Question 1

To correct a balance of payments deficit and unemployment a nation requires a:

Accepted Answer

A)  devaluation and expansionary fiscal and monetary policies
B)  devaluation and contractionary fiscal and monetary policies
C)  devaluation and either expansionary or contractionary fiscal and monetary policies
D)  revaluation and either expansionary or contractionary fiscal and monetary policiesE) All of the above
F) C) and D)

Question 2

In order to achieve internal and external balance simultaneously,a nation must usually use at least:

Accepted Answer

A)  one policy
B)  two policies
C)  three policies
D)  cannot sayE) None of the above
F) A) and B)

Question 3

To correct unemployment and a balance of payments deficits with flexible exchange rates and imperfect capital mobility:

Accepted Answer

A)  both fiscal and monetary policies are required
B)  fiscal policy is required
C)  monetary policy is required
D)  either monetary or fiscal policy is requiredE) All of the above
F) A) and D)

Question 4

To achieve external balance and correct a recession,a nation will always have to use tight monetary policy if at the full employment level of national income the nation's
BP curve is:

Accepted Answer

A)  above the LM curve
B)  below the LM curve
C)  steeper than the LM curve
D)  above the IS curveE) B) and C)
F) A) and D) A

Question 5

To correct a balance of payments surplus and inflation a nation requires a:

Accepted Answer

A)  devaluation and expansionary fiscal and monetary policies
B)  devaluation and contractionary fiscal and monetary policies
C)  devaluation and either expansionary or contractionary fiscal and monetary policies
D)  revaluation and either expansionary or contractionary fiscal and monetary policiesE) B) and C)
F) A) and B)

Question 6

The IS curve is negatively inclined because:

Accepted Answer

A)  the higher is the rate of interest the smaller is the quantity of money demanded for speculative purposes
B)  higher rates of interest lead to greater capital flows
C)  at lower interest rates the levels of investment and national income are higher
D)  at lower interest rates the level of national income is lowerE) B) and D)
F) None of the above

Question 7

If the BP curve is above the point of intersection of the IS and LM curves,the nation will:

Accepted Answer

A)  have a balance of payments deficit at that level of income
B)  have a balance of payments surplus at that level of income
C)  be in recession
D)  face inflationE) None of the above
F) All of the above

Question 8

Points below internal balance line YY in the Swan diagram indicate:

Accepted Answer

A)  a balance of payments deficit
B)  a balance of payments surplus
C)  unemployment
D)  inflationE) A) and C)
F) B) and C)

Question 9

To correct unemployment from a condition of external balance,a nation will usually have to use:

Accepted Answer

A)  expansionary fiscal policy only
B)  easy monetary policy only
C)  expansionary fiscal policy and easy monetary policy
D)  expansionary fiscal policy and tight monetary policyE) None of the above
F) A) and B) D

Question 10

The most important economic objective of industrial nations is:

Accepted Answer

A)  external balance
B)  internal balance
C)  a reasonable rate of growth
D)  an equitable distribution of incomeE) All of the above
F) A) and D)

Question 11

To correct a balance of payments deficit and inflation a nation requires:

Accepted Answer

A)  contractionary fiscal policy and easy monetary policy
B)  contractionary fiscal policy and tight monetary policy
C)  expansionary fiscal policy and tight monetary policy
D)  any of the above depending on the level of inflation and the size of the initial deficitE) A) and D)
F) A) and C)

Question 12

Direct controls refer to:

Accepted Answer

A)  tariffs,quotas,and other quantitative restrictions on the flow of international trade
B)  restrictions on international capital flows
C)  multiple exchange rates
D)  all of the aboveE) All of the above
F) B) and D)

Question 13

In a world of perfectly elastic international capital flows and fixed exchange rates:

Accepted Answer

A)  fiscal policy is completely ineffective
B)  monetary policy is completely ineffective
C)  both fiscal and monetary policies are completely ineffective
D)  both fiscal and monetary policies are effectiveE) All of the above
F) A) and B)

Question 14

To correct a balance of payments deficit and inflation a nation requires a:

Accepted Answer

A)  devaluation and expansionary fiscal and monetary policies
B)  devaluation and contractionary fiscal and monetary policies
C)  devaluation or revaluation and contractionary fiscal and monetary policies
D)  revaluation and either expansionary or contractionary fiscal and monetary policiesE) B) and D)
F) A) and B) C

Question 15

To correct a balance of payments surplus and unemployment a nation requires a:

Accepted Answer

A)  devaluation and expansionary fiscal and monetary policies
B)  devaluation and contractionary fiscal and monetary policies
C)  devaluation or revaluation and expansionary fiscal and monetary policies
D)  revaluation and either expansionary or contractionary fiscal and monetary policiesE) A) and B)
F) A) and C)

Question 16

To correct a balance of payments surplus and inflation a nation requires:

Accepted Answer

A)  expansionary fiscal policy and easy monetary policy
B)  contractionary fiscal policy and tight monetary policy
C)  contractionary fiscal policy and easy monetary policy
D)  expansionary fiscal policy and tight monetary fiscal policyE) C) and D)
F) B) and D)

Exam 18: Open-Economy Macroeconomics: Adjustment Policies

To correct a balance of payments deficit and unemployment a nation requires a:

Correct Answer
verified

In order to achieve internal and external balance simultaneously,a nation must usually use at least:

Correct Answer
verified

To correct unemployment and a balance of payments deficits with flexible exchange rates and imperfect capital mobility:

Correct Answer
verified

To achieve external balance and correct a recession,a nation will always have to use tight monetary policy if at the full employment level of national income the nation's BP curve is:

Correct Answer
verified
A

To correct a balance of payments surplus and inflation a nation requires a:

Correct Answer
verified

The IS curve is negatively inclined because:

Correct Answer
verified

If the BP curve is above the point of intersection of the IS and LM curves,the nation will:

Correct Answer
verified

Points below internal balance line YY in the Swan diagram indicate:

Correct Answer
verified

To correct unemployment from a condition of external balance,a nation will usually have to use:

Correct Answer
verified
D

The most important economic objective of industrial nations is:

Correct Answer
verified

To correct a balance of payments deficit and inflation a nation requires:

Correct Answer
verified

Direct controls refer to:

Correct Answer
verified

In a world of perfectly elastic international capital flows and fixed exchange rates:

Correct Answer
verified

To correct a balance of payments deficit and inflation a nation requires a:

Correct Answer
verified
C

To correct a balance of payments surplus and unemployment a nation requires a:

Correct Answer
verified

To correct a balance of payments surplus and inflation a nation requires:

Correct Answer
verified

Exam 18: Open-Economy Macroeconomics: Adjustment Policies

To correct a balance of payments deficit and unemployment a nation requires a:

Correct AnswerverifiedShow Answer

In order to achieve internal and external balance simultaneously,a nation must usually use at least:

Correct AnswerverifiedShow Answer

To correct unemployment and a balance of payments deficits with flexible exchange rates and imperfect capital mobility:

Correct AnswerverifiedShow Answer

To achieve external balance and correct a recession,a nation will always have to use tight monetary policy if at the full employment level of national income the nation's BP curve is:

Correct AnswerverifiedA

To correct a balance of payments surplus and inflation a nation requires a:

Correct AnswerverifiedShow Answer

The IS curve is negatively inclined because:

Correct AnswerverifiedShow Answer

If the BP curve is above the point of intersection of the IS and LM curves,the nation will:

Correct AnswerverifiedShow Answer

Points below internal balance line YY in the Swan diagram indicate:

Correct AnswerverifiedShow Answer

To correct unemployment from a condition of external balance,a nation will usually have to use:

Correct AnswerverifiedD

The most important economic objective of industrial nations is:

Correct AnswerverifiedShow Answer

To correct a balance of payments deficit and inflation a nation requires:

Correct AnswerverifiedShow Answer

Direct controls refer to:

Correct AnswerverifiedShow Answer

In a world of perfectly elastic international capital flows and fixed exchange rates:

Correct AnswerverifiedShow Answer

To correct a balance of payments deficit and inflation a nation requires a:

Correct AnswerverifiedC

To correct a balance of payments surplus and unemployment a nation requires a:

Correct AnswerverifiedShow Answer

To correct a balance of payments surplus and inflation a nation requires:

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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A

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D

Correct Answer
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C

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Correct Answer
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