MST13 Balanced trade is:

a.

a situation in which the value of a country's imports equals the value of its consumption

b.

a situation in which the value of a country's exports equals the value of its imports

c.

a situation in which the value of a country's exports equals the value of its production

d.

a situation in which the value of a country's consumption equals the value of its production

MST14 An economy with a current account deficit must also have

a.

a capital account deficit

b.

capital account surplus

c.

a budget surplus

d.

a budget deficit

MST15 If purchasing-power parity holds, and a tonne of rice costs $200 in Australia and 1,000 CNY in China, then the nominal exchange rate is:

a.

4.5 CNY/$

b.

1 CNY/$

c.

5.5 CNY/$

d.

5 CNY/$

MST16 Which of the following statements about nominal GDP (calculated by market exchange rates and converted to $USD) and real GDP (calculated by PPP) is CORRECT

a.

Real GDP calculated by PPP is always preferred, as it measures one country's real economic performance and takes into account the differences in inflation and cost of non-tradable goods.

b.

China's GDP is often inflated by $USD approach, since Chinese RMB is undervalued.

c.

Total value for GDP in the US is indifferent under two alternative measures.

d.

Nominal GDP measured in $USD is always preferred, as it is easy to calculate and compare.

MST18 Which of the following statements about 'Great Proletarian Cultural Revolution' is INCORRECT?

a.

Cultural Revolution completely ruined the tertiary education, which made thousands of academics and intellectuals being widely persecuted

b.

Similar to 'Great Leap Forward' campaign, the Cultural Revolution was another plan that backfired, causing millions more deaths by violence and again crippling the Chinese economy

c.

Launched by Chairman Mao Zedong, the stated goal of Cultural Revolution was to preserve Chinese Communism and restore economic growth

d.

Cultural Revolution dramatically damaged the labour force, which suspended economic production in many major sectors