Chap018 - Chapter 18 Global Macro Chapter 18 Global Macro...

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Chapter 18: Global MacroChapter 18: Global MacroMultiple Choice QuestionsINTERNATIONAL TRADE 1.According to the circular flow of economic activity: A)Exports are a leakage. C)Imports and exports are both leakages. B)Imports are a leakage. D)Exports and imports are both injections. Answer: B Type: Basic Understanding Page: 371 2.The relationship between total income and domestic spending in a closed economy would be: Type: Analytical Page: 371 3.Which of the following represents the relationship between income and spending in an open economy? Type: Complex Understanding Page: 372 4.Imports: Type: Basic Understanding Page: 372 5.An increase in the level of imports will cause: A)An increase in leakages from the circular flow of economic activity. B)A decrease in the size of the multiplier. C)A reduction in the impact of fiscal stimulus. D)All of the above. Answer: D Type: Basic Understanding Page: 372 6.The marginal propensity to import is: X ÷IM. Type: Analytical Page: 372 Page 1
Chapter 18: Global Macro7.The fraction of each additional dollar of disposable income spent on imports is called the: Type: Definition Page: 372 8.An increase in the marginal propensity to import will: Type: Basic Understanding Page: 372 9.Which of the following is the correct calculation for the multiplier in a closed economy? A)1 - MPC. B) 1 ÷(1 - MPC). C) 1 ÷(MPS + MPM). D) 1 ÷(MPC + MPM). Answer: B Type: Analytical Page: 373 10.Which of the following is the correct calculation for the multiplier in an open economy? Type: Analytical Page: 373 11.Relative to the closed-economy multiplier, the open-economy multiplier is: Type: Basic Understanding Page: 373

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