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International Finance MCQ Questions
with Detailed Verified Answers
Question: What does the value C + I + Grepresent in a closed economy?
a. gross national expenditure (GNE)
b. gross domestic product (GDP)
c. gross national income (GNI)
d. all of the above
Answer: d. all the above
Question:
Which of the following represents the correct way to calculate the current
account?
a. GDP - GNE
b. GNDI - GNE
c. GDP + GNE
d. GNDI + GNE
Answer: b. GNDI-GNE
Question:
Other things equal, which of the following values will decrease due to an
outward unilateral transfer of income?
a. gross national expenditure (GNE)
b. gross national product (GDP)
c. gross national income (GNI)
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d. the capital account (CA)
Answer: D. the capital account (CA)
Question:
Since 1990, which of the following hasbeen true of the U.S. current account
(CA) and financial account (FA)?
a. Both have been positive entries in U.S. balanceof payments (BOP) statistics.
b. The CA has been a positive entry, and the FAhas been a negative entry.
c. The CA has been a negative entry, and the FA has been a positive entry.
d. Both have been negative entries in BOPstatistics.
Answer: c. he CA has been a negative entry, and the FA has been a positive
entry.
Question:
An increase in which of the following will cause a decrease in external wealth?
a. the current account (CA)
b. the financial account (FA)
c. the capital account (KA)
d. capital gains on external wealth
Answer: b. The financial account (FA)
Question:
If the interest rate 𝑟∗ increases, what willhappen to a country's external
wealth, other things equal?
a. It will not be affected.
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b. It will increase.
c. It will decrease.
d. It will depend on the sign of external wealth from theprevious period.
Answer: d. It will depend on the sign of external wealth from the previous
period.
Question:
Assume that 𝑟∗ =0.04, and a country expects to have anoutput of 200 this year
and each year from now into the distant future.What is the net present value
of that output?
a. 80
b. 100
c. 5,000
d. 5,200
Answer: d. 5200
Question:
Now assume that the country from the previous question experiences
atemporary recession, such that its output falls from 200 to 174 in this year
only. If the country engages in borrowing and consumption smoothing, then
how much will its consumption have to fall in this and subsequent years?
a. 0
b. 1
c. 13
d. 26
International Finance MCQ Questions
with Detailed Verified Answers
Question: What does the value C + I + Grepresent in a closed economy?
a. gross national expenditure (GNE)
b. gross domestic product (GDP)
c. gross national income (GNI)
d. all of the above
Answer: d. all the above
Question:
Which of the following represents the correct way to calculate the current
account?
a. GDP - GNE
b. GNDI - GNE
c. GDP + GNE
d. GNDI + GNE
Answer: b. GNDI-GNE
Question:
Other things equal, which of the following values will decrease due to an
outward unilateral transfer of income?
a. gross national expenditure (GNE)
b. gross national product (GDP)
c. gross national income (GNI)
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d. the capital account (CA)
Answer: D. the capital account (CA)
Question:
Since 1990, which of the following hasbeen true of the U.S. current account
(CA) and financial account (FA)?
a. Both have been positive entries in U.S. balanceof payments (BOP) statistics.
b. The CA has been a positive entry, and the FAhas been a negative entry.
c. The CA has been a negative entry, and the FA has been a positive entry.
d. Both have been negative entries in BOPstatistics.
Answer: c. he CA has been a negative entry, and the FA has been a positive
entry.
Question:
An increase in which of the following will cause a decrease in external wealth?
a. the current account (CA)
b. the financial account (FA)
c. the capital account (KA)
d. capital gains on external wealth
Answer: b. The financial account (FA)
Question:
If the interest rate 𝑟∗ increases, what willhappen to a country's external
wealth, other things equal?
a. It will not be affected.
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b. It will increase.
c. It will decrease.
d. It will depend on the sign of external wealth from theprevious period.
Answer: d. It will depend on the sign of external wealth from the previous
period.
Question:
Assume that 𝑟∗ =0.04, and a country expects to have anoutput of 200 this year
and each year from now into the distant future.What is the net present value
of that output?
a. 80
b. 100
c. 5,000
d. 5,200
Answer: d. 5200
Question:
Now assume that the country from the previous question experiences
atemporary recession, such that its output falls from 200 to 174 in this year
only. If the country engages in borrowing and consumption smoothing, then
how much will its consumption have to fall in this and subsequent years?
a. 0
b. 1
c. 13
d. 26
