6. The slope of DD curve is (are) affected by i. investment level ii. marginal p
ID: 1143688 • Letter: 6
Question
6. The slope of DD curve is (are) affected by i. investment level ii. marginal propensity to consume ii. price level A. (i) only B. (i) only C. (iii) only D. (ii) and (ii) only 7. In year 2017, Home country's balance of payment account is-10. which of the following about the Home country must inerense? chomge i. foreign asset held by Home country ii. official foreign reserve ii. net foreign asset A. () only B. (ii) only C. (iii) only D. (ii) and (iii) only. 8. If the sum of the GDP of all the countries over the world is greater than 30, what is the sum of GNP of all the countries in the world? A. 30 B. greater than 30. C. less than 30 D. uncertain Suppose output is endogenous. Initially, money supply is 20 and current account is -5. Now the mo supply reduces permanently to 16. What is the new current account? 9. B. less than-5 C. greater than -5 D. uncertain 10. If we assume that Purchasing Power Parity holds, then A. the slope of AA curve is infinity B. the slope of AA curve is zero C. the slope of DD curve is infinity D. the slope of DD curve is zeroExplanation / Answer
Answer : 6) The slope of DD curve is (are) affected by the price level. Therefore, the answer is C. (iii) only .
7) In year 2017, Home country's balance of payment account is -10 . This means country's balance of payment is in deficit. In case of deficit country export more and make foreign asset . Therefore, A. (i) only is correct.
8) If the sum of the GDP of all the countries over the world is greater than 30 , the sum of GNP of all countries in the world is D. Uncertain. Because GNP measures the production level where GDP measures income level in which GNP is included. In this case GNP may be greater or lower than GDP. Therefore, GNP is uncertain.
9) Suppose the output is endogenous. Initially, money supply is 20 and current account is -5. Now the money supply reduces permanently to 16. The new current account is B. less than -5.
Current account shows the money balance of country. If money supply decrease then current account decrese . According to given question , money supply is decreased by -4 (20 -16). Therefore, current account is decreased by -4 .
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