Economics MCQs

Page No. 202

A government might use tax to ?


aDiscourage consumption of positive externalities

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bDiscourage consumption of public goods

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cDiscourage consumption of merit goods

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dDiscourage consumption of negative externalities

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In a regressive tax system ?


aThe amount of tax paid increase with income

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bThe marginal rate of tax decrease with more income

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cThe average rate of tax falls as income increase

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dThe average rate of tax is constant as income increases

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


aworsen

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bImprove

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c Stay the same

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d Increase with inflation

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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

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bThe amount of tax paid will increase by Rs4,000

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cThe amount of tax paid will increase by Rs 800

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dThe total tax paid will be Rs4,800

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A reflationary (expansionist) fiscal policy could include ?


aLower interest rates

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b Increased lending by the banks

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cAn increase in corporation tax

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dAn increase in discretionary government spending

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Over-funding is when the State Bank of Pakistan ?


asells less government bonds than are required to finance the PSBR

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bsells more government bonds than are required to finance the PSBR

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csells government securities on the open market

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dbuys government securities on the open market

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


areduce the minimum reserve asset ratio.

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bbuy government securities on the open market

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clower interest rates

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dsell government securities on the open market

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Goodhart’s Law suggests that ?


abad money drives out good

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

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

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

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As the required reserve ratio is decreased the money multiplier ?


acould either increase or decrease

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bdecrease

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cincrease

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

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View Answer increase

The parable of Riding a Switchback suggest that stabilizing policy ?


ais not sufficiently stimulating or contracting the economy at any time

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bis effective

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cis stimulating or contracting the economy at the wrong times

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dis desirable

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