Economics MCQs

Page No. 286

Which of the following are costs of inflation ?


ainflation weakens the creation of credit and capital markets


b inflation distorts business behavior especially investment behavior


c inflation increase the price of foreign goods relative to domestic goods


dA , B and C


View Answer A , B and C

Central banks in LDCs generally have less effect on expenditure and output than in LDCs because of ?


a an externally dependent banking system


ba poorly developed securities market


ca low percentage of demand deposits divided by the total money supply


dA , B and C


View Answer A , B and C

When the financial system lacks the capability of making judgement about investment opportunities due to asymmetric information leading to potentially bad credit risks lending is subject to ?


aadverse selection


bmoral hazard


csocial goods


dhyperinflation


View Answer adverse selection

The property tax wealth tax inheritance tax and income taxes such as persona and corporate taxes are ?


a indirect taxes


bdirect taxes


cinelastic


d value-added tax


View Answer direct taxes

_______ states that as real GNP per capita rises, people demand relatively more social goods and relatively fewer private goods?


a incomes policy


b Moral hazard


c Wagner’s law


dFiscal policy


View Answer Wagner’s law

By using fiscal policy, i (e) varying ______ and/or _____ governments achieve goals for output and employment growth as well as price stability?


ademand pull inflation tax elasticity


b interest rates, financial liberalization


cinterest rates, tax rates


d tax rates, government spending



Demand pull inflation result from ?


ademand for government spending on public goods goes due to lack of financial backup through tax collection


b consumer business and government demand for goods and services in excess of an economy’s capacity to produce


ca shortage of demand for goods and services in excess of supply during depression


d demand for public goods is greater than demand for consumer goods



With _______ prices rise in the first sector, remain the same in the second and increase overall?


aratchet inflation


b inflationary expectations


cimport substitution


ddemand pull inflation


View Answer ratchet inflation

During Stagflation ?


aan increase in aggregate spending will eliminate the recession


ba decrease in aggregate spending will reduce inflation


c government faces contradictory goals


dA , B and C


View Answer A , B and C

Inflation is measured by the ?


aconsumer price index (CPI)


bGDP deflator


ccurrent account


dA and B


View Answer A and B

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