MCQs of Economics - Budget Deficits And The Trade Balance – Multiple Choice Question

Question 1 of 19

1. Question

Which of the following statements regarding the loanable funds market is not true?

A decrease in a country's net capital outflow shifts the demand for loanable funds to the left
An increase in domestic investment shifts the demand for loanable funds to the right
An increase in a country's net capital outflow shifts the supply of loanable funds to the left
An increase in a country's net capital outflow raises its real interest rate

Question 2 of 19

2. Question

An increase in the government budget deficit:

has no impact on the real interest rate and fails to crowed out investment
decreases the real interest rate and crowds out investment
None of these answers
Increases the real interest rate and crowds out investment

Question 3 of 19

3. Question

Which of the following statement regarding the loanable funds market is true?

A decrease in the government budget deficit increase the real interest rate
An increase in the government budget deficit shifts the supply of loanable funds to the right
An increase in private saving shifts the supply of loanable funds to the left
An increase in the government budget deficit shifts the supply of loanable funds to the left

Question 4 of 19

4. Question

An increasing in Europe’s taste for UK produced Hondas would cause the pound to”

depreciate and would increase UK net exports
apreciate and would increase UK net exports
depreciate and would decrease UK net exports
appreciate, but the total value of UK net export stays the same

Question 5 of 19

5. Question

An increase in the Pakistan’s government budget deficit:

Increase Pakistan's net exports and decrease Pakistan's net net capital outflow
decreases Pakistan's net exports and Pakistan's net Capital outflow the Pakistan's same amount
Increase Pakistan's net exports and Pakistan's net capital outflow the same amount
decreases Pakistan's net exports and increase Pakistan's net capital outflow

Question 6 of 19

6. Question

The Phrase “twin deficits” refers to:

A country's trade deficit and its government budget deficit
The fact that if a country has a trade deficit, its trading partners must also have trade deficits
the equality of a country's saving deficit and its investment deficit
a country's trade deficit and its net capital outflow deficit

Question 7 of 19

7. Question

Which of the following statements regarding the market for foreign currency exchange is true?

An increase in Pakistan's net exports decreases the supply of rupees and the rupees depreciates
An increase in Pakistan's net exports increase the demand for rupees and the rupees appreciates
An increase in Pakistan's net exports increases the Supply of rupees and the rupees depreciates
An increase in Pakistan's net exports decrease the demand for rupees and the rupees appreciates

Question 8 of 19

8. Question

Which of the following statements regarding the market for foreign currency exchange is true?

An increase in Pakistan's net capital outflow increase the supply of rupees and the rupees depreciate
An increase in Pakistan's net capital outflow increase the demand of rupees and the rupees appreciate
An increase in Pakistan's net capital outflow increase the demand of rupees and the rupees depreciate
An increase in Pakistan's net capital outflow increase the supply of rupees and the rupees appreciate

Question 9 of 19

9. Question

If the EU imposes a quota on the importing of clothing produced in China, so reducing UK imports of clothing Which of the following is true regarding the market for foreign currency exchange?

The demand for pounds decrease and the pound depreciates
The Supply of pounds increases and the pound depreciates
The Supply of pounds decreases and the pound appreciates
The demand for Pounds increases and the pound appreciates

Question 10 of 19

10. Question

If the EU imposes a quota on the importing of clothing produced in China, so reducing UK imports of clothing, which of the following is true regarding UK net exports?

Net exports will rise
None of these answers
Net exports will fall
Net exports will remain unchanged

Question 11 of 19

11. Question

Suppose, due to political instability, Russians suddenly choose to invest in UK assets as opposed to Russian assets Which of the following statements is true regarding UK net foreign investment?

UK net foreign investment is unchanged because only UK residents can after UK net foreign investment
UK net foreign investment rises
UK net foreign investment falls
None of the above

Question 12 of 19

12. Question

Suppose, due to political instability , Russians suddenly choose to purchase UK assets as opposed to Russian assets Which of the following statements is true regarding the value of the pound and UK net exports?

The pound appreciates and UK net exports rise
The pound appreciates and UK net exports fall
The pound depreciates and UK net exports rise
The pound depreciates and UK net exports fall

Question 13 of 19

13. Question

An increase in Pakistan’s private saving:

increase Pakistan's net exports and Pakistan's net capital outflow the same amount
Increase Pakistan's net exports and decrease Pakistan's net capital outflow
decreases Pakistan's net exports and Pakistan's net capital outflow the same amount
decrease Pakistan's net exports and increase Pakistan's net capital outflow

Question 14 of 19

14. Question

Which of the following statements about trade policy is true?

A country's trade policy has no impact on the size of its trade balance
None of these answers
A restrictive import quota decrease a country's net exports
A restrictive imports quota increase a country's net exports

Question 15 of 19

15. Question

Which of the following groups would not benefit from an EU imports quota on Japanese cars?

Eu consumers who buy electronics from Japan
EU farmers who export grain
employees of EU car manufacturers
Shareholders of German carmaker BMW

Question 16 of 19

16. Question

An example of a trade policy is:

A tariff on sugar
All are examples of trade policy
capital flight because it increase a country's net exports
an increase in the government budget deficit because it reduces a country's net exports

Question 17 of 19

17. Question

An export subsidy should have the opposite effect of:

A government budget deficit
Capital flight
An increase in Private saving
A tariff

Question 18 of 19

18. Question

Which of the following groups would be most harmed by a UK government budget deficit?

Foreigners who wish to buy assets in the UK
BAe Systems wishing to sell aircraft to Saudi Arabia
UK residents wishing to buy foreign Produced cars
Lenders of loanable funds

Question 19 of 19

19. Question

Capital flight:

decreases a country's net exports and increases its long-run growth path
increases a country's net exports and increases its long-run growth path
increases a country's net exports and decreases its long-run growth path
decreases a country's net exports and decreases its long-run growth path

MCQs of Economics – Budget Deficits And The Trade Balance

Economics - Budget Deficits And The Trade Balance

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