MCQ

01. Which one of the following is an outcome of an increase in the government budget deficit?

1. It increases net exports.

2. It reduces net capital outflow.

3. It increases the demand for loanable funds.

4. It causes the real exchange rate to depreciate.

02. If Canada imposes a quota on the imports of apparel produced in China: In Canada

1. Net exports will rise.

2. Net exports will fall.

3.Net exports will remain unchanged.

4. We do not have enough information to determine Canada's Net Exports.

03. Suppose the inflation rate over the past 20 years has been 7% in Great Britain, 9% in Japan, and 5% in Canada. If purchasing-power parity holds, which of the following statements describes the most likely result? Over this period:

1. The value of dollar should have fallen compared to the value of the pound and yen.

2. The yen should have risen in value compared to the pound and fallen compared to the dollar.

3. The yen should have fallen in value compared to the pound and risen compared to the dollar.

4. The pound should have risen in value compared to yen and fallen compared to the dollar.