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Unit 6 - Practice MC Test

Authored by Eamonn Manion

Social Studies

12th Grade

Used 1+ times

Unit 6 - Practice MC Test
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20 questions

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1.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following transactions is counted in the U.S. current account?

A French importer buys a case of California wine

An American working for a Brazilian company deposits her paycheck

An American buys a bond from a Japanese company

An American charity sends money to an African aid agency

A Chinese national buys stock in a US company

2.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

The difference between a country's exports and imports of goods is that country's

Balance of payments on its current account

Balance of payments on its financial account

Balance of payments on its capital account

Merchandise trade balance

Balance of payments on goods and services

3.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following relationships between the current (CA) and the financial account (FA) must be true?

CA - FA = 0

CA + FA = 0

CA = FA

CA = 1/FA

(CA) (FA) = 1

4.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following is a reason for capital to flow into a country?

a rapidly growing economy

government budget surplus

higher savings rates

lower savings rates

a relatively high supply of loanable funds

5.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Media Image

Suppose that Northlandia and Southlandia are the only two trading countries in the world, that each nation runs a balance of payments on both the current account and the financial account equal to zero, and that each nation sees the other's assets as identical to its own.

Given the situation depicted in the graphs, which of the following will happen?

The interest rate in Northlandia will rise

The interest rate in Southlandia will rise

Capital will flow into Northlandia

Capital will flow into Southlandia

Southlandia will experience a balance of trade deficit

6.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Media Image

Suppose that Northlandia and Southlandia are the only two trading countries in the world, that each nation runs a balance of payments on both the current account and the financial account equal to zero, and that each nation sees the other's assets as identical to its own.

Which of the following will happen in Southlandia?

The quantity of loanable funds supplied will decrease

The supply of loanable funds will increase

The demand for loanable funds will decrease

The supply of loanable funds will decrease

The interest rate will decrease

7.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Media Image

Suppose that Northlandia and Southlandia are the only two trading countries in the world, that each nation runs a balance of payments on both the current account and the financial account equal to zero, and that each nation sees the other's assets as identical to its own.

If the international equilibrium interest rate is 8%, which of the following will be true?

Southlandia will experience a capital outflow of 250

Southlandia will experience a capital outflow of 700

Northlandia will experience a capital outflow of 250

Northlandia will experience a capital outflow of 300

The international equilibrium quantity of loanable funds will be 1,200

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