Economics MCQs

Page No. 342

Which of the following sets of government policies is the most growth oriented ?


a Lower taxes on the returns to saving, provide investment tax credits and lower the deficit


bIncrease tax on the returns to saving Provide investment tax credits and increase the deficit


c Increase tax on the returns to saving Provide investment tax credits and lower the deficit


dLower taxes on the returns to saving Provide investment tax credits and increase the deficit



If the public consumes Rs 100 billion less and the government purchases Rs100 billion more (other things unchanging), Which of the following statement is true ?


aSaving is unchanged


b There is an increased in saving and the economy should grow more quickly


cThere is a decrease in saving and the economy should grow more slowly


dThere is not enough information to determine what will happen to saving


View Answer Saving is unchanged

If government spending exceeds tax collections?


a there is a budget deficit


bNone of these answers


cThere is a budget surplus


dprivate saving is positive



National Saving (or just saving) is equal to ?


a none of these answers


b investment + consumption expenditures


cprivate saving + public saving


dGDP government purchases



Credit risk refers to a bond’s ?


aProbability of default


b Price-earnings ratio


cdividend


dtax treatment



If the government increases investment tax credits and reduces taxes on the return to saving at the same time ?


athe real interest rate should fall


bthe real interest rate should rise


c the impact on the real interest rate is indeterminate


dthe real interest rate should not change



If an increase in the budget deficit reduces national saving and investment we have witnessed a demonstration of ?


aintermediation


bequity finance


ccrowding out


d the investment fund effect


View Answer crowding out

If the Supply of loanable funds is very inelastic (steep) Which policy would likely increase saving and investment the most ?


aa reduction in the budget deficit


b an increase in the budget deficit


can investment tax credit


dNone of the above



An increase in the budget deficit that causes the government to increase its borrowing ?


a Shifts the supply of loanable funds to the right


bShift the demand for loandbale funds to the left


c Shift the demand for loanable funds to the right


d Shift the supply of loanable funds to the left



If Pakistani citizens become more thrifty we would expect ?


aThe supply of loanable funds in the Pakistan loanable funds market to shift to the right and the real interest rate to fall.


b The demand for loanable funds in the Pakistan loanable funds market to shift to the right and the real interest rate to rise


cThe demand for loandable funds in the Pakistan loanable funds market to shift to the right and the real interest rate to fall


dThe supply of loandable funds in the Pakistan loanable funds market to shift to the right and the real interest rate to rise



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