Question 51 If consumption spending increases because people feel more confident

Question

Question 51

If consumption spending increases because people feel more confident about the future,

Select one:

a. aggregate demand will shift to the right.

b. aggregate demand will shift to the left.

c. aggregate supply will shift to the left.

d. aggregate supply will shift to the right.

Question 52

The single most important reason for Canada's seeking a free trade agreement with the United States was to

Select one:

a. ensure its ability to join NAFTA.

b. ensure its access to the U.S. market.

c. harmonize its environmental laws with the United States.

d. ensure the continuation of its social programs.

e. avoid international outsourcing in low wage countries.

Question 53

A flexible exchange rate system crisis involves

Select one:

a. a decrease in the dollar value of the country's international debt.

b. a sure political collapse of the ruling government.

c. a revaluation of the currency.

d. a rapid and uncontrolled depreciation of the currency.

Question 54

One drawback to a single currency is that

Select one:

a. bond markets are larger and therefore harder to control.

b. exporters and importers have fewer choices about how they will receive and make payments.

c. the exchange rate is more volatile.

d. individual nations cannot use monetary policy to stabilize the economy.

e. foreign currency is more expensive.

Question 55

All of the following would be potential problems if developing nations around the world emphasized export promotion except

Select one:

a. industrial nations may be unable to absorb the exports of many newly industrializing nations.

b. current research has clearly established that there is no causal connection between exports and faster economic growth.

c. export promotion by many countries may lead to economic conflicts.

d. export growth may not add to GDP if it crowds out growth in output of goods for domestic consumption.

e. it would be much harder to emphasize exports under the WTO framework if the emphasis in exports requires some kind of subsidies.

Explanation / Answer

.Ans51) A is the correct option. aggregate demand will shift to the right. If people will think their future is secured and consumer spending increases then aggregate demand will shift to the right because consumption is the component of aggregate demand.

Ans52) B is the correct option. ensure its access to the U.S. market.

Ans53) D is the correct option. A rapid and uncontrolled depreciation of the currency.

Ans54) D is the correct option. individual nations cannot use monetary policy to stabilize the economy.

Ans55) B is the correct option. current research has clearly established that there is no causal connection between exports and faster economic growth.

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