Quizbee PPT

Question 1

What term refers to full employment with price stability
and external equilibrium?

Answer 1

Internal and external balance

Question 2

This switches expenditures from domestic
to foreign products and can be used to
correct a surplus in the nation’s balance of
payments.

Answer 2

Revaluation

Question 3

Which of the following is an
expenditure-changing policy?

Answer 3

Fiscal policy

Question 4

In the Swan Diagram, Zone IV
represents:

Answer 4

Zone IV –
External deficit and internal unemployment

Question 5

Fiscal policy directly impacts
interest rates.

Answer 5

False

Question 6

Which curve in the Swan
Diagram reflects external
balance?

Answer 6

EE curve

Question 7

The IS curve is

Answer 7

Negatively sloped

Question 8

According to the
Mundell-Fleming model, a
devaluation shifts the IS curve
rightward.

Answer 8

true

Question 9

An expansionary fiscal policy
causes the IS curve to:

Answer 9

Shift right

Question 10

Direct controls include all
EXCEPT:

Answer 10

D. Interest rate manipulation

Question 11

This diagram illustrates
combinations of exchange rates
and domestic absorption that result
in internal and external balance.

Answer 11

Swan Diagram

Question 12

The IS curve represents
equilibrium in the _______
market.

Answer 12

goods

Question 13

A government budget deficit
occurs when ______ exceeds
______

Answer 13

G (government spending);
T (taxes)

Question 14

capital mobility implies
that capital flows freely in
response to interest rate changes.

Answer 14

Perfect

Question 15

The point where the EE and YY
curves intersect in the Swan
Diagram represents simultaneous
______ and ______ balance

Answer 15

internal; external

Question 16

A policy tool that involves
changes in government spending
or taxation to influence demand.

Answer 16

Fiscal Policy

Question 17

The phenomenon when a
government’s budget deficit
coincides with a country’s current
account deficit

Answer 17

Twin Deficit

Question 18

The economist who developed the
principle of effective market
classification.

Answer 18

Robert Mundell

Question 19

Enumerate the five most important
economic objectives of nations

Answer 19

Internal balance, External balance, Reasonable
rate of growth, Equitable income distribution, Environmental
protection

Question 20

List the three types of policy
instruments used to achieve
internal and external balance

Answer 20

Expenditure-changing policies,
Expenditure-switching policies, Direct controls

Question 21

Name the three curves in the
IS–LM–BP model and the market
each represents

Answer 21

IS – Goods market, LM – Money market,
BP – Balance of payments

Question 22

Identify four zones of imbalance in
the Swan Diagram.

Answer 22

Zone I – External surplus and internal unemployment;
Zone II – External surplus and internal inflation;
Zone III – External deficit and internal inflation; Zone IV –
External deficit and internal unemployment

Question 23

Fiscal policy is ____________if government
expenditures are increased and/or taxes reduced,
while __________fiscal policy refers to a reduction
in government expenditures and/or an increase in
taxes, both of which reduce domestic production
and income and induce a fall in imports

Answer 23

expansionary, contractionary

Question 24

What do IS-LM-BP
abbreviations stand for in the
the IS, LM, and BP curves

Answer 24

“investment-saving” (IS)
“liquidity preference-money supply” (LM)
“Balance of Payments” (BP(