PPSC Economics Topic 5 International Economics With Answers

PPSC Economics Topic 5 International Economics

Sr. # Questions Answers Choice
1 _____________ represent the most widely used tool in international finance for measuring the average value of a currency relative to a number of other currencies Nominal exchange rates Real exchange rates Cross exchange rates Exchange rate indexes
2 Riskless transactions to take advantage of profit opportunities due to a price differential or a yield differtial in excess of transaction costs are called. Differential actions Cash transactions Arbitrage Forward transactions
3 The difference between bid rates and ask rates is called the Profit Arbitrage Spread Forward transaction
4 The least common type of transaction in the foreign exchanges is a. Forward transaction Spot transaction Swap transaction None of the above
5 An important feature of a___ is that the holder has the right , but not the obligation, to buy or sell currency Swap Foreign exchange arbitrage Foreign exchange option Futures market contract
6 The reduction or covering of foreign exchange risk is called. Hedging Speculation Intervention Arbitrage
7 The exchange rate is kept the same across geographically separate markets by Hedging Speculation Government regulation Arbitrage
8 Which financial instruments provide a buyer the right to purchase or sell a fixed amount of currency at a prearranged price within a few days to a coupled of years. Letter of credit Foreign currency option Cable transfer Bill of exchange
9 A depreciation of the dollar willhave its most pronounced impact on imports if the demand for imports is. Constant Inelastic Elastic Unitary elastic
10 The supply of foreign currency tends to be Upward sloping Down ward sloping Vertical Any of the above
11 The most widely traded currency in the foreign exchange market is the. Euro Chinses yuan British pound U.S. Dollar
12 Direct investment and security purchases are classified as. Capital account transactions Current account transactions Unilateral transfer transactions Merchandise trade transactions
13 The "balance of trade" is a record of. Exports and imports of financial assets The current account plus capital account The net export of goods and services The value of merchandise exports minus imports
14 In balance of payments accounting tourism and travel are classified in the Merchandise trade account Services account Unilateral transfers account Capital account
15 A current account surplus implies that The country is a net lender to the rest of the world The country is running a net capital account surplus Foreign investment in domestic securities is at very low levels All of the above
16 In the calculation of gross domestic product net exports are. The sum of merchandise trade and services The current account plus long term capital The value of merchandise exports minus imports Short term capital plus the basic balance
17 A nation with a current account deficit will be Lending more money to other nations Experiencing a surplus in exports of goods and services Reducing its indebtedness to other nations Going further into debt with other nations
18 A nation wishing to reduce its current account deficit would be advised to. Engage in more government spending. Reduce government taxes Increase private investment spending Decrease domestic consumption spending
19 The difference between a country's balances of payments and its balance of international indebtedness. Is equal of official reserve transactions Occurs because of foreign exchange fluctuations Reflects statistical discrepancies Reflects the difference between flow and stock concepts
20 Current account deficits are offset by Merchandise trade deficits Merchandise trade surpluses Capital /financial account surpluses Capital /financial account deficits
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