ECONOMICS QUIZ

MC

100

Which of the following policies is mainly used to manage inflation? (A) Fiscal policy (B) Monetary policy (C) Competition policy (D) Labour market policy

Monetary Policy

200

Which of the following is most likely to shift both the aggregate demand and aggregate supply curve to the right? (A) An increase in investment and a reduction in subsidies to producers (B) An increase in the budget deficit and a decrease in the cost of labour (C) An increase in the productivity of labour and an increase in interest rates (D) An increase in the budget surplus and an increase in the cost of raw materials

B An increase in the budget deficit and a decrease in the cost of labour

300

Which of the following international organisations is most likely to be involved in financing the construction of a dam in a developing country? (A) The World Bank (B) The World Trade Organisation (C) The International Monetary Fund (D) The Organisation for Economic Cooperation and Development

(A) The World Bank

400

Components of the current account $ billion ($bn) Exports of goods and services 100 Imports of goods and services 120 Net primary income –140 Net secondary income –40 What is the balance on the capital account? (A) A deficit of $160 billion (B) A surplus of $160 billion (C) A deficit of $200 billion (D) A surplus of $200 billion

(D) A surplus of $200 billion

500

Other things being equal, what would be the impact of an increase in net capital inflow on the Australian currency? (A) There would be an increase in the demand for the Australian dollar and an appreciation of the currency. (B) There would be a decrease in the demand for the Australian dollar and a depreciation of the currency. (C) There would be an increase in the supply of the Australian dollar and an appreciation of the currency. (D) There would be a decrease in the supply of the Australian dollar and a depreciation of the currency.

(A) There would be an increase in the demand for the Australian dollar and an appreciation of the currency.

MC

100

Which of the following is most likely to result in an increased budget surplus? (A) Reduced government spending and reduced taxation (B) Increased government spending and reduced taxation (C) Reduced government spending and increased taxation (D) Increased government spending and increased taxation

(C) Reduced government spending and increased taxation

200

What would be the likely impact on an economy if the government increased quotas on imported cars? (A) The domestic price of cars would increase. (B) The market share of domestic producers would decline. (C) The supply of cars in the domestic market would decrease. (D) Foreign producers would find it more difficult to access the domestic market.

(B) The market share of domestic producers would decline.

300

Which of the following is most likely to increase Australia’s international competitiveness? (A) Structural change and higher interest rates in Australia (B) Lower labour costs and improved infrastructure in Australia (C) Lower inflation in Australia and reduced import quotas on foreign cars (D) Productivity growth in Australia and appreciation of the Australian dollar

(B) Lower labour costs and improved infrastructure in Australia

400

The non­accelerating inflation rate of unemployment (NAIRU) is most likely to be reduced by increasing (A) spending on retraining job seekers. (B) the level of unemployment benefits. (C) protection levels for domestic industries. (D) spending on public infrastructure projects.

(A) spending on retraining job seekers.

500

An increase in investment of $5000 increases the equilibrium level of national income by $20 000. What is the marginal propensity to consume (MPC)? (A) 0.2 (B) 0.25 (C) 0.75 (D) 0.8

(C) 0.75

MC

100

Which of the following economic objectives can best be achieved simultaneously with economic growth? (A) Price stability (B) External balance (C) Increasing employment (D) Environmental sustainability

(C) Increasing employment

200

How are the foreign company dividends paid to Australian investors recorded on Australia’s Balance of Payments? (A) As a debit on the current account (B) As a credit on the current account (C) As a debit on the capital and financial account (D) As a credit on the capital and financial account

(B) As a credit on the current account

300

All other things being equal, which of the following is most likely to cause an increase in Australia’s current account deficit? (A) A decrease in national savings (B) A decrease in Australian overseas aid (C) An increase in the Federal Government’s budget surplus (D) An increase in the number of overseas students studying in Australia

(A) A decrease in national savings

400

Which of the following could lead to a deterioration in the structural component of Australia’s current account deficit? (A) An increase in net foreign liabilities (B) A decrease in portfolio investment by foreign firms (C) A decrease in export volumes due to a weakening global economy (D) An increase in imports resulting from an improvement in the terms of trade

(A) An increase in net foreign liabilities

500

The table shows Balance of Payments data for a hypothetical economy with a flexible exchange rate. $ Billion Financial Derivatives 5 Net Primary Income –200 Direct Investment 50 Reserve Assets 10 Balance on Goods and Services 50 Net Secondary Income 25 Portfolio Investment 45 Capital Account ? Using the data above, what is the value of the capital account? (A) $15 billion deficit (B) $15 billion surplus (C) $25 billion deficit (D) $25 billion surplus

(B) $15 billion surplus

MC

100

Which of the following statements best describes the implementation and impact of economic policies? (A) Microeconomic policy is quickly implemented through the annual budget. (B) Microeconomic policy shifts the aggregate demand curve to improve productivity. (C) Monetary policy is quicker to implement than fiscal policy but takes longer to affect economic activity. (D) Monetary policy is slower to implement than fiscal policy and is quicker to affect economic activity.

(C) Monetary policy is quicker to implement than fiscal policy but takes longer to affect economic activity.

200

Which of the following government policies is most likely to reduce the size of a negative externality? (A) Reduction in petrol excise (B) Abolition of national park entry fees (C) Lowering rebates on sustainable energy sources (D) Reducing tax concessions on car parking spaces in the city

(D) Reducing tax concessions on car parking spaces in the city

300

Which of the following is likely to encourage the hidden unemployed to enter the labour force? (A) A reduction in child­care costs (B) An increase in the unemployment rate (C) An increase in marginal income tax rates (D) A reduction in funding of traineeship programs

(A) A reduction in child­care costs

400

Which of the following policies is most likely to result in a decrease in demand inflation and an increase in cost inflation? (A) A decrease in non-discretionary government expenditure and loose monetary policy (B) An increase in non-discretionary government expenditure and increased import tariffs (C) An increase in discretionary government expenditure and a reduction in subsidies to producers (D) A decrease in discretionary government expenditure and a depreciation of the domestic currency

(D) A decrease in discretionary government expenditure and a depreciation of the domestic currency

500

Australia’s headline annual (CPI) inflation rate has fallen from 3% to 2%, while the underlying annual inflation rate remains unchanged at 3%. The divergence between these two measures of inflation is most likely due to (A) a decrease in house prices. (B) an increase in house prices. (C) a decrease in world oil supply. (D) an increase in world oil supply.

(D) an increase in world oil supply.

TRENDS

100

The current cash rate?

1.5%

200

Current economic growth rate?

1.8%

300

Current unemployment rate?

5.6%

400

What is the current inflation rate?

1.9%

500

Net foreign liabilities % of GDP

58%