Explore topic-wise MCQs in Economics Mcqs.

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
Discussion
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
Discussion
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
Discussion
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
Discussion
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.
Discussion
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.
Discussion
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
Discussion
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.
Discussion
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.
Discussion
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
Discussion
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
Discussion
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
Discussion
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.
Discussion
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
Discussion
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
Discussion
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
Discussion