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

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 required

e. None of the above

47. Trade diversion arises in a customs union if it:

a. Increases trade among union members and with non-member nations

b. Reduces trade among union members and with non-member nations

c. Increases trade among members but reduces trade with non-members

d. Reduces trade among union members but increases it with non-members

e. None of the above

48. We can expect deviations from PPP because of:

a. Quotas

b. Tariffs

c. Transportation costs

d. Differentiated goods

e. All of the above

49. What is the underlying characteristic of the WTO?

a. It facilitates economic co-operation between different countries

b. It resolves disputes between economic trade blocks

c. It facilitates the development of less developed countries

d. It acts as an umbrella institution that regulates the agreements concluded at the Uruguay round, the organisation's ultimate goal being the promotion of free international trade

e. It ensures the smooth functioning of the Bretton Wood agreement.

50. When Australia ships food aid to a developing nation, Australia debits:

a. Unilateral transfers

b. Services

c. The financial account

d. Official reserves

e. None of the above