MCQOPTIONS
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MCQOPTIONS
This section includes 16 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. |
Inflation is measured by the ? I- consumer price index (CPI) II- GDP deflator III- current account IV- depreciation |
| A. | I and II only |
| B. | I and III only |
| C. | III and IV only |
| D. | I, II and III |
| Answer» B. I and III only | |
| 2. |
Which of the following are costs of inflation ? I- inflation weakens the creation of credit and capital markets II- inflation distorts business behavior especially investment behavior III- inflation increase the price of foreign goods relative to domestic goods IV- Inflation imposes a tax on the holders of money |
| A. | I and II only |
| B. | III and IV only |
| C. | I, II and IV only |
| D. | I, II and III only |
| Answer» D. I, II and III only | |
| 3. |
Under financial repression ? I- banks engage in non-price rationing of loans II- banks face pressure for loans to those with political connections III- banks charge a high premium on foreign investments IV- banks depend on foreign banks to set interest rates |
| A. | I and II only |
| B. | III and IV only |
| C. | I, II and III only |
| D. | I, II , III and IV |
| Answer» B. III and IV only | |
| 4. |
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 ? |
| A. | adverse selection |
| B. | moral hazard |
| C. | social goods |
| D. | hyperinflation |
| Answer» B. moral hazard | |
| 5. |
Which of the following is NOT true ? |
| A. | Taxes on international trade are the major source of tax revenue for low-income countries with poor administrative capacity |
| B. | import duties can restrict luxury goods consumption |
| C. | several LDCs have used value-added taxes to raise a substantial fraction of revenues |
| D. | Cascade tax a form of progressive tax, is dominant in DCs |
| Answer» E. | |
| 6. |
Central banks in LDCs generally have less effect on expenditure and output than in LDCs because of ? I- an externally dependent banking system II- a poorly developed securities market III- a low percentage of demand deposits divided by the total money supply IV- the relative insensitivity of investment and employment to monetary policies |
| A. | I and II only |
| B. | III and IV only |
| C. | I, II and III only |
| D. | I, II , III and IV |
| Answer» E. | |
| 7. |
With _______ prices rise in the first sector, remain the same in the second and increase overall? |
| A. | ratchet inflation |
| B. | inflationary expectations |
| C. | import substitution |
| D. | demand pull inflation |
| Answer» B. inflationary expectations | |
| 8. |
fiscal incentives to attract businesses from abroad include ? I- tax holidays II- accelerated depreciation III- import duty relief IV- lower tax rates for reinvested business profits |
| A. | I and II only |
| B. | III and IV only |
| C. | I, II and III only |
| D. | I, II, III, and IV |
| Answer» E. | |
| 9. |
By using fiscal policy, i (e) varying ______ and/or _____ governments achieve goals for output and employment growth as well as price stability? |
| A. | demand pull inflation tax elasticity |
| B. | interest rates, financial liberalization |
| C. | interest rates, tax rates |
| D. | tax rates, government spending |
| Answer» E. | |
| 10. |
If people with higher incomes pay a higher percentage of income in taxes, the income tax structure is ? |
| A. | progressive |
| B. | regressive |
| C. | value added taxes (VAT) |
| D. | excise taxes |
| Answer» B. regressive | |
| 11. |
The Bank of England and the Federal Reserve ? |
| A. | are central banks |
| B. | are branches of commercial banks |
| C. | use fiscal policy to influence GDP |
| D. | loan money to most of LDC commercial banks |
| Answer» B. are branches of commercial banks | |
| 12. |
Monetary policy effects the _________ and __________? |
| A. | reserve, unemployment |
| B. | money supply, interest rate |
| C. | taxes, exchange rate |
| D. | stock price, minimum wage |
| Answer» C. taxes, exchange rate | |
| 13. |
During Stagflation ? I- an increase in aggregate spending will eliminate the recession II- a decrease in aggregate spending will reduce inflation III- government faces contradictory goals IV- the central bank decease money supply to reduce inflation |
| A. | I and II only |
| B. | III and IV only |
| C. | I ,II and III only |
| D. | I , II , III, and IV |
| Answer» E. | |
| 14. |
_______ 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 |
| D. | Fiscal policy |
| Answer» D. Fiscal policy | |
| 15. |
Demand pull inflation result from ? |
| A. | demand 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 |
| C. | a 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 |
| Answer» C. a shortage of demand for goods and services in excess of supply during depression | |
| 16. |
The property tax wealth tax inheritance tax and income taxes such as persona and corporate taxes are ? |
| A. | indirect taxes |
| B. | direct taxes |
| C. | inelastic |
| D. | value-added tax |
| Answer» C. inelastic | |