International Macroeconomics
Study Guide Questions
Course Introduction
International Macroeconomics explores the dynamics of economies in a global context, focusing on the interactions between national economies through trade, investment, and financial markets. The course examines key topics such as exchange rate determination, balance of payments, international monetary systems, and the impact of macroeconomic policies in open economies. Students analyze the effects of globalization, currency crises, and policy coordination between countries, and learn to apply macroeconomic models to understand real-world international economic issues and policy challenges.
Recommended Textbook
Macroeconomics 4th Australian Edition by Glenn Hubbard
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15 Chapters
2116 Verified Questions
2116 Flashcards
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Page 2
Chapter 1: Economics: Foundations and Models
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160 Verified Questions
160 Flashcards
Source URL: https://quizplus.com/quiz/28152
Sample Questions
Q1) The government makes all economic decisions in a mixed economy.
A)True
B)False
Answer: False
Q2) In a modern mixed economy, who decides what goods and services will be produced?
A)only the producers
B)only consumers
C)only the government
D)All of the above.
Answer: D
Q3) Explain why economics is considered a social science.
Answer: Economics is a social science because it studies the actions of individuals. As a social science, economics considers human behaviour, particularly decision-making behaviour, in every context.
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Page 3
Chapter 2: Choices and Trade Offs in the Market
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192 Verified Questions
192 Flashcards
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Sample Questions
Q1) If Tanisha can audit more tax returns in one hour than Libby, then Tanisha has an absolute advantage in auditing tax returns.
A)True
B)False
Answer: True
Q2) Adam Smith's behavioural assumption about humans was that people:
A)typically act irrationally.
B)usually act in a rational, self-interested way.
C)are consistently greedy.
D)typically act randomly.
Answer: B
Q3) If a nation changes its laws to more actively enforce intellectual property rights, all of the following will most likely take place except:
A)more software companies will choose to export their products to that country.
B)more filmmakers will choose to do business in that country.
C)the black market for intellectual property will become more prosperous in that country.
D)foreign investment in that country will increase.
Answer: C
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Page 4
Chapter 3: Where Prices Come From: the Interaction of
Demand and Supply
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201 Verified Questions
201 Flashcards
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Sample Questions
Q1) An increase in consumer income causes a decrease in the demand for soft drinks (an inferior good here), accompanied by an increase in the supply of soft drinks as a result of falling sweetener prices, will result in:
A)a decrease in the equilibrium quantity of soft drinks and no change in the equilibrium price.
B)a decrease in the equilibrium price of soft drinks and no change in the equilibrium quantity.
C)a decrease in the equilibrium price of soft drinks; the equilibrium quantity may increase or decrease.
D)an increase in the equilibrium quantity of soft drinks; the equilibrium price may increase or decrease.
Answer: C
Q2) The demand curve for a good will shift leftward if there is:
A)a change in the technology used to produce the good.
B)an increase in the price of the good.
C)an increase in the price of a complementary good.
D)a decrease in the price of the good.
Answer: C
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Chapter 4: Gdp: Measuring Total Production, Income and Economic Growth
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123 Verified Questions
123 Flashcards
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Sample Questions
Q1) If the GDP deflator is 142, by how much have prices changed since the base year?
A)Prices have increased by 42%.
B)Prices have increased by 142%.
C)Prices have decreased by 4.2%.
D)Prices have increased by 58%.
Q2) China's current rate of GDP growth is quite rapid. Its growth rate is much higher than that of Australia. However, the levels of pollution are much higher than in Australia. Would you consider China to be better off than Australia given this information? Why or why not?
Q3) The size of the underground economy as a percentage of GDP is larger in Australia than in poorer countries such as Peru.
A)True
B)False
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Page 6
Chapter 5: Economic Growth, the Financial System and Business Cycles
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132 Verified Questions
132 Flashcards
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Sample Questions
Q1) The demand for loanable funds is determined by the willingness of ________ to borrow money to engage in new investment projects.
A)government
B)households
C)banks
D)firms
Q2) Which of the following explains why the rate of unemployment continues to rise once a recession is over?
A)Discouraged workers leave the labour force.
B)Wages rise faster than productivity increases so firms are reluctant to hire workers.
C)Firms are operating below capacity for some time after the recession is finished.
D)The unemployment rate does not continue to rise after a recession is over.
Q3) Which of the following statements about the Australian federal budget is true?
A)In 2010, the federal budget was in deficit by $54 billion.
B)In 1996, the federal budget was in deficit by $5 billion.
C)In 2007, the federal budget was in surplus by $17 billion.
D)All of these options are correct.
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Page 7
Chapter 6: Long-Run Economic Growth: Sources and Policies
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118 Verified Questions
118 Flashcards
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Sample Questions
Q1) Which of the following is not a policy that can increase the accumulation of knowledge capital?
A)subsidised research and development
B)patent laws to encourage innovation
C)free provision of education
D)removing patent laws to allow for the spread of knowledge
Q2) What is the result of a lack of investment in strong education and health care systems?
A)It causes a deterioration in human capital and an increase in physical capital.
B)It causes a decline in physical capital and a decline in labour productivity.
C)It increases human capital and causes a decline in labour productivity.
D)It causes a deterioration in human capital and a decline in labour productivity.
Q3) For how long does a patent give a firm the exclusive legal right to a product in Australia?
A)10 years
B)17 years
C)20 years
D)50 years
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Chapter 7: Unemployment
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120 Verified Questions
120 Flashcards
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Sample Questions
Q1) The rate of unemployment in Australia is higher among 15-19-year-olds than 40-44 year-olds.
A)True
B)False
Q2) When would 'structural unemployment' increase?
A)When the economy enters a recession.
B)When the number of individuals who quit their job to find another increases.
C)When discouraged workers drop out of the work force.
D)When workers are replaced by machines and the workers do not have the skills to perform new jobs.
Q3) The 'labour force' is the:
A)number of people employed minus the number of people unemployed.
B)number of people employed plus the number of people unemployed.
C)ratio of the number of people employed to the number of people unemployed.
D)ratio of the number of people employed to the working-age population.
Q4) Who might be disadvantaged by deregulation of the labour market?
9
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Chapter 8: Inflation
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110 Verified Questions
110 Flashcards
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Sample Questions
Q1) Explain how lowering inflation acts like a tax cut for investors and illustrate this using an example.
Q2) If the CPI falls from 142 to 140 between two consecutive years, this implies that prices fell by 2% between those two years.
A)True
B)False
Q3) People who have borrowed money from banks at a fixed rate of interest will most likely:
A)experience losses if the inflation rate is higher than anticipated.
B)benefit if the inflation rate is lower than anticipated.
C)experience a rise in their real interest rate.
D)benefit if the inflation rate is higher than anticipated.
Q4) There are no costs to inflation if it is fully anticipated.
A)True
B)False
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Chapter 9: Aggregate Expenditure and Output in the Short Run
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138 Verified Questions
138 Flashcards
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Sample Questions
Q1) A stock market crash which causes share prices to fall should cause:
A)a decrease in consumption spending.
B)an increase in consumption spending.
C)an increase in wealth.
D)no change in consumption spending.
Q2) Throughout most of the 2000s, including 2016, net exports in Australia:
A)grew and then declined.
B)were mostly positive.
C)were mostly negative.
D)increased, as exports rose above imports.
Q3) The key idea of the aggregate expenditure model is that in any particular year, the level of GDP is determined mainly by:
A)investment spending.
B)export spending.
C)government spending.
D)the level of aggregate expenditure.
Q4) An increase in the price level in Australia, ceteris paribus, will reduce imports and increase exports.
A)True
B)False
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Chapter 10: Aggregate Demand and Aggregate Supply Analysis
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134 Verified Questions
134 Flashcards
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Sample Questions
Q1) 'Stickiness' of wages and prices is considered unimportant in which of the following economic models?
A)Keynesian supply and demand model
B)Monetarist model
C)New classical model
D)Real business cycle model
Q2) What do the 'aggregate demand' and 'aggregate supply' models help explain?
A)long-run economic growth
B)short-run fluctuations in real GDP and the price level
C)price fluctuations in an individual market
D)output fluctuations in an individual market
Q3) What does the term 'Keynesian revolution' refer to?
Q4) An adverse supply shock causes the short-run aggregate supply curve to shift left, increasing the price level.
A)True
B)False
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Chapter 11: Money, Banks and the Reserve Bank of Australia
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123 Verified Questions
123 Flashcards
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Sample Questions
Q1) What are the implications of the 'quantity theory of money' for monetary policy and price stability?
Q2) If the Reserve Bank of Australia wants to increase interest rates, it will:
A)buy financial securities.
B)sell financial securities.
C)increase the exchange rate.
D)decrease the exchange rate.
Q3) A cash withdrawal from the banking system:
A)lowers demand deposits to zero.
B)decreases demand deposits.
C)increases the money supply.
D)increases excess reserves.
Q4) A person's 'wealth' is the same as her or his income.
A)True
B)False
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Chapter 12: Monetary Policy
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116 Verified Questions
116 Flashcards
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Sample Questions
Q1) If the Reserve Bank of Australia buys bonds and securities in the open market, this is likely to lead to a ______ in interest rates and a(n)_______ of the Australian dollar.
A)rise; appreciation
B)rise; depreciation
C)fall; appreciation
D)fall; depreciation
Q2) Open market operations occur when the Reserve Bank of Australia:
A)purchases or sells corporate shares in the market to control interest rates.
B)controls the money supply.
C)makes loans to foreign banks.
D)purchases or sells short-dated financial instruments.
Q3) A rise in domestic interest rates relative to interest rates in other countries may lead to an exchange rate:
A)depreciation and an increase in net exports.
B)depreciation and a decrease in net exports.
C)appreciation and an increase in net exports.
D)appreciation and a decrease in net exports.
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14
Chapter 13: Fiscal Policy
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163 Verified Questions
163 Flashcards
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Sample Questions
Q1) The federal government debt ________ when the federal government runs a deficit and ________ when the federal government runs a surplus.
A)increases; increases
B)decreases; increases
C)increases; decreases
D)decreases; decreases
Q2) If the economy were in a recession, we would expect government expenditure to be:
A)high and tax revenues to be high, probably leading to a budget deficit.
B)high and tax revenues to be low, probably leading to a budget deficit.
C)low and tax revenues to be low, probably leading to a budget surplus.
D)high and tax revenues to be low, probably leading to a budget surplus.
Q3) If the equilibrium real GDP were higher than potential GDP, then a contractionary fiscal policy would cause the inflation rate to be ________ and real GDP to be
A)higher; higher
B)higher; lower
C)lower; higher
D)lower; lower
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Chapter 14: Macroeconomics in an Open Economy
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141 Verified Questions
141 Flashcards
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Sample Questions
Q1) Outline the three main components of the current account.
Q2) Consider the market for dollars against the British pound shown in Figure 14.1. From this graph, we can conclude that the dollar price of a British pound has ________ to ________ dollars per pound.
A)decreased; 0.46
B)increased; 2.17
C)decreased; 2.00
D)increased; 0.50
Q3) In an open economy, contractionary monetary policy will have a secondary effect on GDP because:
A)net exports will fall due to the lower foreign exchange value of the dollar.
B)net exports will rise due to the lower foreign exchange value of the dollar.
C)net exports will fall due to the higher foreign exchange value of the dollar.
D)net exports will rise due to the higher foreign exchange value of the dollar.
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16
Chapter 15: The International Financial System
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145 Verified Questions
145 Flashcards
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Sample Questions
Q1) A 'speculative attack' is the result of investors' expectations that the future value of a currency will decline.
A)True
B)False
Q2) Your friend states that (i)a strong dollar (appreciation of the dollar)is a sign of a healthy economy and that (ii)a weak dollar (depreciation of the dollar)is a sign of a weak economy. Assuming that other factors that could affect the exchange rate do not change, explain that the opposite is true when the following are considered: a.the effect of rapidly falling incomes in Australia during a recession b.the effect of rapidly rising incomes in Australia during an economic expansion
Q3) International flows of capital can increase both efficiency and economic growth in countries around the world.
A)True
B)False
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