Economics MCQs

Page No. 203

The implementation lag for monetary policy is generally ?


a the same as it is for fiscal policy

✖


bmuch shorter than it is for fiscal policy

✓


cmush longer than it is for fiscal policy

✖


d unrelated to central bank action

✖


View Answer much shorter than it is for fiscal policy

The budget deficit tends to decrease then ?


aGDP decrease rapidly

✖


bGDP remains unchanged

✖


cGDP decrease slightly

✖


dGDP increase

✓


View Answer GDP increase

Automatic stabilizers act to ______ government expenditures and _______ government revenue during an expansionary period?


aincrease; increase

✖


bdecrease; increase

✓


c increase; decrease

✖


ddecrease; decrease

✖


View Answer decrease; increase

Net taxes are ?


a taxes paid by firms and households to the government minus the cost of collecting the taxes

✖


bTaxes paid firms and households to the government minus the transfer payments made to firms and household

✓


cTaxes paid by firms and households to the government plus transfer payments made to firm and households

✖


dgovernment expenditures minus government revenues

✖


View Answer Taxes paid firms and households to the government minus the transfer payments made to firms and household

As an economy grows ?


aThe government’s budget position should automatically improve

✖


bThe government’s budget position should automatically worsen

✓


cThis will have no effect on the government’s budget position

✖


dThis will reduce the government’s tax revenue

✖


View Answer The government’s budget position should automatically worsen

The public Sector Net Cash Requirement (PSNCR) is ?


aA measure of the country’s trade position

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bA measure of the country’s budget position

✓


c A measure of the country’s total debt

✖


d A measure of the government’s monetary stance

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View Answer A measure of the country’s budget position

The marginal rate of tax paid is ?


aThe total tax paid / total income

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b Total income / total tax paid

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cChange in the tax paid / change in income

✓


d Change in income / change in tax paid

✖


View Answer Change in the tax paid / change in income

Imagine there is no tax on income up to Rs 1000 after that there is a tax of 505 what is the average tax rate on an income of Rs 20,000 ?


a Rs 50000

✖


b20%

✓


c25%

✖


dRs 10000

✖


View Answer 20%

Fiscal drag occurs when ?


aTax bands do not increase with inflation

✓


b Tax rates move inversely with inflation

✖


cGovernment spending falls to reduce aggregate demand

✖


dTax banks increase with inflation

✖


View Answer Tax bands do not increase with inflation

By controlling the monetary base economists mean ?


a making banks keep a certain % of their assets as M0

✓


bcontrolling the money multiplier

✖


crestricting the amount of cash in circulation

✖


dnot allowing commercial banks to issue notes and coins

✖


View Answer making banks keep a certain % of their assets as M0

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