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The Terms of Trade (TOT) of a country measure the ratio of:
ATotal Foreign Debt to GDP
BGross Exports to Gross Imports
CNominal Exchange Rate to Real Exchange Rate
DExport Prices to Import Prices (Px / Pm) × 100
The Singer-Prebisch thesis argues that developing nations face long-term secular deterioration in their:
ADomestic tax revenue collection rates
BInflation rates relative to developed countries
CTerms of Trade when exporting primary commodities to developed nations
DIndustrial labor productivity
The Foreign Trade Multiplier measures the change in national income resulting from a unit change in:
ADomestic Interest Rates
BForeign Exchange Reserves
CTariff Rates
DAutonomous Exports
Ragnar Nurkse’s concept of the ‘Vicious Circle of Poverty’ highlights that poor countries remain poor primarily because:
AForeign trade is illegal
BLow income leads to low savings, low investment, and low capital accumulation, resulting back in low income
CGovernment tax rates are zero
DPopulation growth is zero
High-powered money (Monetary Base or M0) issued by the central bank consists of:
ABroad money (M3) minus gold reserves
BGovernment bonds and Treasury bills only
CCommercial bank demand deposits
DCurrency in circulation plus bank reserves held at the central bank
An inflationary gap occurs in the short run when actual aggregate output is:
AGreater than potential output (full-employment output)
BLess than potential output
CEqual to potential output
DFalling faster than consumer prices
Which economic concept measures the velocity of money circulation (V)?
AThe percentage of cash held in central bank reserves
BThe growth rate of national savings
CThe average number of times a unit of currency is spent on final goods per year
DThe foreign exchange rate turnover
Which curve shows all combinations of the interest rate and national income at which the balance of payments is in equilibrium?
AIS Curve
BBP (Balance of Payments) Curve
CLM Curve
DYield Curve
Under flexible exchange rates and perfect capital mobility, which policy instrument is completely ineffective according to Mundell-Fleming?
AMonetary Policy
BCommercial Policy
CTariff Policy
DFiscal Policy
Automatic stabilizers in fiscal policy include which of the following without requiring new legislation?
AAd-hoc discretionary infrastructure projects
BProgressive income taxes and unemployment compensation benefits
CCentral bank open market operations
DForeign exchange intervention