MCQOPTIONS
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MCQOPTIONS
This section includes 18 Mcqs, each offering curated multiple-choice questions to sharpen your Economics Mcqs knowledge and support exam preparation. Choose a topic below to get started.
| 1. |
For the Eurozone countries, the most important source of the downward slope of the aggregate demand curve is probably ? |
| A. | The wealth effect |
| B. | None of these answers |
| C. | The exchange-rate effect |
| D. | The fiscal effect |
| E. | The interest-rate effect |
| Answer» F. | |
| 2. |
Which of the following best describes how an increase in the money supply shift the aggregate demand curve ? |
| A. | The money supply shifts right prices fall spending increases and the aggregate demand curve shifts right |
| B. | The money supply shifts right the interest rate rises investment decreases and the aggregate demand curve shifts left |
| C. | The money supply shifts right the interest rate falls, investment increases, and the aggregate demand curve shifts right |
| D. | The money supply shifts right, prices rise, demand curve shifts left |
| Answer» D. The money supply shifts right, prices rise, demand curve shifts left | |
| 3. |
When an increase in government purchases raises incomes shifts money demand to the right raises the interest rate, and lowers investment we have seen a demonstration of ? |
| A. | supply-side economics |
| B. | None of these answers |
| C. | The crowding-out effect |
| D. | The multiplier effects |
| Answer» D. The multiplier effects | |
| 4. |
The initial effect of an increase in the money supply is to ? |
| A. | increase the interest rate |
| B. | increase the price level |
| C. | decrease the price level |
| D. | decrease the interest rate |
| Answer» C. decrease the price level | |
| 5. |
Which of the following is an automatic stabilizer ? |
| A. | Spending on public schools |
| B. | Military spending |
| C. | All of these answers are automatic stabilizers |
| D. | spending on the space shuttle |
| E. | Unemployment benefits |
| Answer» F. | |
| 6. |
The initial impact of an increase in government spending is to shift ? |
| A. | aggregate demand to the right |
| B. | aggregate demand to the left |
| C. | aggregate supply to the right |
| D. | aggregate supply to the left |
| Answer» B. aggregate demand to the left | |
| 7. |
Suppose the government increases its purchases by Rs16 billion. If the multiplier effect exceeds the crowding out effect, then ? |
| A. | The aggregate supply curve shifts to the right by more than Rs 16 billion |
| B. | The aggregate demand curve shifts to the left by more than Rs 16 billion |
| C. | The aggregate demand curve shifts to the right by more than Rs 16 billion |
| D. | the aggregate supply curve shifts to the left by more than Rs 16 billion |
| Answer» D. the aggregate supply curve shifts to the left by more than Rs 16 billion | |
| 8. |
An increase in the marginal propensity to consumer (MPC) ? |
| A. | raises the value of the multiplier |
| B. | has no impact on the value of the multiplier? |
| C. | rarely occurs because the MPC is set by congressional legislation |
| D. | lowers the value of the multiplier |
| Answer» B. has no impact on the value of the multiplier? | |
| 9. |
When money demand is expressed in a graph with the interest rate on the vertical axis and the quantity of money on the horizontal axis an increase in the interest rate ? |
| A. | None of these answers |
| B. | decrease the quantity demanded of money |
| C. | increase the quantity demanded of money |
| D. | decreases the demand for money |
| E. | increases the demand for money |
| Answer» C. increase the quantity demanded of money | |
| 10. |
Which of the following statements about stabilization policy is not true ? |
| A. | Many economists prefer automatic stabilizers because they affect the economy with a shorter lag than activist stabilization policy |
| B. | None of these answers are true |
| C. | Long lags enhance the ability of policy makers to fine tune the economy |
| D. | When policy makers implement activist stabilization policies there is a significant risk that their policies may actually have a destabilizing effect |
| Answer» D. When policy makers implement activist stabilization policies there is a significant risk that their policies may actually have a destabilizing effect | |
| 11. |
Which of the following statements regarding taxes is correct ? |
| A. | Most economists believe that in the short run the greatest impact of a change in taxes is on aggregate supply, not aggregate demand |
| B. | An increase in taxes shifts the aggregate demand curve to the right |
| C. | A decrease in taxes shifts the aggregate supply curve to the left |
| D. | A permanent change in taxes has a greater effect on aggregate demand than a temporary change in taxes. |
| Answer» E. | |
| 12. |
When an increase in government purchases increases the income of some people, and those people spend some of that increase in income on additional consumer goods, we have seen a demonstration of ? |
| A. | The multiplier effects |
| B. | supply side economics |
| C. | None of these answers |
| D. | The crowding out effect |
| Answer» B. supply side economics | |
| 13. |
In the market for real output, the initial effect of an increase in the money supply is to ? |
| A. | shift the aggregate supply curve to the right |
| B. | shift the aggregate supply curve to the left |
| C. | shift the aggregate demand curve to the left |
| D. | shift the aggregate demand curve to the right |
| Answer» E. | |
| 14. |
If the marginal propensity of consume MPC is 0.75 the value of the multiplier is ? |
| A. | 4 |
| B. | 7.5 |
| C. | 5 |
| D. | 0.75 |
| Answer» B. 7.5 | |
| 15. |
Suppose a wave of investor and consumer pessimism in the USA causes a reduction in spending If the US federal Reserve (Which has a broader remit than the Bank of England Which is charged only with controlling inflation) chooses to engage in activist stabilization policy it should ? |
| A. | Increase government spending and decrease taxes |
| B. | decrease the money supply |
| C. | decrease government spending and increase taxes |
| D. | decrease interest rates |
| Answer» E. | |
| 16. |
Suppose a wave of investor and consumer optimisms has increased spending so that the current level of input exceeds the long-run natural rate If policy makers choose to engage in activist stabilization policy they should ? |
| A. | decrease government spending Which the shifts the aggregate demand curve to the left |
| B. | decrease taxes, which shifts the aggregate demand curve to the right |
| C. | decrease taxes, which shifts the aggregate demand curve to the left |
| D. | decrease government spending which shifts the aggregate demand curve to the right |
| Answer» B. decrease taxes, which shifts the aggregate demand curve to the right | |
| 17. |
Keynes liquidity preference theory of the interest rate suggests that the interest rate is determined by ? |
| A. | aggregate supply and aggregate demand |
| B. | the supply and demand for loanable funds |
| C. | the supply and demand for money |
| D. | the supply and demand for labor |
| Answer» D. the supply and demand for labor | |
| 18. |
When supply and demand for money are expressed in a graph with the interest rate on the vertical axis and the quantity of money on the horizontal axis an increase in the price level ? |
| A. | shifts money demand to the right and increases the interest rate |
| B. | None of these answers |
| C. | shifts money demand to the right and decreases the interest rate |
| D. | shifts money demand to the left and increases the interest rate |
| E. | shifts money demand to the left and decrease the interest rate |
| Answer» B. None of these answers | |