Within a system of perfectly flexible exchange rates, an increase in the Malaysian demand for imports would result in a

Select one:

a.

rise in the exchange rate.

b.

balance of payments surplus.

c.

fall in the exchange rate.

d.

balance of payments deficit.

Clear my choice

Question2

Not yet answered

Marked out of 1.00

Flag question

Question text

If a reduction in the money supply leads to a rise in interest rates and lower output, in a fixed exchange rate system:

Select one:

a.

it promotes more imports of goods and services.

b.

it benefits both trade and capital accounts.

c.

it worsens both trade and capital accounts.

d.

it increases inflation.

Clear my choice

Question3

Not yet answered

Marked out of 1.00

Flag question

Question text

Which of the following statements is (are) correct?

Select one:

a.

Given a fixed exchange rate system, there is an absence of conflicts between internal and external balance goals

b.

Under a fixed exchange rate system, potential conflicts arise between the goals of internal balance and external balance

c.

Countries may find that expansionary policies, which might be desired in order to reduce the unemployment rate, lead to income levels that are too high to balance the trade account and could lead to balance of payments problems

d.

Both (a)and (c)

e.

Both (b)and (c)

Clear my choice

Question4

Not yet answered

Marked out of 1.00

Flag question

Question text

Which of the following statements is (are) correct?

Select one:

a.

the myopic, or short-sighted behavior of voters is inconsistent with rational expectations

b.

Even the earliest political business cycle and partisan models assumed that expectations were rational

c.

The earliest political business cycle models assumed that expectations were always rational, whereas the partisan model assumed that expectations were sometimes irrational

d.

The partisan model of fiscal policy cannot be modified to be consistent with rational expectations

Clear my choice

Question5

Not yet answered

Marked out of 1.00

Flag question

Question text

The best case for intermediate targeting on monetary aggregates is where the

Select one:

a.

LM schedule is steep and the money demand function is stable.

b.

IS schedule is flat and the level of investment is stable.

c.

LM schedule is flat and the money demand function is stable.

d.

IS schedule is steep and the money demand function is stable.

n the Mundell-Fleming model with perfect capital mobility, the domestic interest rates are determined by

Select one:

a.

monetary policy.

b.

the IS and LM curves.

c.

domestic savings and investment.

d.

budget deficits.

e.

none of the above.

Clear my choice

Question7

Not yet answered

Marked out of 1.00

Flag question

Question text

If the great majority of shocks to our system arise from unpredictable shocks to money demand, the preferred tactic of monetary policy is targeting

Select one:

a.

M2.

b.

reserves plus currency.

c.

interest rates.

d.

reserves.

Clear my choice

Question8

Not yet answered

Marked out of 1.00

Flag question

Question text

With a fixed exchange rate, an increase in the domestic price level will, for a constant foreign price level,

Select one:

a.

increase both exports and imports.

b.

make foreign goods relatively cheaper to Malaysia citizens but Malaysia exports will be more expensive to foreign purchasers.

c.

increase exports and decrease imports.

d.

make foreign goods relatively more expensive to Malaysia citizens but Malaysia exports will be relatively cheaper to foreign buyers.

Clear my choice

Question9

Not yet answered

Marked out of 1.00

Flag question

Question text

A rightward shift of the BP curve occurs with a

Select one:

a.

decrease in government spending.

b.

fall in the exchange rate.

c.

cut in taxes.

d.

an increase in exports.

Clear my choice

Question10

Not yet answered

Marked out of 1.00

Flag question

Question text

Assume perfect capital mobility.Under a fixed exchange rate system, expansionary fiscal policy causes the value of RM to _____, while expansionary monetary policy causes the value of RM to _____.

Select one:

a.

rise; rise

b.

rise; fall

c.

fall; fall

d.

fall; rise