Question

1. When interest rates in Australia decrease relative to interest rates in other countries, we may see Australian dollar

Select one:

a. depreciation and a decrease in net exports.

b. appreciation and an increase in net exports.

c. appreciation and a decrease in net exports.

d. depreciation and an increase in net exports.

2.

We can expect an increase in the value (appreciation) of the Australian dollar relative to Indian rupiah when

Select one:

a. Indian economy is going into an expansion and Australia’s exports to India are large

b. domestic interest rates decrease in Australia but not in other countries.

c. Interest rates increase in India

d. all answers are correct

3.

If a petrol station accepts bitcoins in exchange for petrol,

Select one:

a. bitcoin can be used as a store of value.

b. bitcoin is serving as a medium of exchange.

c. bitcoin is serving as a standard of deferred payment.

d. bitcoin is not performing any functions of money because it is not recognised by the government as a legal tender.

4.

Double coincidence of wants

Select one:

a. is necessary for banking system to function well

b. is required for a trade to occur in the modern economy

c. all of the answers are correct

d. is required for a trade to occur in the barter economy

5.

When Australian dollar depreciates in value relative to other currencies

Select one:

a. the aggregate demand curve shifts to the right.

b. the short-run aggregate supply curve shifts to the left.

c. the long-run aggregate supply curve shifts to the right.

d. the aggregate demand curve shifts to the left

6.

Monetary policy primarily affects macroeconomic equilibrium in the economy by

Select one:

a. Changing both the Aggregate Demand and Long-Run Aggregate Supply

b. changing the Long-Run Aggregate Supply

c. changing the Aggregate Demand

d. changing the Short-Run Aggregate Supply

7.

When government borrows in the domestic market to finance budget deficit one can expect

Select one:

a. none of the answers is correct

b. exchange rate depreciation and higher net exports.

c. exchange rate depreciation and lower net exports.

d. higher interest rates, exchange rate appreciation, and lower net exports.

Answer 1

1) option d).

When lower interest rates, then depreciation & Increase in net Exports

2) option a)

As exports rise, so demand for Australian currency rises, & it appreciates

3) option b)

Bitcoin is serving as medium of exchange in this case

4) option d)

Double coincidence of wants is necessary in barter exchange

5) option a)

Net exports rise, so AD shifts right

6) option c)

Monetary policy affects aggregate demand

7) option d)

Budget deficit leads to rise in Interest rates, exchange rate appreciates, leading to decline in net exports