Chapter 4
Short-Run Open Economy Model
Questions
Multiple Choice Questions
1. Foreign trade multiplier is concerned with a
(a) Closed economy
(b) Open economy
(c) Neither of them
Answer: (b) Open economy.
2.The concept of foreign trade multiplier was developed by
(a) R.F Khan
(b) J.M. Keynes
(c) Samuelson
Answer: (b) J.M. Keynes.
3. In an open economy, the income propagation is affected by
(a) Saving leakage
(b) Import leakage
(c) Both of them
Answer: (c) Both of them.
Very Short Answer Type Questions
1. Define an open economy.
Answer:
2. What is meant by foreign trade multiplier ?
Answer:
3. How does a net increase in exports affect the level of income ?
Answer:
4. What are beggar-my-neighbour policies ?
Answer:
Short Answer Type Questions
1. Bring out the effect of an increase in exports upon income in an open system.
Answer:
2. How can investment growth can cause international transmission of fluctuations ?
Answer:
3. What is the import of trade multiplier upon balance of trade of a country ?
Answer:
Long Answer Type Questions
1. Explain the working of foreign trade multiplier in an open model.
Answer:
2. What is export multiplier ? What are its implications for an open economic system ?
Answer:
3. Explain the operation of foreign trade multiplier in a dynamic economic model.
Answer:
Very Long Answer Type Questions
1. Explain clearly the process of income propagation in an open economy.
Answer:
2. Explain the foreign repurcussion effect of an increase in investment in an open economic system.
Answer:
3. Derive the concept of foreign trade multiplier. Analyse its implications for economic policies.
Answer:
Post ID : DABP005164
