Economic transition involves high inflation because _____ and ______?

Related Mcqs:

1. The equilibrium inflation rate is determined by the intersection of _____ and _____?

   A. demand, supply
   B. IS, LM
   C. AD, AS
   D. Labor demand, labor supply

2. The period of high inflation and low economic growth is termed as ?

   A. Stagnation
   B. Take-off stage in economy
   C. Stagflation
   D. None of these

3. If the economy is in the though phase of the business cycle, aggregate demand ____ unemployment ______ inflation ______ and the current account of the balance of payments is likely to move towards ________?

   A. falls; falls; falls; surplus
   B. falls; rises; falls; surplus
   C. is static; low; rises; deficit
   D. rises; falls; rises; deficit

4. Refer to Exhibit 6.If People in the economy expect inflation to be 6 percent but inflation turn out to be 3 percent the economy is operating at point ?

   A. H
   B. c
   C. d
   D. F

5. If workers and firms agree on an increase in wages based on their expectations of inflation and inflation turns out to be more than they expected ?

   A. none of these answers
   B. Workers will gain at the expense of firms
   C. neither workers nor firms will gain because the increase in wages in fixed in the labor agreement
   D. firms will gain at the expense of workers.

6. If the Bank of England reduces the money supply to reduce inflation a floating exchange rate will aid the Bank of England in fighting inflation because ?

   A. as the money supply is decreased the interest rate will increase and the price of UK exports will rise and the Price of UK imports will fall
   B. as the money supply is decreased the interest rate will increase, and the price of UK exports will fall and the price of UK imports will rise
   C. as the money supply is decreased the interest rate will increase and the price of UK exports and UK imports will fall.
   D. as the money supply is decreased the interest rate will increase and the price of both UK exports and UK imports will rise

7. Under adjustable pegged exchange rates, if the rate of inflation in the United States exceeds the rate of inflation of its trading partners ?

   A. U.S exports tend to rise, and imports tend to fall
   B. U.S imports tend to rise, and exports tend to fall
   C. U.S foreign exchange reserves tend to rise
   D. U.S foreign exchange reserves remain constant

8. Under managed floating exchange rates if the rate of inflation in the United States is less than the rate of inflation of its trading partners the dollar will likely ?

   A. appreciates against foreign currencies
   B. depreciates against foreign currencies
   C. be officially revalued by the government
   D. be officially devalued by the government

9. For the United States suppose the annual interest rate on government securities equals 8 percent while the annual inflation rate equals 4 percent, For Switzerland the annual interest rate on government securities equal 10 percent while the annual inflation rate equals 7 percent the above variables would cause investment funds to flow from ?

   A. the United States to Switzerland causing the dollar to depreciate
   B. the United States to Switzerland causing the dollar to appreciate
   C. Switzerland to the United States causing the franc to depreciate
   D. Switzerland to the United States causing the franc to appreciate

10. For the United States suppose the annual interest rate on government securities equals 12 percent while the annual inflation rate equals 8 percent For Japan the annual interest rate on government securities equals 10 percent while the annual inflation rate equals 5 percent the above variables would cause investment funds to flow from ?

    A. The United States to Japan causing the dollar to depreciate
    B. The United States to Japan causing the dollar to appreciate
    C. The Japan to United States, causing the dollar to depreciate
    D. The Japan to United States, causing the dollar to appreciate