Practise tracing links among inflation, unemployment, growth, currency values and current-account balances and evaluating whether objectives conflict or reinforce one another in context.
The US government has been using a policy of quantitative easing to increase economic growth.
What is the most likely effect of this policy on the internal and external value of the US dollar?
internal value
external value
decrease
decrease
decrease
increase
increase
increase
increase
decrease
The inflation rate in a country increased.
Which effect would this most likely have on the country's balance of payments?
an improvement in the current account balance
an increase in price competitiveness
an increase in export revenue
an increase in import expenditure
When will government success in achieving economic growth be most likely to conflict with a desire to reduce a surplus in the balance of payments?
when growth depends upon the import of capital equipment
when growth increases foreign investors' confidence in the country
when growth requires a reduction in the level of its tariffs
when growth results from the removal of restrictions on capital outflows
The table shows the relationship between inflation and unemployment in Germany from 2019 to 2022.
Some theories argue that inflation rates are at their lowest when the rate of unemployment is low. Which year contradicts this expectation to the greatest extent?
2019
2020
2021
2022