 30 per cent in the 1970s to approximately 80 per cent by 2016.

Question 16

Why do countries peg their currencies? What problems can result from pegging?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

Countries peg their currencies to make p

Question 17

Suppose that South Korea is attempting to peg its exchange rate to the US dollar.Speculators think the value of the South Korean won is going to fall.Use a graph to show how this affects the demand for and supply of the won.What will the South Korean central bank have to do in order to maintain the peg? Show how raising interest rates affect the central bank's attempt to maintain the peg.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

The market begins at point A with the ex

Question 18

Assume that the exchange rate between the dollar and the yen is ¥60 = $1.Suppose the exchange rate changes to ¥100 = $1.Because of the change

Accepted Answer

A)  Australian exports should increase and Australian imports should increase. 
B)  Australian exports should decrease and Australian imports should increase. 
C)  Australian exports should increase and Australian imports should decrease. 
D)  Australian exports should decrease and Australian imports should decrease. 
A)  Australian exports should increase and Australian imports should increase. 
B)  Australian exports should decrease and Australian imports should increase. 
C)  Australian exports should increase and Australian imports should decrease. 
D)  Australian exports should decrease and Australian imports should decrease.

Question 19

Assume that a Big Mac burger costs $3.57 in Australia and 7.80 zlotys in Poland.If the exchange rate is 3 zlotys per dollar,purchasing power parity predicts that the dollar will

Accepted Answer

A)  appreciate as the demand for dollars rises in the long run. 
B)  appreciate as the supply of dollars falls in the long run. 
C)  depreciate as the demand for dollars falls in the long run. 
D)  depreciate as the supply of dollars rises in the long run. 
A)  appreciate as the demand for dollars rises in the long run. 
B)  appreciate as the supply of dollars falls in the long run. 
C)  depreciate as the demand for dollars falls in the long run. 
D)  depreciate as the supply of dollars rises in the long run.

Question 20

The 'balance of payments' includes all of the following accounts except the _________.

Accepted Answer

A)  current account 
B)  financial account 
C)  capital account 
D)  national debt account 
A)  current account 
B)  financial account 
C)  capital account 
D)  national debt account

Which of the following is not included in the 'current account'?

A 'floating exchange rate system' is one in which

Under the gold standard,a chance discovery of gold such as a gold rush would

In 2015/2016,Australia

When a currency's exchange rate is pegged to the US dollar and the value is fixed below the equilibrium exchange rate as expressed in US dollars per the currency,then in order to maintain the peg,the country's central bank must

Australia's net foreign debt rose from less than 5 per cent of GDP in the mid-1970s to over 50 per cent in 2013.

When can foreign debt become a problem for a country? _ _

In the late 1960s,speculators were counting on the value of the German mark to and the German central bank responded by marks.

A federal budget deficit may exchange rates (foreign currency per domestic currency)and the balance of trade for goods and services.

If a country's exchange rate is pegged above the equilibrium exchange rate,the country must

The record of a country's transactions in goods,services,and assets with the rest of the world is its _________.

If the value of goods and services exported from Australia is smaller than the value of goods and services imported,then

The ________ account records flows of funds into and out of a country.

What is the 'theory of purchasing power parity'? _ _

Australia's net foreign debt as a proportion of GDP has

Why do countries peg their currencies? What problems can result from pegging? _ _

Assume that the exchange rate between the dollar and the yen is ¥60 = $1.Suppose the exchange rate changes to ¥100 = $1.Because of the change

Assume that a Big Mac burger costs $3.57 in Australia and 7.80 zlotys in Poland.If the exchange rate is 3 zlotys per dollar,purchasing power parity predicts that the dollar will

The 'balance of payments' includes all of the following accounts except the _________.

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency,government Price Setting and Taxes

Technology,production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition and Oligopoly

The Markets for Labour and Other Factors of Production

Government Intervention in the Market

Social Policy and Inequality

Gdp: Measuring Total Production, income and Economic Growth

Unemployment and Inflation

Aggregate Demand and Aggregate Supply Analysis

Money,banks and the Reserve Bank of Australia

Monetary Policy

Fiscal Policy

Comparative Advantage and the Gains From International Trade

Filters

Exam 20: Macroeconomics in an Open Economy

Which of the following is not included in the 'current account'?

A 'floating exchange rate system' is one in which

Under the gold standard,a chance discovery of gold such as a gold rush would

In 2015/2016,Australia

When a currency's exchange rate is pegged to the US dollar and the value is fixed below the equilibrium exchange rate as expressed in US dollars per the currency,then in order to maintain the peg,the country's central bank must

Australia's net foreign debt rose from less than 5 per cent of GDP in the mid-1970s to over 50 per cent in 2013.

When can foreign debt become a problem for a country? _____________________________________________________________________________________________ _____________________________________________________________________________________________

In the late 1960s,speculators were counting on the value of the German mark to ________ and the German central bank responded by ________ marks.

A federal budget deficit may ________ exchange rates (foreign currency per domestic currency)and ________ the balance of trade for goods and services.

If a country's exchange rate is pegged above the equilibrium exchange rate,the country must

The record of a country's transactions in goods,services,and assets with the rest of the world is its _________.

If the value of goods and services exported from Australia is smaller than the value of goods and services imported,then

The ________ account records flows of funds into and out of a country.

What is the 'theory of purchasing power parity'? _____________________________________________________________________________________________ _____________________________________________________________________________________________

Australia's net foreign debt as a proportion of GDP has

Why do countries peg their currencies? What problems can result from pegging? _____________________________________________________________________________________________ _____________________________________________________________________________________________

Assume that the exchange rate between the dollar and the yen is ¥60 = $1.Suppose the exchange rate changes to ¥100 = $1.Because of the change

Assume that a Big Mac burger costs $3.57 in Australia and 7.80 zlotys in Poland.If the exchange rate is 3 zlotys per dollar,purchasing power parity predicts that the dollar will

The 'balance of payments' includes all of the following accounts except the _________.

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency,government Price Setting and Taxes

Technology,production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition and Oligopoly

The Markets for Labour and Other Factors of Production

Government Intervention in the Market

Social Policy and Inequality

Gdp: Measuring Total Production, income and Economic Growth

Unemployment and Inflation

Aggregate Demand and Aggregate Supply Analysis

Money,banks and the Reserve Bank of Australia

Monetary Policy

Fiscal Policy

Comparative Advantage and the Gains From International Trade

Filters

When can foreign debt become a problem for a country? _ _

In the late 1960s,speculators were counting on the value of the German mark to and the German central bank responded by marks.

A federal budget deficit may exchange rates (foreign currency per domestic currency)and the balance of trade for goods and services.

What is the 'theory of purchasing power parity'? _ _

Why do countries peg their currencies? What problems can result from pegging? _ _