Practice Exam 1- Spring 2012

Yen will appreciate by 3 percent against the dollar

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Unformatted text preview: dent rises. C) incomes fall. D) the inflation rate rises. 7. If the real exchange rate between the United States and Japan remains unchanged, and the inflation rate in the United States is 6 percent and the inflation rate in Japan is 3 percent, the: A) B) C) D) dollar will appreciate by 3 percent against the yen. yen will appreciate by 3 percent against the dollar. yen will appreciate by 6 percent against the dollar. yen will appreciate by 9 percent against the dollar. 8. Assume that some large foreign countries decide to subsidize investment by instituting an investment tax credit. Then a small country's real exchange rate: A) will fall and its net exports will rise. B) will rise and its net exports will fall. C) and net exports will both fall. D) and exports will both rise. 9. In a small open economy, starting from a position of balanced trade, if the government increases the income tax, this produces a tendency toward a trade ______ and ______ net capital outflow. A) deficit; negative B) surplus; positive C) deficit; positive D) surplus; negative 10. If the consumption function is given by C = 150 + 0.95Y and Y increases by 1 unit, then C increases by: A) 0.05 unit. B) 0.85 unit. C) 0.95 unit. D) 1 unit. 11. An increase in the trade deficit of a small open economy could be the result of: A) an increase in taxes. B)...
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This document was uploaded on 03/18/2014 for the course ECON 4710 at LSU.

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