MCQs of Economics – Monetary, Fiscal And Incomes Policy, And Inflation

Monetary policy effects the _____ and ______

By using fiscal policy, i (e) varying _____ and/or ____ governments achieve goals for output and employment growth as well as price stability

The Bank of England and the Federal Reserve

_____ states that as real GNP per capita rises, people demand relatively more social goods and relatively fewer private goods

If people with higher incomes pay a higher percentage of income in taxes, the income tax structure is:

The property tax wealth tax inheritance tax and income taxes such as persona and corporate taxes are:

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

Which of the following is NOT true?

Inflation is measured by the:
I- consumer price index (CPI)
II- GDP deflator
III- current account
IV- depreciation

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:

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

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

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

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 behaviour
III- inflation increase the price of foreign goods relative to domestic goods
IV- Inflation imposes a tax on the holders of money

With ____ prices rise in the first sector, remain the same in the second and increase overall

Demand pull inflation result from