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

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

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

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

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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

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

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

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

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View Answer Saving is unchanged

If government spending exceeds tax collections?


a there is a budget deficit

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bNone of these answers

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cThere is a budget surplus

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dprivate saving is positive

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National Saving (or just saving) is equal to ?


a none of these answers

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b investment + consumption expenditures

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cprivate saving + public saving

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dGDP government purchases

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Credit risk refers to a bond’s ?


aProbability of default

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b Price-earnings ratio

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cdividend

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dtax treatment

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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

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bthe real interest rate should rise

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c the impact on the real interest rate is indeterminate

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dthe real interest rate should not change

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


aintermediation

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bequity finance

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ccrowding out

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d the investment fund effect

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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

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b an increase in the budget deficit

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can investment tax credit

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dNone of the above

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


a Shifts the supply of loanable funds to the right

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bShift the demand for loandbale funds to the left

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c Shift the demand for loanable funds to the right

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d Shift the supply of loanable funds to the left

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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.

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

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

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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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