17. With respect to a country having a fixed exchange rate, which of the following statements is not correct? A. The fixed exchange rate system imposes strict discipline on the central bank. B. The economy is vulnerable to foreign but not domestic demand disturbances. C. The Taylor Rule schedule is irrelevant. D. Shifts in world interest rates can pose a risk to the sustainability of the fixed exchange rate. 18. The Mundell-Fleming framework studies (A) _____ , (B) _________ economies in a world with (C) _____ financial markets and (D) _____ capital mobility. A. (A) small; (B) open; (C) integrated; (D) free B. (A) large; (B) open; (C) integrated; (D) free C. (A) small; (B) mercantilist; (C) integrated; (D) free D. (A) large; (B) open; (C) restricted; (D) free 19. Which of the following policy options would simultaneously increase interest rates and decrease output? A. The Bank of Zambia sells bonds through open market operations. B. he Government increases its defense purchases. C. The Bank of Zambia expands the money supply. D. The government increases the tax rate. 20. An increase in the money supply and a drop in consumer confidence will lead to A. A decrease in output with an ambiguous effect on the interest rate. B. An increase in output and a decrease in the interest rate. C. An ambiguous effect on output and an increase in the interest rate. D. An ambiguous effect on output and a decrease in the interest rate. 21. Marginal Propensity to Consume is A. Increase in consumption due to one unit increase in income. B. Total consumption divided by total income. C. Both (a) and (b). D. Neither (a) nor (b). 22. Which of the following are not characteristics of Keynesian consumption function? A. The main influence on consumption in the short run is current disposable income B. The marginal propensity to consume is less than one C. The average propensity to consume decreases as income increases D. The average propensity to consume increases as income increases 23. Monetary policy under fixed exchange rate A. is more effective if international capital movement is very sensitive. B. is more effective if international capital movement is not sensitive. C. is never effective. D. None of the above 24. In Keynesian consumption function, the property shows : A. MPC = APC B. MPC < APC C. MPC > APC D. APC = zero

17. With respect to a country having a fixed exchange rate, which of the following statements is not correct? A. The fixed exchange rate system imposes strict discipline on the central bank. B. The economy is vulnerable to foreign but not domestic demand disturbances. C. The Taylor Rule schedule is irrelevant. D. Shifts in world interest rates can pose a risk to the sustainability of the fixed exchange rate. 18. The Mundell-Fleming framework studies (A) _ , (B) ___ economies in a world with (C) _ financial markets and (D) ___ capital mobility. A. (A) small; (B) open; (C) integrated; (D) free B. (A) large; (B) open; (C) integrated; (D) free C. (A) small; (B) mercantilist; (C) integrated; (D) free D. (A) large; (B) open; (C) restricted; (D) free 19. Which of the following policy options would simultaneously increase interest rates and decrease output? A. The Bank of Zambia sells bonds through open market operations. B. he Government increases its defense purchases. C. The Bank of Zambia expands the money supply. D. The government increases the tax rate. 20. An increase in the money supply and a drop in consumer confidence will lead to A. A decrease in output with an ambiguous effect on the interest rate. B. An increase in output and a decrease in the interest rate. C. An ambiguous effect on output and an increase in the interest rate. D. An ambiguous effect on output and a decrease in the interest rate. 21. Marginal Propensity to Consume is A. Increase in consumption due to one unit increase in income. B. Total consumption divided by total income. C. Both (a) and (b). D. Neither (a) nor (b). 22. Which of the following are not characteristics of Keynesian consumption function? A. The main influence on consumption in the short run is current disposable income B. The marginal propensity to consume is less than one C. The average propensity to consume decreases as income increases D. The average propensity to consume increases as income increases 23. Monetary policy under fixed exchange rate A. is more effective if international capital movement is very sensitive. B. is more effective if international capital movement is not sensitive. C. is never effective. D. None of the above 24. In Keynesian consumption function, the property shows : A. MPC = APC B. MPC < APC C. MPC > APC D. APC = zero

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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17. With respect to a country having a fixed exchange rate, which of the following statements is not correct?

A. The fixed exchange rate system imposes strict discipline on the central bank.

B. The economy is vulnerable to foreign but not domestic demand disturbances.

C. The Taylor Rule schedule is irrelevant.

D. Shifts in world interest rates can pose a risk to the sustainability of the fixed exchange rate.

18. The Mundell-Fleming framework studies (A) _____ , (B) _________ economies in a world with (C) _____ financial markets and (D) _____ capital mobility.

A. (A) small; (B) open; (C) integrated; (D) free

B. (A) large; (B) open; (C) integrated; (D) free

C. (A) small; (B) mercantilist; (C) integrated; (D) free

D. (A) large; (B) open; (C) restricted; (D) free

19. Which of the following policy options would simultaneously increase interest rates and decrease output?

A. The Bank of Zambia sells bonds through open market operations.

B. he Government increases its defense purchases.

C. The Bank of Zambia expands the money supply.

D. The government increases the tax rate.

20. An increase in the money supply and a drop in consumer confidence will lead to

A. A decrease in output with an ambiguous effect on the interest rate.

B. An increase in output and a decrease in the interest rate.

C. An ambiguous effect on output and an increase in the interest rate.

D. An ambiguous effect on output and a decrease in the interest rate.

21. Marginal Propensity to Consume is

A. Increase in consumption due to one unit increase in income.

B. Total consumption divided by total income.

C. Both (a) and (b).

D. Neither (a) nor (b).

22. Which of the following are not characteristics of Keynesian consumption function?

A. The main influence on consumption in the short run is current disposable income

B. The marginal propensity to consume is less than one

C. The average propensity to consume decreases as income increases

D. The average propensity to consume increases as income increases

23. Monetary policy under fixed exchange rate

A. is more effective if international capital movement is very sensitive.

B. is more effective if international capital movement is not sensitive.

C. is never effective.

D. None of the above

24. In Keynesian consumption function, the property shows :

A. MPC = APC

B. MPC < APC

C. MPC > APC

D. APC = zero

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