Which of the following best describes the exchange rate regime

in Australia from 1971-1983?

Managed floating exchange rate regime

Fixed exchange rate regime under a currency board system

Fixed exchange rate regime, with the AU$ pegged to the US$ and then to a basket of

currencies

Fixed exchange rate regime within the Bretton Woods system

18.If the domestic and the foreign interest rates are 8% and 12% respectively, then according to interest rate parity:

foreign currency is expected to depreciate by 2%

foreign currency is expected to appreciate by 2%

foreign currency is expected to depreciate by 4%

19.Compared to the AS/AD framework in the absence of the exchange rate effect, a contractionary monetary policy in the extended AS/AD framework (where exchange rate may depreciate or appreciate) causes:

smaller decreases in both equilibrium output and inflation.

a smaller decrease in equilibrium output and a further decrease in inflation.

further decreases in both equilibrium output and inflation.

23.

What does a government budget deficit imply?

Government debt has been increasing.

Government debt-to-GDP ratio has been increasing.

24.The allocation function of fiscal policy involves:

Higher tax rate to high income earners.

Increased government spending on infrastructure.

Welfare payments to unemployed workers.

25.Suppose that the actual output or GDP in the economy is below the potential or trend GDP, the government will try to stimulate the economy by conducting athat will result in.

fiscal expansion; higher output and lower inflation

fiscal expansion; higher output and higher inflation

fiscal contraction; higher output and lower inflation

33.Which of the following occurred in the build-up to the GFC?

The ratio of U.S. households mortgage debts to house values increased

significantly.

The U.S. housing market was booming and house prices grew strongly.

Various financial innovations e.g. the issuance of mortgage- or asset-backed

securities.

All of the above

36.Australia's export sector remained strong during the financial crisis because: (There may be more than one correct answer.)

Australia's exports to China grew strongly due to large demand from China.

Australia did not trade with the US and other countries which were heavily affected by

the crisis.

the Australian dollar depreciated which made Australia's exports relatively

cheaper.