All Free Economics MCQs with Answers
Every Economics question in the bank, across all chapters, each with the correct answer and a written explanation. Free and unlimited, with no account needed.
4,037 questions · page 58 of 202
- A. currency arbitrage
- B. interest arbitrage
- C. short positions
- D. long positions
Explanation: Interest arbitrage involves shifting funds toward foreign assets or currencies offering higher interest returns, while considering…
Correct answer: interest arbitrage- A. his desire to open a bank account in Japan
- B. his desire to purchase an automobile produced domestically
- C. his desire to travel to Europe
- D. his desire to purchase Treasury bills issued by the British government
Explanation: Buying a domestically produced automobile normally requires domestic currency, so it does not create demand for foreign exchange.
Correct answer: his desire to purchase an automobile produced domestically- A. Norway's export goods become more expensive to Norway's residents
- B. Norway's exports goods become cheaper to Sweden's residents
- C. Sweden's export goods become cheaper to Norway's residents
- D. Sweden's export goods become cheaper to Sweden's residents
Explanation: When the Swedish currency depreciates against Norway's, Swedish goods become cheaper when priced in Norwegian currency.
Correct answer: Sweden's export goods become cheaper to Norway's residents- A. forward discount
- B. forward premium
- C. forward spread
- D. None of these
Explanation: A franc priced at $0.42 in the forward market versus $0.48 in the spot market has a lower future dollar price.
Correct answer: forward discount- A. differential actions
- B. cash transaction
- C. arbitrage
- D. forward transactions
Explanation: Arbitrage is the simultaneous or near-simultaneous exploitation of price or yield differences for a riskless profit after transaction…
Correct answer: arbitrage- A. 2.0
- B. 1.999
- C. 2.323
- D. 2.222
Explanation: If one franc costs $0.45, one dollar buys 1 divided by 0.45, or approximately 2.222 francs.
Correct answer: 2.222- A. Swap
- B. foreign exchange arbitrage
- C. foreign exchange option
- D. futures market contract
Explanation: A foreign exchange option gives its holder the right, but not the obligation, to buy or sell currency at a specified rate.
Correct answer: foreign exchange option- A. hedging
- B. speculation
- C. government regulation
- D. arbitrage
Explanation: Arbitrageurs buy a currency where it is relatively cheap and sell it where it is dear, earning profit until the price difference…
Correct answer: arbitrage- A. upward
- B. vertical
- C. downward
- D. horizontal
Explanation: With dollars per yen on the vertical axis, a higher exchange rate makes yen more expensive in dollar terms.
Correct answer: downward- A. China
- B. Germany
- C. United Kingdom
- D. USA
Explanation: The United Kingdom, especially London, has historically been the largest foreign-exchange trading centre.
Correct answer: United Kingdom- A. flows of foreign investment into the United States
- B. rising price inflation in the United States
- C. a substantial decrease in U.S imports
- D. a substantial increase in U.S exports
Explanation: Foreign investment flowing into the United States increased demand for dollars, supporting its exchange value during 1981–1985.
Correct answer: flows of foreign investment into the United States1152. Under a system of floating exchange rates the pound would depreciate in value if there occurs ?
- A. Price inflation in the United States
- B. an increase in U.S real income
- C. a decrease in the British money supply
- D. falling interest rates in Britain
Explanation: Falling British interest rates make pound-denominated assets less attractive, encouraging capital outflows and reducing demand for pounds.
Correct answer: falling interest rates in Britain- A. 2 francs per dollar
- B. 1 franc per dollar
- C. $2 per franc
- D. $3 per franc
Explanation: If 400 francs equal 200 dollars, dividing both sides by 200 gives 2 francs per dollar. Equivalently, one franc is worth 50 cents.
Correct answer: 2 francs per dollar- A. euro
- B. Chinese Yuan
- C. British pound
- D. U.S dollar
Explanation: The U.S. dollar is the most widely traded foreign-exchange currency and appears on one side of most currency transactions.
Correct answer: U.S dollar- A. How do the poorest 2/3 of the world live?
- B. What are the major theories of economic development
- C. what factors affect labor skills in the third world?
- D. All of the above are correct
Explanation: Development economics examines living conditions in poor countries, theories of development, and factors such as education and skills that…
Correct answer: All of the above are correct- A. Nigeria
- B. Japan
- C. India
- D. Mali
Explanation: Japan is a high-income, industrialised economy with material living standards most comparable to those of the United States.
Correct answer: Japan- A. Taiwan
- B. North Korea
- C. Singapore
- D. Hong kong
Explanation: Taiwan, Singapore, and Hong Kong are classic newly industrialised economies.
Correct answer: North Korea- A. high population growth rates
- B. large number of people living in poverty
- C. very traditional methods of agricultural production
- D. All of the above
Explanation: Developing countries commonly face rapid population growth, widespread poverty, and low-productivity traditional farming methods.
Correct answer: All of the above- A. capitalism
- B. physical quality of life index
- C. socialism
- D. communism
- E. None of the above
Explanation: Capitalism, socialism, and communism are economic systems because they describe how production and resource allocation are organised.
Correct answer: physical quality of life index- A. approximately 35%
- B. approximately 80%
- C. nearly 10 billion people
- D. nearly 1 billion people
Explanation: Developing countries contain roughly four-fifths of the world's population, although the exact share changes with definitions and time.
Correct answer: approximately 80%