Business Economics Online MCQ Set 12

QN01. The real business cycle theory

  1. Argues for active stabilization policy.
  2. Argues for interventionist policies in response to recessions
  3. Is in favor of a constant money growth rate rule for the money stock
  4. Is an offshoot of Monetarist theory
  5. None of the above
Answer

(E)None of the above

QN02. Which of the following shocks have been emphasized most often with respect to real business cycle story?

  1. Shocks to technology
  2. Variations in environmental conditions
  3. Changes in the real(relative) prices of imported raw materials
  4. Changes in tax rates
  5. None of the above
Answer

(A)Shocks to technology

QN03. In real business cycle models, business cycles are caused by _________________, while in new Keynesian model business cycles are caused by _________________

  1. Aggregate demand ; Aggregate demand
  2. Aggregate demand ; Aggregate supply
  3. Aggregate supply; Aggregate demand
  4. Fiscal policy ; monetary policy
Answer

(C)Aggregate supply; Aggregate demand

QN04. Advocates of real business cycle theories argue that all of the following could cause a recession except

  1. A fall in consumer expectations
  2. Natural disasters
  3. Higher taxation
  4. Increase in the price of oil
Answer

(A)A fall in consumer expectations

QN05. Many economists who accept the real business cycle explanations of economic fluctuations

  1. Believe that the Sharpe rise in the relative price of imported oil was the central cause of the deep recession in the United States in the mid-1970s
  2. Believe that the restrictive Federal reserve Monetary policy was the central cause of the deep recession in the United States in the mid-1970s
  3. Believe that the Sharpe rise in the relative price of imported oil was not the main cause of the deep recession in the United States in the mid-1970s
  4. Both a and c
  5. None of the above
Answer

(A)Believe that the Sharpe rise in the relative price of imported oil was the central cause of the deep recession in the United States in the mid-1970s

QN06. The five year plan in India are launched after the approval of

  1. The President and Prime Minister
  2. The Rajya Sabha
  3. The National Development Council (NDC)
  4. The Lok Sabha
Answer

(C)The National Development Council (NDC)

QN07. Dualism in development economics refers to

  1. Dual price policy
  2. Co-existence of technical and non-technical sectors
  3. Co-existence of modern and traditional sectors
  4. Co-existence of institutional and non- institutional agencies
Answer

(C)Co-existence of modern and traditional sectors

QN08. Determination of price through interaction of demand and supply was introduced by:

  1. Keynes
  2. Marshall
  3. Pigou
  4. Walras
Answer

(D)Walras

QN09. The imposition of an import tariff by a nation will increase the nation's welfare:

  1. Never
  2. Often
  3. Sometimes
  4. Always
Answer

(C)Sometimes

QN10. Factor intensity as it is used in economics, is primarily s:

  1. Relative concept
  2. Absolute concept
  3. Abstract concept
  4. Empirical concept
Answer

(A)Relative concept

QN11. A situation where the firm is not in a position to recover its variable costs at the prevailing prices is known as:

  1. Point of inflation
  2. Equilibrium point
  3. Optimum point
  4. None of these
Answer

(D)None of these

QN12. The traffic which maximizes a country's economic welfare is called

  1. Discriminatory traffic
  2. Protective traffic
  3. Optimum traffic
  4. Non-Discriminatory traffic
Answer

(D)Non-Discriminatory traffic

QN13. Suppose that the MPC out of disposable income was 0.8 and the marginal tax rate was 0.25 for a given economy. In this case, the value of the tax multiplier in the simple Keynesian model would be

  1. 1
  2. -2.
  3. 2.5
  4. 2
  5. None of the above
Answer

(B)-2.

QN14. The role of the progressive tax system as an autonomous fiscal stabilizer requires that the budget

  1. Should require actual deficits be equal to zero on average
  2. Should go into a surplus at appropriate points in the business cycle.
  3. Cannot have a structural deficit component
  4. Both a & b
  5. None of the above
Answer

(B)Should go into a surplus at appropriate points in the business cycle.

QN15. According to the partisan theory,

  1. Politicians are viewed as working only for their own welfare.
  2. There are two parties with flexible goals
  3. Moderates and liberals often switch political goals
  4. Macroeconomic policy is not a key focus of most politicians
  5. None of these
Answer

(A)Politicians are viewed as working only for their own welfare.

QN16. Which of the following are the most frequently utilized tools of fiscal policy in the United States?

  1. Indirect business taxes
  2. Corporate income taxes
  3. Inheritance taxes
  4. Personal income taxes
Answer

(D)Personal income taxes

QN17. Which of the following statements are(is) correct?

  1. Expansionary monetary policy and expansionary fiscal that leads to budget deficits create low interest rates
  2. High interest rates in the first half of the 1980s resulted from falls in the budget deficit under the Reagan administration
  3. The best monetary-fiscal policy mix to keep interest rates low would be to raise taxes and raise the money supply
  4. The answer depends upon the school of thought used to evaluate the effects of deficit policies
Answer

(D)The answer depends upon the school of thought used to evaluate the effects of deficit policies

QN18. The cyclical deficit is that portion of the deficit

  1. That results form the economy being below the natural rate of output
  2. That would exist even if the economy were at its natural rate of output
  3. Is a function of the level of automatic stabilizers
  4. Both a & c
Answer

(D)Both a & c

QN19. Adam Smith advocated

  1. Laissez Faire
  2. Division of Labour
  3. Both of these
  4. None of these
Answer

(C)Both of these

QN20. When an individual's income falls(while everything else remains the same), his demand for an inferior good:

  1. Increases
  2. Decrease
  3. Remains unchanged
  4. We cannot say without additional information
Answer

(B)Decrease

QN21. A demand curve which takes the form of horizontal line parallel to quantity axis illustrates elasticity which is:

  1. Zero
  2. Infinite
  3. Greater than one
  4. Less than one
Answer

(D)Less than one

QN22. If the quantity of a commodity demanded remains unchanged as its price changes, the coefficient of price elasticity of demand is

  1. Greater than 1
  2. Equal to 1
  3. Less than 1
  4. Zero
Answer

(D)Zero

QN23. Real business cycle proponents argue that

  1. Recessions are caused by movements of output away from the natural rate of output
  2. Prices and wages are sticky
  3. Macroeconomics should be based on the same assumptions as microeconomics
  4. Monetary policy is important in determining recessions
Answer

(C)Macroeconomics should be based on the same assumptions as microeconomics

QN24. In real business cycle models and new classical models

  1. Monetary factors are responsible for fluctuations in output and employment
  2. Changes in unemployment are involuntary
  3. Markets always clear
  4. Prices and wages are perfectly flexible
  5. None of the above
Answer

(D)Prices and wages are perfectly flexible

QN25. In any efficiency wage model it must be true that

  1. The marginal benefit of increased efficiency is equal to the marginal cost of higher wages
  2. Nominal wages are inflexible
  3. Disequilibrium in the labor market exists
  4. All of the above
  5. None of the above
Answer

(D)All of the above

QN26. The real business cycle theory and the new classical theory agree that

  1. Business cycles are driven by changes in Aggregate demand
  2. Expectations are formed rationally
  3. Imperfect information plays a big role in business cycles
  4. None of the above
Answer

(B)Expectations are formed rationally

QN27. According to real business cycle theory an increase in taxes

  1. Would significantly reduce labor supply, increase employment, and decrease output
  2. A decline in employment but not in output
  3. Would significantly reduce labor supply, decrease employment, and decrease output
  4. No change in output and employment
Answer

(C)Would significantly reduce labor supply, decrease employment, and decrease output

QN28. New Keynesian theories of efficiency wages imply

  1. Voluntary unemployment
  2. Real wage rigidity
  3. Changes in unemployment represent changes in the natural rate of unemployment
  4. None of the above
Answer

(B)Real wage rigidity

QN29. Deductive method

  1. Moves from general to particular
  2. Moves from particular to general
  3. Is based on hypothesis
  4. Both a and b
Answer

(A)Moves from general to particular

QN30. If external debt of country rises faster than its interest obligations, it is a case of:

  1. Dept trap
  2. Liquidity trap
  3. Poverty trap
  4. Export led growth
Answer

(A)Dept trap

QN31. Indian exports were increased during 2001-2002 and it went upto the level of:

  1. 39.8 billion dollars
  2. 28.2 billion dollars
  3. 44.0 billion dollars
  4. 45.6 billion dollars
Answer

(C)44.0 billion dollars

QN32. The interrelation between innovations and investment opportunity was first pointed out by:

  1. Schumpeter
  2. Samuelson
  3. T. R. Hicks
  4. Torgenson
Answer

(D)Torgenson

QN33. Who has suggested the utilization of “disguised unemployment” as a source of savings potential in underdeveloped countries?

  1. W.A Lewis
  2. Ragnar Nurkse
  3. Gunnar Myrdal
  4. K.K Kurihara
Answer

(B)Ragnar Nurkse

QN34. Suppose that the MPC out of disposable income was 0.8 and the tax function for a given economy was T= -30+0.25Y. an increase in the intercept of the tax function of 10 units(from -30 to -20 would cause equilibrium income in the simple Keynesian model to fall by

  1. -20 units
  2. 10 units
  3. 20 units
  4. 40 units
Answer

(C)20 units

QN35. Advocates of the public-choice view argue that voting behaviour is influenced by the

  1. Rate of inflation prior to an election.
  2. Level of economic activity.
  3. Favourite son syndrome.
  4. Campaign issues
Answer

(B)Level of economic activity.

QN36. Assume that the actual deficit is $150 billion with the economy well below potential output and that the level of economic activity rose to its potential level while tax revenues increased by $50 billion and transfer payments fell by $20 billion. Then, what is the structural deficit?

  1. $180 billion
  2. $120 billion
  3. $220 billion
  4. $80 billion
Answer

(D)$80 billion

QN37. From the net tax function: T=t0+t1Y,where t0<0 and t1>0, it follows that, as income rises

  1. average taxes falls and the surplus declines
  2. average taxes rises and the deficit increases
  3. average taxes falls and the deficit declines
  4. average taxes and the deficit do not change
Answer

(C)average taxes falls and the deficit declines

QN38. The book 'Asian Drama' was written by

  1. A.C Pigou
  2. D.Ricardov
  3. Gunnar Myrdal
  4. Lionel Robbins
Answer

(C)Gunnar Myrdal

QN39. An exceptional demand curve is one that slopes

  1. Upward to the left
  2. Downward to the right
  3. Horizontally
  4. Upward to the right
Answer

(D)Upward to the right

QN40. When the demand curve is a rectangular hyperbola, it represents:

  1. Perfectly elastic demand
  2. Unitary elastic demand
  3. Perfectly inelastic demand
  4. Relatively elastic demand
Answer

(B)Unitary elastic demand

ed010d383e1f191bdb025d5985cc03fc?s=120&d=mm&r=g

DistPub Team

Distance Publisher (DistPub.com) provide project writing help from year 2007 and provide writing and editing help to hundreds student every year.