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A government budget deficit occurs when:
AGovernment expenditure exceeds government revenues in a financial year
BExports exceed imports
CNational debt is fully paid off
DTax revenues exceed public spending
Primary deficit is calculated as:
ARevenue Deficit minus Capital Expenditure
BFiscal Deficit minus Interest Payments
CBudget Deficit plus Foreign Grants
DTotal Expenditure minus Total Revenue
David Ricardo introduced which fundamental trade theory based on opportunity cost differences?
AHeckscher-Ohlin Model
BProduct Life Cycle Theory
CGravity Model of Trade
DTheory of Comparative Advantage
The Heckscher-Ohlin (H-O) model asserts that a nation will export goods that intensively use its:
AAbundant factors of production
BScarce factors of production
CImported raw materials only
DHigh-cost domestic technology
Devaluation of a currency makes a country’s exports:
AMore expensive for foreigners and imports cheaper
BUnchanged in global markets
CEqual to foreign tariff rates
DCheaper for foreigners and imports more expensive for domestic residents
In the Harrod-Domar growth model, the rate of economic growth depends directly on:
APopulation growth rate
BSavings rate and inversely on capital-output ratio
CForeign trade balance
DGovernment tax rates
The central bank function that acts as a ultimate lender of safety funds to commercial banks facing liquidity stress is:
AFiscal Agent
BClearing House
CLender of Last Resort
DUnderwriter
The LM curve in the IS-LM framework slopes upward because a higher level of income increases:
ASavings, lowering interest rates
BGovernment spending directly
CNet exports
DDemand for money, requiring higher interest rates to restore equilibrium
Which equation represents Irving Fisher’s Quantity Theory of Money?
AY = C + I + G
BS = I
CMV = PT
DMD = L(Y, i)
The GDP Deflator is calculated as:
A(Nominal GDP / Real GDP) × 100
B(Real GDP / Nominal GDP) × 100
C(CPI / Nominal GDP) × 100
D(GDP growth rate / Inflation) × 100