Answer to Question #210581 in Macroeconomics for Anisha Kumar

Question

True or False Questions

Question 17

In a flexible exchange rate system, with perfect capital mobility, a devaluation will increase GDP but interest rate will remain unchanged.

Select one:

True

False

Question 18

The biggest policy challenge for most countries now is managing economic contraction.

Select one:

True

False

Question 19

COVID19 crisis has reduced trade to/from the Pacific region.

Select one:

True

False

Question 20

The following are constraints for economic development in Samoa: subsistence agriculture, limited tourism and lack of domestic private investment.

Select one:

True

False

Question 21

If I = I_0-b_i, then the value of b will determine the impact of monetary policy on investment.

Select one:

True

False

Question 22

In order to reduce market interest rate, the central bank conducts open market sale of bonds.

Select one:

True

False

Answer 1

17. True

Devaluation of currency will increase aggregate demand and raise GDP.

18. True

Disruption by covid 19 led to drop in personal income, industrial production, retail sales and increased unemployment.

19.True

Due to lock downs and travel restrictions

20.True

subsistence farming grow food for own consumption instead of commercialization to make profit out of it. Limited tourism leads to low circulation of money hence low growth. Lack of domestic private investment leads to high dependency due to lack of jobs consequently there is low economic growth.

21.False

b is the elasticity of investment with respect to interest rate.

22.True

Low interest rates buys open market bonds