Managerial Economics MCQs and Notes

R

Ranjeet • 34.60K Points
Instructor I

Q 41. According to the Keynesians,

(A) An easy-fiscal tight-monetary policy reduces the trade deficit, such as what occurred during the 1980s
(B) An easy-fiscal tight-monetary policy mix affects the composition of output by encouraging imports of foreign goods and discouraging U.S. exports, as was experienced during the 1980s
(C) There was not a link between the rising government budgetary deficit and the rising trade deficit during the mid-1980s
(D) Budget deficits and trade deficits should not be a source of concern

R

Ranjeet • 34.60K Points
Instructor I

Q 42. The structural deficit is

(A) Directly attributable to the long-run behaviour of the economy
(B) Not directly attributable to the cyclical behaviour of the economy
(C) The result of permanent decisions policymakers have made about tax rates, the level of government spending, and benefit levels for transfer programs.
(D) Both b and c

P

Praveen Singh • 36.81K Points
Coach

Q 43. 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?

(A) $180 billion
(B) $120 billion
(C) $220 billion
(D) $80 billion

S

Shiva Ram • 30.44K Points
Instructor I

Q 44. Which of the following are the most frequently utilized tools of fiscal policy in the United States?

(A) Indirect business taxes
(B) Corporate income taxes
(C) Inheritance taxes
(D) Personal income taxes

A

Admin • 36.96K Points
Coach

Q 45. According to the Keynesian model, the optimal fiscal policy is to

(A) Increase cyclical but not structural deficits during a recession
(B) Reduce cyclical and structural deficits during a recession
(C) Increase structural deficits during a recession
(D) Maintain a balanced budget in case of national emergency

G

Gopal Sharma • 38.32K Points
Coach

Q 46. When automatic fiscal stabilizers are in place, a shock that causes a fall in the kevel of economic activity automatically

(A) Results in a decline in the federal budget deficit that lessens the fall in income
(B) Results in a rise in the federal deficit that lessens the fall in income
(C) Requires the federal government to balance the budget
(D) Will lead to a permanent increase in the budget deficit

V

Vijay Sangwan • 28.62K Points
Instructor II

Q 47. Which of the following statements is(are) correct?

(A) Even the earliest political business cycle and partisan models assume that expectations were rational
(B) The partisan model of fiscal policy cannot be modified to be consistent with rational expectations
(C) The myopic, or short-sighted behaviour of voters is inconsistent with rational expectations
(D) The earliest political business cycle models assumed that expectations were always rational, whereas the partisan model assumed that expectations were sometimes irrational.

S

Shiva Ram • 30.44K Points
Instructor I

Q 48. According to the partisan theory,

(A) Politicians are viewed as working only for their own welfare.
(B) There are two parties with flexible goals
(C) Moderates and liberals often switch political goals
(D) Macroeconomic policy is not a key focus of most politicians

R

Rakesh Kumar • 28.44K Points
Instructor II

Q 49. Advocates of the public-choice view argue that voting behaviour is influenced by the

(A) Rate of inflation prior to an election.
(B) Level of economic activity.
(C) “Favourite son syndrome.
(D) Campaign issues

A

Admin • 36.96K Points
Coach

Q 50. In the simple Keynesian model, if the tax function is given by T=0.15Y and the consumption function is C= 50 + 0.7 YD then a 10-unit ncrease in government spending would increase equilibrium income by

(A) 10 units
(B) 11.2 units
(C) 22.4 units
(D) 30 units

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