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Economics Mcqs 4423 MCQs [All-Courses]

Economics MCQs cover fundamental concepts of microeconomics and macroeconomics, including demand and supply, inflation, national income, and economic policies.
This section is designed to strengthen analytical skills and conceptual understanding for competitive examinations.
Highly useful for PPSC, FPSC, NTS, OTS, KPPSC, and other testing services preparation.

IF when cost $4 per bushel in the United States and 2 pounds per bushel in Great Britain then in the presence of purchasing power parity the exchange rate should be ?

A $50 per pound

B $1.00 per pound

C $2.00 per pound

D $8.00 per pound

Review Detailed Answer

Correct Answer: $2.00 per pound

Assume that the United States faces a percent inflation rate while no (zero) inflation exists in Japan. According to the purchasing power parity theory over the long run the dollar would be expected to ?

A appreciate by 8 percent against the yen

B depreciate by 8 percent against the yen

C remain at its existing exchange rate

Review Detailed Answer

Correct Answer: depreciate by 8 percent against the yen

Relatively low real interest rates in the United States tend to ?

A decrease the foreign demand for dollars causing the dollar to depreciate

B decrease the foreign demand for dollars causing the dollar to appreciate

C increase the foreign demand for dollars causing the dollar to depreciate

D decrease the foreign demand for dollars causing the dollar to appreciate

Review Detailed Answer

Correct Answer: decrease the foreign demand for dollars causing the dollar to depreciate

If the exchange rate between Swiss francs and British pounds is 5 francs per pound, then the number of pounds that can be obtained for 200 francs equals ?

A 20 pounds

B 40 pounds

C 60 pounds

D 80 pounds

Review Detailed Answer

Correct Answer: 40 pounds

Exchange rate overshooting often occurs because ?

A domestic prices adjust slowly to shifts in demand

B military spending during military conflicts

C elasticities are smaller in the long run than the short run

D elasticities are smaller in the short run than the long run

Review Detailed Answer

Correct Answer: elasticities are smaller in the short run than the long run

According to the asset market approach increased investor confidence in the Mexican economy would cause the peso to ?

A appreciate because of an increase supply of peso denominated assets

B depreciate because of an increased supply of peso denominated assets

C appreciated because of an increased demand for peso denominated assets

D depreciated because of an increased demand for peso denominated assets

Review Detailed Answer

Correct Answer: appreciated because of an increased demand for peso denominated assets

The purchasing power parity theory has limitations in forecasting exchange rate fluctuations for all of the following reasons except ?

A inflation effects exchange rates

B international capital flows affect exchange rates

C governments sometimes impose trade restrictions such as tariffs and quotas

D not all products are internationally tradeable

Review Detailed Answer

Correct Answer: inflation effects exchange rates

The asset market approach views exchange rates as being determined mainly by ?

A the use of import tariffs and quotas by governments

B the current account balance of each country

C the relative growth rate of national output between countries

D efforts of investors to balance their portfolios among financial assets denominated in different currencies

Review Detailed Answer

Correct Answer: efforts of investors to balance their portfolios among financial assets denominated in different currencies

The assets market approach is most helpful in explaining ?

A why exchange rates remain quite stable

B why governments change their money supplies

C long term exchange rate movements

D short term exchange rate movements

Review Detailed Answer

Correct Answer: short term exchange rate movements

Consulting firms that use large-scale econometric models to forecast exchange rate movements are engaging in ?

A judgmental analysis

B fundamental analysis

C technical analysis

D nontechnical analysis

Review Detailed Answer

Correct Answer: fundamental analysis

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Economics Mcqs 4423 MCQs [All-Courses]

All Topics 4423

All Topics 4423

IF when cost $4 per bushel in the United States and 2 pounds per bushel in Great Britain then in the presence of purchasing power parity the exchange rate should be ?

Assume that the United States faces a percent inflation rate while no (zero) inflation exists in Japan. According to the purchasing power parity theory over the long run the dollar would be expected to ?

Relatively low real interest rates in the United States tend to ?

If the exchange rate between Swiss francs and British pounds is 5 francs per pound, then the number of pounds that can be obtained for 200 francs equals ?

Exchange rate overshooting often occurs because ?

According to the asset market approach increased investor confidence in the Mexican economy would cause the peso to ?

The purchasing power parity theory has limitations in forecasting exchange rate fluctuations for all of the following reasons except ?

The asset market approach views exchange rates as being determined mainly by ?

The assets market approach is most helpful in explaining ?

Consulting firms that use large-scale econometric models to forecast exchange rate movements are engaging in ?