Question 1

If income in Australia rises while income in the UK remains unchanged,it is likely that:

Accepted Answer

A) Australia will increase its demand for UK imports, causing a decrease in the equilibrium exchange rate. 
B) the UK will increase its demand for Australian imports, causing the Australian dollar to depreciate. 
C) the demand for UK pounds will rise, causing the Australian dollar to appreciate. 
D) the demand for Australian dollars will rise, causing the Australian dollar to appreciate. 
A) Australia will increase its demand for UK imports, causing a decrease in the equilibrium exchange rate. 
B) the UK will increase its demand for Australian imports, causing the Australian dollar to depreciate. 
C) the demand for UK pounds will rise, causing the Australian dollar to appreciate. 
D) the demand for Australian dollars will rise, causing the Australian dollar to appreciate.

Question 2

Which of the following transactions would be recorded as a credit in the Australian current account?

Accepted Answer

A) A Japanese bank's purchase of Coles Myer stock. 
B) A Japanese consumer's purchase of an Australian piece of beef. 
C) An Australian tourist's payment to a Japanese hotel. 
D) An Australian consumer's purchase of a Toshiba VCR. 
A) A Japanese bank's purchase of Coles Myer stock. 
B) A Japanese consumer's purchase of an Australian piece of beef. 
C) An Australian tourist's payment to a Japanese hotel. 
D) An Australian consumer's purchase of a Toshiba VCR.

Question 3

Assume that the opportunity cost of producing wheat is lower in Australia compared with Malaysia.Further assume that the opportunity cost of producing cars is higher in Australia compared with Malaysia.Which country should specialise in producing cars?

Accepted Answer

A) Australia and Malaysia. 
B) Australia. 
C) Malaysia. 
D) Both countries have to specialise in producing wheat. 
A) Australia and Malaysia. 
B) Australia. 
C) Malaysia. 
D) Both countries have to specialise in producing wheat.

Question 4

An increase in inflation in the United States relative to the rate in France would make:

Accepted Answer

A) US goods relatively less expensive in the United States and in France. 
B) French goods relatively less expensive in the United States and US goods relatively more expensive in France. 
C) French goods relatively more expensive in the United States and in France. 
D) French goods relatively more expensive in the United States and US goods relatively less expensive in France. 
A) US goods relatively less expensive in the United States and in France. 
B) French goods relatively less expensive in the United States and US goods relatively more expensive in France. 
C) French goods relatively more expensive in the United States and in France. 
D) French goods relatively more expensive in the United States and US goods relatively less expensive in France.

Question 5

If Australia has a capital account surplus,this indicates:

Accepted Answer

A) Australians made more investments overseas than foreign interests made in Australia. 
B) Australia has exported more goods and services than it imported. 
C) Australia has imported more goods and services than it exported. 
D) foreign interests made more investments in Australia than Australians made overseas. 
A) Australians made more investments overseas than foreign interests made in Australia. 
B) Australia has exported more goods and services than it imported. 
C) Australia has imported more goods and services than it exported. 
D) foreign interests made more investments in Australia than Australians made overseas.

Question 6

Assume that the opportunity cost of producing wheat is lower in Australia compared with Malaysia.Further assume that the opportunity cost of producing cars is higher in Australia compared with Malaysia.Which country has a comparative advantage in producing wheat?

Accepted Answer

A) Australia and Malaysia. 
B) Australia. 
C) Malaysia. 
D) Both countries have to specialise in producing cars. 
A) Australia and Malaysia. 
B) Australia. 
C) Malaysia. 
D) Both countries have to specialise in producing cars.

Question 7

Free trade often has its critics because the benefits are spread over most of the population and go largely unnoticed.

Accepted Answer

A) True 
 B)False

Question 8

Suppose a German bank purchases an Australian Treasury bond.This transaction would be recorded in the:

Accepted Answer

A) capital account. 
B) current account. 
C) goods trade balance. 
D) unilateral transfers. 
A) capital account. 
B) current account. 
C) goods trade balance. 
D) unilateral transfers.

Question 9

Suppose a perfume sells for NZ$100 in Christchurch and the exchange rate is NZ$1.2 per Australian dollar.The perfume costs:

Accepted Answer

A) NZ$120. 
B) A$120. 
C) A$100. 
D) A$83. 
A) NZ$120. 
B) A$120. 
C) A$100. 
D) A$83.

Question 10

If country A lowers its tariffs even if country B doesn't,then:

Accepted Answer

A) only country A will be at a disadvantage. 
B) both countries will be worse off. 
C) both countries will be better off. 
D) country A will be better off than if it kept tariffs high. 
E) country B is better off if it keeps tariffs high. 
A) only country A will be at a disadvantage. 
B) both countries will be worse off. 
C) both countries will be better off. 
D) country A will be better off than if it kept tariffs high. 
E) country B is better off if it keeps tariffs high.

Question 11

A current account deficit is a problem if it is only used to fund new investment,not consumption.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following would be included in Australia's capital account?

Accepted Answer

A) The sale of wheat to Britain. 
B) The purchase of cars from Japan. 
C) Interest repayments on a loan from a US bank. 
D) Investors from Papua New Guinea buy a cattle station in Queensland, Australia. 
A) The sale of wheat to Britain. 
B) The purchase of cars from Japan. 
C) Interest repayments on a loan from a US bank. 
D) Investors from Papua New Guinea buy a cattle station in Queensland, Australia.

Question 13

Shifts in supply and demand for foreign exchange result from changes in relative price levels.

Accepted Answer

A) True 
 B)False

If income in Australia rises while income in the UK remains unchanged,it is likely that:

Which of the following transactions would be recorded as a credit in the Australian current account?

Assume that the opportunity cost of producing wheat is lower in Australia compared with Malaysia.Further assume that the opportunity cost of producing cars is higher in Australia compared with Malaysia.Which country should specialise in producing cars?

An increase in inflation in the United States relative to the rate in France would make:

If Australia has a capital account surplus,this indicates:

Assume that the opportunity cost of producing wheat is lower in Australia compared with Malaysia.Further assume that the opportunity cost of producing cars is higher in Australia compared with Malaysia.Which country has a comparative advantage in producing wheat?

Free trade often has its critics because the benefits are spread over most of the population and go largely unnoticed.

Suppose a German bank purchases an Australian Treasury bond.This transaction would be recorded in the:

Suppose a perfume sells for NZ$100 in Christchurch and the exchange rate is NZ$1.2 per Australian dollar.The perfume costs:

If country A lowers its tariffs even if country B doesn't,then:

A current account deficit is a problem if it is only used to fund new investment,not consumption.

Which of the following would be included in Australia's capital account?

Shifts in supply and demand for foreign exchange result from changes in relative price levels.

Thinking like an economist

Production possibilities and opportunity cost

Market demand and supply

Markets in action

Elasticity of demand and supply

Production costs

Perfect competition

Monopoly

Monopolistic competition and oligopoly

Policy issues: resource taxes and climate change

Measuring the size of the economy

Business cycles and economic growth

Inflation and unemployment

A simple model of the macro economy

The monetary and financial system

Macroeconomic policy I: monetary policy

Macroeconomic policy II: fiscal policy

Applying graphs to economics

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Exam 18: International trade and finance

If income in Australia rises while income in the UK remains unchanged,it is likely that:

Which of the following transactions would be recorded as a credit in the Australian current account?

Assume that the opportunity cost of producing wheat is lower in Australia compared with Malaysia.Further assume that the opportunity cost of producing cars is higher in Australia compared with Malaysia.Which country should specialise in producing cars?

An increase in inflation in the United States relative to the rate in France would make:

If Australia has a capital account surplus,this indicates:

Assume that the opportunity cost of producing wheat is lower in Australia compared with Malaysia.Further assume that the opportunity cost of producing cars is higher in Australia compared with Malaysia.Which country has a comparative advantage in producing wheat?

Free trade often has its critics because the benefits are spread over most of the population and go largely unnoticed.

Suppose a German bank purchases an Australian Treasury bond.This transaction would be recorded in the:

Suppose a perfume sells for NZ$100 in Christchurch and the exchange rate is NZ$1.2 per Australian dollar.The perfume costs:

If country A lowers its tariffs even if country B doesn't,then:

A current account deficit is a problem if it is only used to fund new investment,not consumption.

Which of the following would be included in Australia's capital account?

Shifts in supply and demand for foreign exchange result from changes in relative price levels.

Thinking like an economist

Production possibilities and opportunity cost

Market demand and supply

Markets in action

Elasticity of demand and supply

Production costs

Perfect competition

Monopoly

Monopolistic competition and oligopoly

Policy issues: resource taxes and climate change

Measuring the size of the economy

Business cycles and economic growth

Inflation and unemployment

A simple model of the macro economy

The monetary and financial system

Macroeconomic policy I: monetary policy

Macroeconomic policy II: fiscal policy

Applying graphs to economics

Filters