Exchange-Rate Adjustments And The Balance of Economics ( Economics ) MCQs – Economics MCQs
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Latest Exchange-Rate Adjustments And The Balance of Economics ( Economics ) Mcqs
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Empirical evidence regarding in the effects of currency depreciation on the balance of trade indicates that?
A. depreciation generally hurts the trade balance
B. depreciation generally improves the trade balance
C. no strong generalization is possible
D. depreciation has no effect on the trade balance
The analysis considers the ability of domestic and foreign price of adjust to devaluation in the short run ?
A. pass through
B. adjustment mechanism
C. absorption
D. currency contract period
The shorter the ______ pass through period the ______ the desirable BOT effects of evaluation on quantities traded will appear ?
A. sooner
B. bigger
C. longer
D. smaller
Suppose that the United Kingdom devalues the pound if both exports and imports are written in terms of pounds then the United Kingdom balance of trade during a currency contract period ?
A. worsens
B. improves
C. is unaffected
D. falls for a while before increasing
If export contracts are written in terms of foreign currency and import contracts are denominated in domestic currency a depreciation of the dollar during the currency contract period ?
A. must increase the balance of trade
B. should not have any effect on the dollar value of U.S imports
C. should increase the dollar value of exports
D. All of the above
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Complete currency pass through arises when a 10 percent depreciation in the value of the dollar causes U.S?
A. export prices to rise by 10 percent
B. import prices to rise by 10 percent
C. import prices to fall by 10 percent
D. export prices to fall by 10 percent
Given a two-country world, suppose Japan devalues the yen by 20 percent and west German devalues the mark by 15 percent This result is a (an)?
A. depreciation in the value of both currencies
B. appreciation in the value of both currencies
C. appreciation in the value of the yen against the mark
D. depreciation in the value of the yen against the mark
If foreign manufacturing costs and profit margins in response to a depreciation in the U.S dollar the effect of these actions is to ?
A. shorten the amount of time in which the depreciation leads to smaller trade surplus
B. shorten the amount of time in which the depreciation leads to smaller trade deficit
C. lengthen the amount of time in which the depreciation leads to smaller trade deficit
D. lengthen the amount of time in which the depreciation leads to smaller trade surplus
Because of the J curve effect and partial currency pass through, a depreciation of the domestic currency tends to increase the size of a ?
A. trade surplus in the long run
B. trade surplus in the short run
C. trade deficit in the short run
D. trade deficit in the long run
According to the Marshall-Lerner condition if a country’s currency depreciates its trade balance will worsen if ?
A. elasticity of demand for exports = 0.7; elasticity of demand for imports = 0.3
B. elasticity of demand for exports = 0.9; elasticity of demand for imports = 0.4
C. elasticity of demand for exports = 0.5; elasticity of demand for imports = 0.7
D. elasticity of demand for exports = 0.3; elasticity of demand for imports = 0.6
The balance of trade can only worsen if income ____ relative to absorption ?
A. does not change
B. decreases
C. increases
D. None of the above
The analysis considers the ability of domestic and foreign price of adjust to devaluation in the short run ?
A. pass through
B. adjustment mechanism
C. absorption
D. currency contract period
The notion that, following a currency depreciation the balance of trade falls for a while before increasing is called an effect ?
A. elasticity
B. relative price
C. J Curve
D. Pass through
Which approach predicts that is an economy operates a full employment and faces trade deficit currency devaluation will improve the trade balance only if domestic spending is cut thus freeing resources to produce exports ?
A. the absorption approaches
B. the monetary approach
C. the Marshall Lerner approach
D. the elasticities approach
The extent to which a change in the exchange rate leads to changes in import and export prices is known as the ?
A. Marshall Lerner effect
B. J Curve effect
C. absorption effect
D. pass through effect
The shift toward imperfectly competitive markets in domestic and international trade the concept of ?
A. exchange arbitrage
B. complete currency pass through
C. official exchange rates
D. trade adjustment assistance
Economic theory predicts that a currency depreciation will least lead to an improvement in the home country’s trade balance when ?
A. home demand for imports is inelastic and foreign export demand is inelastic
B. home demand for imports is inelastic and foreign export demand is elastic
C. home demand for imports is elastic and foreign export demand is inelastic
D. home demand for imports is elastic and foreign export demand is elastic
Suppose that U.S dollar depreciates 70 percent against the yen yet Japanese export prices to Americans did not decrease by the full extent of the dollar depreciation. This is best explained by ?
A. partial currency pass through
B. partial J curve effect
C. complete currency pass through
D. complete J curve effect