MCQ Question

1, If government fiscal policy is used to restrain cost-push inflation, we can expect:

• A.the aggregate demand curve to shift rightward.
• B.tax-rate declines and increases in government spending.
• C.the unemployment rate to rise.
• D.the unemployment rate to fall.

2, The following is a consolidated balance sheet for the chartered banking system. All figures are in billions. Assume that the desired reserve ratio is 20 percent.

Assets Liabilities and net worth

Cash Reserves $120 Demand Deposits $300

Securities 300 Stock shares 200

Loans 240

Property 600

Refer to the above information. The maximum amount by which this chartered banking system can expand the supply of money by lending is:

• A.$480 billion.
• B.$120 billion.
• C.$300 billion.
• D.$600 billion.

3, Suppose that a country has a trade surplus of $50 billion, a balance on the capital account of $10 billion, and a balance on the current account of -$200 billion. The balance on the capital and financial account will be:

• A.$7,200 billion
• B.$1,200 billion.
• C.$200 billion.
• D.$100 billion.

4, The following table shows the balance of payments statement for the hypothetical nation of Zabella for 2014. All the figures are in billions of dollars.

Merchandise exports$+80

Merchandise imports?70

Exports of services+20

Imports of services?25

Net investment income+5

Net transfers?5

Capital AccountCapital inflows+13

Capital outflows?23

Official Settlements AccountOfficial international reserves+5

Refer to the above data. In 2014, Zabella's balance on the capital account shows a:

• A.deficit of $10 billion.
• B.deficit of $28 billion.
• C.surplus of $5 billion.
• D.surplus of $13 billion.

5,