Quiz #632 answers

• 1. The MMT classification of exports as a cost means:

Answer: (c) The resources that are embodied in exports are lost to the nation and are, instead, used by foreigners to enhance their material prosperity.

• 2. A rising child dependency ratio:

Answer: (a) Will ultimately lead to a falling standard dependency ratio once birth rates decline.

• 3. When a nations exchange rate depreciates:

Answer: (d) Imported goods become more expensive in the local currency.

• 4. When a nations exchange rate appreciates, the debt servicing payments for debt denominated in a foreign currency:

Answer: (a) Fall in local currency terms.

• 5. A nation will become more competitive in international trade if:
  1. (a) Its nominal exchange rate is unchanged, but its inflation rate falls relative to other nations.
  2. (b) Its nominal exchange rate is unchanged, but its inflation rate rises relative to other nations.
  3. (c) Its nominal exchange rate appreciates, but its inflation rate is unchanged relative to other nations.
  4. (d) Its nominal exchange rate depreciates, but its inflation rate is unchanged relative to other nations.

Answer: (a) and (d)