International Economics

ক. It will produce a net inflow of short-term capital
খ. It will cause inflation to fall thereby improving the country's competitiveness
গ. It will depress economic activity leading to a fall in imports
ঘ. It will harm the economy's growth prospects leading to a decrease in inward investment

উত্তরঃ It will harm the economy's growth prospects leading to a decrease in inward investment

বিস্তারিত

A country decides to allow its foreign exchange rate to float freely. Which item in the country's balance of payments accounts will become zero?

ক. the current account balance
খ. the visible trade balance
গ. changes in official reserve of foreign currency
ঘ. net investment overseas by domistic residents

উত্তরঃ changes in official reserve of foreign currency

বিস্তারিত

What might explain an increase in the volume of a country's imports?

ক. a recession in the country
খ. a rise in the country's rate of income tax
গ. an appreciation of the country's exchange rate
ঘ. an increase in the country's tariffs

উত্তরঃ an appreciation of the country's exchange rate

বিস্তারিত

Why might a 10% devaluation of a country's currency fail to improve its balance of trade deficit?

ক. Other countries devalue their currencies by 15%
খ. Other countries revalue their currencies by 15%
গ. The demand for the country's imports is elastic
ঘ. The supply for the country's exports is elastic

উত্তরঃ Other countries devalue their currencies by 15%

বিস্তারিত

The 'terms of trade' of a country refers to--

ক. the rate at which domestic currency can be sold in foreign exchange markets
খ. the difference between the value of exports and the value of imports
গ. the system of tariff rates levied by the government of the country
ঘ. the relationship between average import prices and average export prices

উত্তরঃ the relationship between average import prices and average export prices

বিস্তারিত

Which of the following statements is correct for an open economy that has a fixed exchange rate?

ক. The domestic money supply is affected by the balance of payments
খ. Its inflation rate is unaffected by inflation rates in the rest of the world
গ. Interest rates are determined solely by the domestic demand for and supply of credit
ঘ. A current account deficit is always matched by net inflows of private capital

উত্তরঃ The domestic money supply is affected by the balance of payments

বিস্তারিত

Why would a government indroduce tariffs and quotas?

ক. to increase the level of international competition
খ. to increase the demand for home-produced goods
গ. to reduce the price of home-produced goods
ঘ. to reduce the price of imports

উত্তরঃ to increase the level of international competition

বিস্তারিত

How might a country improve its terms of trade?

ক. by improving the productivity of its exports industries
খ. by imposing quotas on importerd goods
গ. by allowing its currency to depreciate
ঘ. by imposing tariffs on imported goods

উত্তরঃ by imposing tariffs on imported goods

বিস্তারিত

In which of the following situation will a country's terms of trade worsen?

ক. The prices of its imports rise by more than the prices of its exports
খ. The total value of external payments rise by more than the total value of external receipts
গ. The value of its imports rises by more than the value of its exports
ঘ. The volume of its imports rises by more than the volume of its exports

উত্তরঃ The prices of its imports rise by more than the prices of its exports

বিস্তারিত

Which of the following would not be a reason for a government to impose a quota on imports?

ক. to retaliate against other countries
খ. to support a strategic industry
গ. to prevent dumping
ঘ. to raise tax revenue

উত্তরঃ to raise tax revenue

বিস্তারিত

What would result from a devaluation of a country's exchange rate?

ক. a increase in the foreign currency price of imports
খ. a reduction in the domestic currency price of imports
গ. a reduction in the domestic currency price of exports
ঘ. a reduction in the foreign currency price of exports

উত্তরঃ a reduction in the foreign currency price of exports

বিস্তারিত

How is a free trade area different from a customs union?

ক. A customs union requires a common currency
খ. A customs union requires fixed exchange rates between member countries
গ. A free trade area allows members to impose different tariffs against non-member countries
ঘ. A free trade area eliminates tariffs between member countries

উত্তরঃ A free trade area allows members to impose different tariffs against non-member countries

বিস্তারিত

What will happen if a country allows its exchange rate to float freely?

ক. Foreign exchange reserves will no longer be needed
খ. Inflation will follow the trend of inflation in the country's trading partners
গ. The current account of the balance of payments will alwayes balanced
ঘ. The monetary authorities will lose their ability to control the money supply

উত্তরঃ Foreign exchange reserves will no longer be needed

বিস্তারিত

What is the main objective of the devaluation of currency?