Additional Sample Questions 1. Which of the following would likely have the least direct influence on a country’s current account? A) Inflation. B) National income. C) Exchange rates. D) Tariffs. E) A tax on income earned on foreign stocks. 2. ______________ is (are) income received by investors on investments in foreign financial assets (securities). A) Portfolio income B) Foreign direct investment income C) Unilateral transfers D) Factor income
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The Relationship among Inflation, Gold Price and US Dollar Abstract: This paper proposes a cointegration analysis method to explore the relationship among inflation, gold price and US dollar, using weekly, monthly data. With the VAR model, the three time series are formed to present the volatility of variables and the long-term equilibrium relationship. The Granger Causality test will proof whether each variable can be used to improve causality of another variable in the dynamics
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that if the U.S. dollar strengthens, it can place downward pressure on U.S. inflation. Based on this information, how might expectations of a strong dollar affect the demand for loanable funds in the United States and U.S. interest rates? Is there any reason to think that expectations of a strong dollar could also affect the supply of loanable funds? Explain. ANSWER: As a strong U.S. dollar dampens U.S. inflation, it can reduce the demand for loanable funds, and therefore reduce interest
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WHAT IS INFLATION Inflation is best defined as a sustained increase in the general price level leading to a fall in the purchasing power or value of money MAIN CAUSES OF INFLATION * Demand-pull inflation: Demand-pull inflation is likely when there is full employment of resources and aggregate demand is increasing at a time when SRAS is inelastic. * Cost-push inflation: Cost-push inflation occurs when firms respond to rising costs, by increasing prices to protect their profit margins. There
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paper reviews macroeconomic causes of financial crisis in 2008. The economist had difficulty for seeing the systematic risk because of the unregulated new financial instruments such as credit default swap and derivatives securities. The Federal Reserve Bank was responsible for the financial crisis due to large amount of money flow in the United States. Thus, US needed to implement the monetary policy in order to overcome from the financial crisis. This paper drafted the causes of financial crisis analyzed
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Different roles of banks, government, central banks, in controlling the business cycle. Bank is a financial intermediary that uses liquid assets in the form of bank deposits to finance the illiquid investments of borrowers. Banks can create liquidity because it isn’t necessary for a bank to keep all of the funds deposited with it in the form of highly liquid assets. Except in the case of a bank run—which we’ll get to shortly—all of a bank’s depositors won’t want to withdraw their funds at the
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ANS: C PTS: 1 3. ____ is not a factor that causes currency supply and demand schedules to change. a.|Relative inflation rates| b.|Relative interest rates| c.|Relative income levels| d.|Expectations| e.|All of the above are factors that cause currency supply and demand schedules to change.| ANS: E PTS: 1 4. A large increase in the income level in Mexico along with no growth in the U.S. income level is normally expected to cause (assuming no change in interest rates or other factors)
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increasing this could be the cause of the uncertainty in the markets. This could also be due to the last financial crisis that economy is still trying to recover from. Job growth and inflation are linked, if more people are employed prices for goods and services go up do to consumption, but even with job growth consumers are not making purchases, this can be due in part to the wage stagnation (Harlan & Mui, 2015). Another factor to the slow rise in inflation, could be a global economic
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(a) Explain the possible internal and external factors that will influence inflation in Singapore. Demand-Pull Inflation (both internal and external factors) - Singapore is moving towards a more knowledge-intensive, service-based economy -> is becoming prime locale for high value-added industries -> investors seek to partake in these promising ventures -> strong inflow of FDI -> Increase in I - Increasing numbers of foreign talent are emigrating to Singapore and taking up permanent
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Version 1 V Genera Certificate of Education (A-lev G al o vel) June 20 J 012 Econo E omics s (Spec ( cificati 21 ion 140) Unit 2 The Natio U 2: onal E Econo omy ECON N2 F al Fina Mar S eme rk Sche e Mark schemes are prepared by the Principal Examiner and considered, together with the relevant questions, by a panel of subject teachers. This mark scheme includes any amendments made at the standardisation events which all examiners participate in and is the scheme which was used by
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