6 Multiple Choices Questions In Economics

only Need the correct answers for the questions 20-26

20.If a nation is experiencing an inflow of capital and a balance of trade deficit, this is a problem if

a.	the capital inflow is channeled into productive projects.
b.	the capital inflow is channeled into unproductive projects.
c.	the country’s rate of unemployment is low.
d.	the investment rate of the country is already high.

21.If the United States ran large budget deficits that push the federal debt to dangerously high levels, which of the following would be most likely to occur?

a.	An increase in investor confidence, an inflow of capital, and expansion in the size of the trade deficit.
b.	Loss of investor confidence, a decline in the net inflow of capital, and shrinkage in the trade deficit.
c.	An increase in the attractiveness of investments in the United States, an increase in the inflow of capital, and a smaller trade deficit.
d.	An increase in the long-term growth rate of the U.S. economy.

22.An inflow of capital and a trade deficit are more dangerous when

a.	the inflow of capital is channeled into private investment.
b.	the inflow of capital is used to finance current consumption and/or channeled into unproductive projects.
c.	the unemployment rate of the country is low, because this will mean the capital inflow will be inflationary.
d.	the investment rate is already high and the unemployment rate low.

Use the figure below to answer the following question(s).

Figure 18-1

23.Figure 18-1 illustrates supply and demand for U.S. dollars and British pounds in the foreign exchange market. If the dollar price of pounds is $1.20, which of the following is true?

a.	There is an excess supply of pounds, and the dollar price of pounds will rise.
b.	There is an excess demand for pounds, and the dollar price of pounds will rise.
c.	There is an excess supply of pounds, and the dollar price of pounds will fall.
d.	There is an excess demand for pounds, and the dollar price of pounds will fall.

24.Figure 18-1 illustrates supply and demand for U.S. dollars and British pounds in the foreign exchange market. If the dollar price of pounds is $1.80, which of the following is true?

a.	There is an excess supply of pounds, and the dollar price of pounds will rise.
b.	There is an excess demand for pounds, and the dollar price of pounds will rise.
c.	There is an excess supply of pounds, and the dollar price of pounds will fall.
d.	There is an excess demand for pounds, and the dollar price of pounds will fall.

Use the figure below to answer the following question(s).

Figure 18-2

25.In Figure 18-2, which of the following would cause the American demand for foreign exchange (pounds) to shift from D1to D2?

a.	an increase in the U.S. real interest rate
b.	higher inflation in Britain than in the United States
c.	higher income growth in Britain than in the United States
d.	an increased level of vacation travel to Britain by Americans

26.Figure 18-2 illustrates supply and demand for U.S. dollars and British pounds in the foreign exchange market. Which of the following would cause the demand for foreign exchange (pounds) to shift from D1 to D2?

a.	an increase in the real interest rate in Britain relative to the United States
b.	higher inflation in Britain than in the United States
c.	higher income growth in Britain than in the United States
d.	an increase in the number of British citizens vacationing in the United States

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