Economics MCQs

Page No. 202

A government might use tax to ?


aDiscourage consumption of positive externalities


bDiscourage consumption of public goods


cDiscourage consumption of merit goods


dDiscourage consumption of negative externalities



In a regressive tax system ?


aThe amount of tax paid increase with income


bThe marginal rate of tax decrease with more income


cThe average rate of tax falls as income increase


dThe average rate of tax is constant as income increases



If the economy grows the government’s budget position will automatically ?


aworsen


bImprove


c Stay the same


d Increase with inflation


View Answer worsen

If the marginal rate of tax is 40% and consumers income increase from Rs10,000 to Rs12,000 ?


aThe amount of tax paid will increase by Rs4,800


bThe amount of tax paid will increase by Rs4,000


cThe amount of tax paid will increase by Rs 800


dThe total tax paid will be Rs4,800



A reflationary (expansionist) fiscal policy could include ?


aLower interest rates


b Increased lending by the banks


cAn increase in corporation tax


dAn increase in discretionary government spending



Over-funding is when the State Bank of Pakistan ?


asells less government bonds than are required to finance the PSBR


bsells more government bonds than are required to finance the PSBR


csells government securities on the open market


dbuys government securities on the open market



If the State Bank of Pakistan wished to pursue a tight monetary policy it would ?


areduce the minimum reserve asset ratio.


bbuy government securities on the open market


clower interest rates


dsell government securities on the open market



Goodhart’s Law suggests that ?


abad money drives out good


b monetary policy can only be effective if it is a long-term policy


ccontrolling one part of the money supply will merely result in that item becoming less important


dthe money supply must only expand at the rate of growth of real national income



As the required reserve ratio is decreased the money multiplier ?


acould either increase or decrease


bdecrease


cincrease


dremain the same, as long as bank hold no excess reserves


View Answer increase

The parable of Riding a Switchback suggest that stabilizing policy ?


ais not sufficiently stimulating or contracting the economy at any time


bis effective


cis stimulating or contracting the economy at the wrong times


dis desirable



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