Question # 1

In the absence of international capital controls, central banks set ______ to provide the correct incentive for speculators

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Money supply targets

Income policy

Interest rates

Inflation targets

import substitution is the replacement of ________ by domestic production under the protection of.

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exports, subsidies

Exports, patents

imports, high tariffs or import quotes

Imports, subsidies

All of the following are benefits of the single market except.

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It allows countries to exploit their comparative advantage, more fully

Firms could more readily exploit economies of scale

It intensified competition

It is easier book holidays in member countries.

Short run equilibrium output means that aggregate demand _ actual output

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is less than

equals

is greater than

fluctuates around

The main cause of different relative costs between countries are.

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Relative factors competition

Relative factor mobility

Relative factor substitution

Relative factor endowments

An advocate of the classical model of the economy would claim that unemployment a created when the ___________ is above its equilibrium level in the.

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Price level, agregate economy

Tax rate, government ebudget

Wage rate, labour market

Interest rate, market for loanable funds

In the UK mergers can be referred to the competition commission of they create a firm with _______ of the market.

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15%

20%

25%

30%

Nominal GNP measures income

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At the present time

Corrected for tax changes

Corrected for changes in interest rates

At current prices

The long run Philips curve is _________ at the ______

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Horizontal natural rate of inflation

Horizontal , natural rate of unemployment

Vertical , natural rte of inflation

Vertical , equilibrium rate of unemployment.

The opportunity cost of acquiring education is.

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Course fees

Course fees and living expenses

The earning foregone

Course fees, living expenses and textbooks

The opportunity cost of a student is.

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Course fees and rent

A loan from the bank

What the student could have earned in the best job available by not studying.

What the student will earn after graduation.

The effect of a tax to offset a negative eternality will be to ________ price and ____ quantity.

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Reduce, reduce

increase, increase

Increase , reduce

reduce, increase

In the ERM, each country fixed ___ against each other ERM participant collectively the group._____ against the rest of the world.

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A nominal exchange rate, floated

A real exchange rate, pegged

a purchasing power parity, pegged

a real exchange rate, floated

In a fixed exchange rate regime, the central bank will intervene by __ pounds to ______ the exchange rate.

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Selling, increase

buying , increase

selling, reduce

both b and c

The business cycle describes fluctuations in output around the.

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Trend path of output

Boom

Recession

Short run fluctuations in output

The quantity theory of money says that changes in ______ lead to equivalent changes in ______ but have no effect on.

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Prices, wages, output and employment.

Output, prices, employment

Nominal money, the price level output and employment.

Nominal money output prices

In the EMU a country's competitiveness can change because of.

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Interest rate adjustment

Central bank intervention i the forex

Domestic wage and price adjustment

Devaluations

In a free market

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Government intervene

Government plan production

Government interfere

Price adjust to reconcile scarcity and desires.

The single European Act committed_ governments to a ___ in 1992

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European union, single market

Western European, single currency area

European union, single currency area

Western European, single market

Human capital can be described as.

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The tools used by workers to entrances productivity

a persons inherited abilities.

The stock of expertise accumulated by a worker

Education

Moral Hazard means that the act of insuring __________ that the desired outcome will occur.

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Reduces the likelihood

Increase the likelihood

Guarantees

None of the above

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