Macroeconomics In The Global Economy

10 Questions | Total Attempts: 1401

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Macroeconomics In The Global Economy

Answer 10 questions. Only one answer is correct. If you want to be under time pressure, use no more than 10 minutes.


Questions and Answers
  • 1. 
    There are several methodologies to measure GDP. If you compare two of them: the product and expenditures methodologies, they should provide you with the same estimate of GDP...
    • A. 

      Only for economies with a balanced current account

    • B. 

      For all economies

    • C. 

      Only when we measure GDP in PPP (purchasing power parity)

    • D. 

      Only when inventories are constant

  • 2. 
    An expected decrease in future income will tend to lead to
    • A. 

      Higher consumption and higher saving

    • B. 

      Lower consumption and lower saving

    • C. 

      Lower consumption and higher saving

    • D. 

      Lower consumption but no effect on saving

  • 3. 
    Assume that investment opportunities at any given interest rate are the same in Japan and in the US. The nominal interest rate in Japan is 0.8%, in the US it is 0%. Inflation in the US is 3% and in Japan inflation is -1.5% (there is deflation in Japan). Based on this information, where would you expect more investment?
    • A. 

      In Japan because nominal interest rate is higher

    • B. 

      In the US because nominal interest rate is lower

    • C. 

      In the US because the real interest rate is lower

    • D. 

      In the US because the real interest rate is higher

  • 4. 
    Suppose that a German citizen crosses the border each day to work in France. Her income from this job would be counted in...
    • A. 

      French GNI and German GNI

    • B. 

      French GNI and German GDP

    • C. 

      French GDP and German GNI

    • D. 

      French GDP and German GDP

  • 5. 
    Money supply in an economy is
    • A. 

      Equal to the number of notes and currency in circulation

    • B. 

      Twice as large as GDP

    • C. 

      Fixed by the government

    • D. 

      The result of central bank policy and response of the private sector

  • 6. 
    Over the past twenty years the US net foreign asset position has deteriorated and from a net creditor to the rest of the world the US has become a net debtor. This implies that over these past twenty years, on average, the US has:
    • A. 

      Been running a capital and financial account deficit

    • B. 

      Been running a capital and financial account surplus

    • C. 

      Kept the interest rate too low

    • D. 

      Been running inadequate monetary policy that led to the depreciation of the dollar

  • 7. 
    When we look at a large sample of countries over the last 5 decades we do not observe convergence in GDP per capita because
    • A. 

      Of differences in inflation rates

    • B. 

      Poor countries do not have enough resources to invest and grow

    • C. 

      The interest rate is always higher in poor countries

    • D. 

      Not all poor countries provide the necessary environment for investment to happen

  • 8. 
    When the currency-to-deposit ratio increases, then if everything else is held constant we will see:
    • A. 

      An increase in money supply

    • B. 

      A decrease in money supply

    • C. 

      No change in money supply

    • D. 

      A sharp acceleration in consumption

  • 9. 
    The supply of loanable funds, or "national saving," is equal to
    • A. 

      income - consumption - government spending

    • B. 

      Income - consumption - government spending - taxes

    • C. 

      Income - consumption

    • D. 

      Income - consumption - taxes

  • 10. 
    A high ratio of consumption to GDP...
    • A. 

      Is a necessary condition for long-term growth, demand needs to grow

    • B. 

      Can be a barrier to growth unless the country can attract capital from other countries

    • C. 

      Is a characteristic of large economies because they are self sufficient

    • D. 

      Is a consequence of high wages

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