ECO401 Final Term Quiz 2 File 2 July 2023 by Miss Mehwish

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1. Between two countries, the worth of one currency in terms of the other is known as: Options:

• Interest rate
• Exchange rate

Correct option: Exchange rate

Q2. "Index-linking" is very common in:

• Latin America
• USA
• South Asia

Correct option: Latin America

3. Which of the following will cause a rightward shift in the Philips curve? Options:

• An increase in the expected inflation rate
• A decrease in the natural rate of unemployment
• A decrease in the expected inflation rate

Correct option: A decrease in the expected inflation rate

4. An exchange rate that varies according to the supply and demand for the currency in the foreign exchange market is called a(n) _________ exchange rate. Options:

• Overvalued
• Fixed
• Undervalued
• Flexible

Correct option: Flexible

Q5. In case of adaptive expectations, the time period is:

• t-1
• t+1
• t/1
• t-1

Correct option: t-1

6. When too much money chases too few goods, the resulting inflation is called: Options:

• Stagflation
• Cost Push Inflation
• Deflation

Correct option: Cost Push Inflation

Q7. The capital account is related to:

• Goods market
• Import of services
• Exports of services
• Asset market

Correct option: Asset market

Q8. What is determined based on a nation's import and export of goods, services, financial transfers, and financial capital?

• Lack of Goods
• Inflation
• Deflation
• Balance of Payments