Economics MCQs

Page No. 175

The opportunity cost of growth is ?


a a reduction in current investment


b a reduction in current consumption


ca reduction in taxes


da reduction in current saving



When a national has very little GDP per person ?


a it is doomed to being relatively poor forever


bnone of these answers


can increase in capital will likely have little impact on output


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



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


areal GDP per person


bnominal GDP per person.


cReal GDP


dThe growth rate of nominal GDP per person


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


bwill always decrease the quantity of saving


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


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



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


a stay the same


brotate inward


cshift outward in a parallel fashion


d rotates outward


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


ba Geffen good


ca normal good


dnone of these answers


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


bX to point X


cX to point Z


dY to point X


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


ba normal good


ca complementary good


dan inferior good


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


bstays the same


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


dfalls


View Answer rises

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


athe budget constraint crosses the indifference curve


bthe two highest indifference curves cross


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


dthe consumer has reached the highest indifference curve



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