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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.

Expansionary monetary policy ?

A tends to lead to an appreciation of a nation’s currency

B tends to lead to a depreciation of a nation’s currency

C usually has no effect on a currency’s exchange value

D tends to lead to a depreciation of the currencies of other nations

Review Detailed Answer

Correct Answer: tends to lead to a depreciation of a nation’s currency

If the Bank of England reduces the money supply to reduce inflation a floating exchange rate will aid the Bank of England in fighting inflation because ?

A as the money supply is decreased the interest rate will increase and the price of UK exports will rise and the Price of UK imports will fall

B as the money supply is decreased the interest rate will increase, and the price of UK exports will fall and the price of UK imports will rise

C as the money supply is decreased the interest rate will increase and the price of UK exports and UK imports will fall.

D as the money supply is decreased the interest rate will increase and the price of both UK exports and UK imports will rise

Review Detailed Answer

Correct Answer: as the money supply is decreased the interest rate will increase and the price of UK exports and UK imports will fall.

In 1971, most countries ?

A adopted a new system of fixed exchange rates

B gave up trying to fix exchange rates formally and began allowing them to be determined essentially by supply and demand

C adopted single internationally accepted currency whose use is limited to international transactions

D returned to the gold standard

Review Detailed Answer

Correct Answer: gave up trying to fix exchange rates formally and began allowing them to be determined essentially by supply and demand

All currencies other than the domestic currency of a given country are referred to as ?

A hard currency

B foreign exchange

C reserve currencies

D near monies

Review Detailed Answer

Correct Answer: foreign exchange

Speculators in foreign exchange markets do all of the following except ?

A attempt to profit by trading on expectations about future currency prices

B bear risk as they attempt to ____ beat the market||

C attempt to buy currency at a low price and later resell that currency at a higher price

D Simultaneously buy a currency at a low price and sell that currency at a higher price, making a riskless profit

Review Detailed Answer

Correct Answer: Simultaneously buy a currency at a low price and sell that currency at a higher price, making a riskless profit

The real effective exchange rate for the U.S dollar ?

A reflects only the influences of merchandise or real trade on the dollar’s exchange value

B reflects only transactions in the currency futures market

C is the weighted average of the dollar exchange rate relative to the currencies of important U.S trading partners adjusted for inflation?

D is the weighted average of the dollar exchange rate relative to the currencies of important U.S trading partners unadjusted for inflation?

Review Detailed Answer

Correct Answer: is the weighted average of the dollar exchange rate relative to the currencies of important U.S trading partners adjusted for inflation?

Investor engage in _____ when they move funds into foreign currencies in order to take advantage to interest rates abroad that are higher than domestic interest rates ?

A currency arbitrage

B interest arbitrage

C short positions

D long positions

Review Detailed Answer

Correct Answer: interest arbitrage

Which of the following is not a reason why Joe Smith (an American) might participate as a demander in the foreign exchange market ?

A his desire to open a bank account in Japan

B his desire to purchase an automobile produced domestically

C his desire to travel to Europe

D his desire to purchase Treasury bills issued by the British government

Review Detailed Answer

Correct Answer: his desire to purchase an automobile produced domestically

If Sweden’s currency depreciates relative to Norway’s currency ?

A Norway’s export goods become more expensive to Norway’s residents

B Norway’s exports goods become cheaper to Sweden’s residents

C Sweden’s export goods become cheaper to Norway’s residents

D Sweden’s export goods become cheaper to Sweden’s residents

Review Detailed Answer

Correct Answer: Sweden’s export goods become cheaper to Norway’s residents

The franc is said to be selling at a _______ if the spot dollar price is $0.48 and the nine-month forward rate is $0.42 ?

A forward discount

B forward premium

C forward spread

D None of these

Review Detailed Answer

Correct Answer: forward discount

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Economics Mcqs 4423 MCQs [All-Courses]

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All Topics 4423

Expansionary monetary policy ?

If the Bank of England reduces the money supply to reduce inflation a floating exchange rate will aid the Bank of England in fighting inflation because ?

In 1971, most countries ?

All currencies other than the domestic currency of a given country are referred to as ?

Speculators in foreign exchange markets do all of the following except ?

The real effective exchange rate for the U.S dollar ?

Investor engage in _____ when they move funds into foreign currencies in order to take advantage to interest rates abroad that are higher than domestic interest rates ?

Which of the following is not a reason why Joe Smith (an American) might participate as a demander in the foreign exchange market ?

If Sweden’s currency depreciates relative to Norway’s currency ?

The franc is said to be selling at a _______ if the spot dollar price is $0.48 and the nine-month forward rate is $0.42 ?