Economics MCQs

Page No. 175

The opportunity cost of growth is ?


a a reduction in current investment

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b a reduction in current consumption

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ca reduction in taxes

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da reduction in current saving

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When a national has very little GDP per person ?


a it is doomed to being relatively poor forever

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bnone of these answers

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can increase in capital will likely have little impact on output

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dit has the potential to grow relatively quickly due to the “catch-up-effect”

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A reasonable measure of the standard of living in a country is ?


areal GDP per person

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bnominal GDP per person.

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cReal GDP

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dThe growth rate of nominal GDP per person

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View Answer real GDP per person

If consumption when young and when old are both normal goods, an increase in the interest rate ?


awill always increase the quantity of saving

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bwill always decrease the quantity of saving

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c will increase the quantity of saving if the substitution effect outweighs the income effect

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dwill increase the quantity of saving if the income effect outweighs the substitution effect

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If income where to double and prices were to to double the budget line would ?


a stay the same

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brotate inward

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cshift outward in a parallel fashion

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d rotates outward

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View Answer stay the same

Refer to Exhibit 4, Suppose that the consumer must choose between buying socks and belts Also suppose that the consumer’s income is €100 A pair of socks is ?


aan inferior effect

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ba Geffen good

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ca normal good

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dnone of these answers

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View Answer a normal good

Refer to Exhibit 4, Suppose that the consumer must choose between buying socks and belts Also suppose that the consumer’s income is €100 Suppose that the price of a pair of socks falls from €5 to €2 The substitution effect is represented by the movement from point ?


aZ to point X

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bX to point X

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cX to point Z

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dY to point X

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View Answer Z to point X

If an increase in a consumer’s income causes the consumers to decrease her quantity demanded of a good, then the good is ?


aa substitute good

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ba normal good

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ca complementary good

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dan inferior good

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View Answer an inferior good

Suppose we measure the quantity of good X on the horizontal axis and the quantity of good Y on the vertical axis If indifference curves are bowed inward, as we move from having an abundance of good X to having an abundance of good Y, the marginal rate of substitution of good Y for good X (the slope of the indifference curve) ?


arises

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bstays the same

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ccould rise or fall depending on the relative prices of the two goods.

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dfalls

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View Answer rises

The consumer’s optimal purchase of any two goods is the point where ?


athe budget constraint crosses the indifference curve

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bthe two highest indifference curves cross

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c the consumer reaches the highest indifference curve subject to remaining on the budget constraint

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dthe consumer has reached the highest indifference curve

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