Question

(6)
At a world price of Pw, the quantity of exports in the graph below is given by __________. QSD − QDD QDD − QSD Pw − P* SD − DD
(7)
Suppose France is an open economy and cannot influence the world price. If the world price is below the domestic equilibrium price, how would an increase in domestic supply affect the price and quantity demanded? It would increase the price and the quantity demanded. It would decrease the price and the quantity demanded. It would decrease the volume of exports. It would decrease the volume of imports.
(8)
What is the relationship between exports and income? The level of exports rises with income. The level of exports falls with income. The level of exports is unrelated to income. The level of exports rises with income as long as the marginal propensity to consume is positive.
(9)
In the domestic economy, imports ___________ the multiplier effect. increase decrease have no effect on first increase then decrease
(10)
Which of the following items is not included in the current account? Services Payments of interest Transfer payments Foreign aid

Answer 1

6..)

Export is difference between the supply and domestic demand.

Answer: QSD –QDD

7)

Answer: It would decrease the volume of imports.

When domestic supply rises it implies that now lesser amount of import shall be made.

8)

Answer: The level of exports falls with income.

When level of income rises, now domestic goods shall be consumed, so little will be left for export.

9)

Answer: Decrease.

Import constitutes leakage in multiplier process.