Category: Economics

A country with a balance of trade deficit raises interest rates.

How may this help to reduce the deficit in the short run?

Select ONE answer:

1. by increasing the inflow of foreign direct investment
2. by lowering the foreign exchange rate
3. by raising the level of domestic capital investment
4. by reducing the level of domestic aggregate demand

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Economics KS4 and KS5 classes.

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

Under a system of floating exchange rates, what determines the foreign exchange value of a currency?

Select ONE answer:

1. the overall supply of and demand for a currency on currency markets
2. the purchasing power of the currency relative to the purchasing power of foreign currencies
3. the surplus or deficit on the balance of payments on current account
4. the differential between domestic and foreign interest rates

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Economics KS4 and KS5 classes.

The answer is 1

1. Correct
2. Not correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

An economy is experiencing a period of deflation.

What must be happening?

Select ONE answer:

1. The average price level is falling.
2. The output of the economy is falling.
3. The rate of inflation is falling.
4. The real value of money is falling.

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Economics KS4 and KS5 classes.

The answer is 1

1. Correct
2. Not correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

What is assumed to be constant when drawing an aggregate demand curve?

Select ONE answer:

1. government tax revenue
2. interest rates
3. the level of unemployment
4. the money supply

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Economics KS4 and KS5 classes.

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

A country decides to remove all its tariffs and engage in free international trade.

What will be the final decision the country has to make before free trade takes place?

Select ONE answer:

1. deciding which resources to allocate to the production of goods and services for international trade
2. deciding which goods and services should be provided for international trade
3. identifying the opportunity costs of production of goods and services which might be used for international trade
4. setting an appropriate exchange rate for the international trade of goods and services

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Economics KS4 and KS5 classes.

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct

This work is licensed under a Creative Commons Attribution 4.0 International License.