#1
In the context of foreign exchange, what does the term 'exchange rate' refer to?
The rate at which a country's currency can be exchanged for another currency
ExplanationRate for currency exchange.
#2
Which economic theory suggests that a country should specialize in producing goods for which it has a comparative advantage?
Comparative advantage
ExplanationSpecializing in comparative advantage goods.
#3
Which economic indicator is often used to measure the overall health of a country's economy?
Gross Domestic Product (GDP)
ExplanationCommon indicator for economic health.
#4
Which of the following is a primary goal of international macroeconomics?
Promoting economic growth and stability across countries
ExplanationPromoting growth and stability across nations.
#5
What is the role of the International Monetary Fund (IMF) in the global economy?
Providing financial assistance to countries facing balance of payments problems
ExplanationOffering aid for balance of payments.
#6
What is the concept of a 'trade surplus' in international trade?
When a country exports more goods than it imports
ExplanationExporting more than importing.
#7
What is the purpose of the World Trade Organization (WTO) in the global economy?
Overseeing international trade agreements and dispute resolution
ExplanationSupervising trade agreements and disputes.
#8
Which economic theory suggests that a country should focus on accumulating gold and silver as a measure of wealth?
Mercantilism
ExplanationAccumulating precious metals for wealth.
#9
What is the significance of the Bretton Woods Agreement in the history of international macroeconomics?
Set up a fixed exchange rate system and established the IMF and World Bank
ExplanationCreating fixed rates and IMF/World Bank.
#10
In the context of foreign exchange markets, what is a 'carry trade'?
A strategy to profit from interest rate differentials between currencies
ExplanationProfiting from interest rate differences.
#11
What does the term 'currency peg' refer to in the context of exchange rate systems?
A government policy to maintain a fixed exchange rate with another currency
ExplanationMaintaining fixed exchange rate policy.
#12
What is the Trilemma in international economics?
The challenge of achieving both fixed exchange rates and free capital movement while maintaining monetary policy autonomy
ExplanationBalancing fixed rates, capital flow, and policy autonomy.
#13
What is the significance of the Marshall-Lerner condition in international trade?
It analyzes the conditions under which a devaluation improves the trade balance
ExplanationExamining effects of devaluation on trade.