MCQOPTIONS
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MCQOPTIONS
This section includes 78 Mcqs, each offering curated multiple-choice questions to sharpen your Economics knowledge and support exam preparation. Choose a topic below to get started.
| 51. |
If the MPC is 0.5 the multiplier is ? |
| A. | 2 |
| B. | 1/2 |
| C. | 0.2 |
| D. | 20 |
| Answer» B. 1/2 | |
| 52. |
If the government increases spending and raises taxes by just enough to finance this increase it will ? |
| A. | leave output unchanged |
| B. | increase output |
| C. | reduce output |
| D. | increase the MPC |
| Answer» C. reduce output | |
| 53. |
If desired spending in the economy exceeds income we would expect ? |
| A. | households to save more |
| B. | firms to produce less |
| C. | firms to produce more |
| D. | the MPC to change |
| Answer» D. the MPC to change | |
| 54. |
If a result of households wish to save more there is a change in equilibrium income and no change in equilibrium saving this is an example of ? |
| A. | market imperfection |
| B. | the law of diminishing returns |
| C. | the paradox of thrift |
| D. | market failure |
| Answer» D. market failure | |
| 55. |
Historically countries at early stages of rapid economic development have tender to experience ? |
| A. | trade deficit and an excess of investment over domestic saving |
| B. | trade surplus and an excess of investment over domestic saving |
| C. | trade deficits and an excess of domestic savings over investment |
| D. | trade surpluses and an excess of domestic saving over investment |
| Answer» B. trade surplus and an excess of investment over domestic saving | |
| 56. |
Higher export demand __________ output and a higher MPZ __________ output? |
| A. | reduces, reduces |
| B. | reduces, increase |
| C. | increase, reduces |
| D. | increases, increases |
| Answer» D. increases, increases | |
| 57. |
For the first time since World War I, in the mid-1980s the United States became a net international ? |
| A. | exporter |
| B. | importer |
| C. | debtor |
| D. | creditor |
| Answer» D. creditor | |
| 58. |
For given government spending and taxation the government budget deficit will grow in _________ and decline in __________? |
| A. | booms, booms |
| B. | recession, recession |
| C. | booms, recessions |
| D. | recessions, booms |
| Answer» E. | |
| 59. |
Equilibrium in the circular flow of income occurs when ? |
| A. | Injections = withdrawals |
| B. | There is a Bank Holiday |
| C. | Injections withdrawals |
| D. | None of these |
| Answer» B. There is a Bank Holiday | |
| 60. |
Direct investment and security purchases are classified as ? |
| A. | capital account transactions |
| B. | current account transactions |
| C. | unilateral transfer transactions |
| D. | merchandise trade transactions |
| Answer» B. current account transactions | |
| 61. |
Debit entries on the balance of payments are the entries that would ? |
| A. | mean a loss of foreign exchange |
| B. | bring foreign exchange into the country |
| C. | indicate a surplus exist |
| D. | exist at the bottom line after all accounts are totaled |
| Answer» B. bring foreign exchange into the country | |
| 62. |
Current account deficit are offset by______________? |
| A. | merchandise trade deficits |
| B. | merchandise trade surpluses |
| C. | capital/financial account surpluses |
| D. | capital/financial account deficits |
| Answer» D. capital/financial account deficits | |
| 63. |
Credit (+) items in the balance of payments correspond to anything that ? |
| A. | involves receipts from foreigners |
| B. | involves payments to foreigners |
| C. | increases the domestic money supply |
| D. | decreases the demand for foreign exchange |
| Answer» B. involves payments to foreigners | |
| 64. |
Credit (-) items in the balance of payments correspond to anything that ? |
| A. | involves receipts from foreigners |
| B. | involves payments to foreigners |
| C. | increases the domestic money supply |
| D. | decreases the demand for foreign exchange |
| Answer» C. increases the domestic money supply | |
| 65. |
An index of prices of all domestically produced goods in the economy is the ? |
| A. | wholesale price index (WPI) |
| B. | Consumer price index (CPI) |
| C. | GDP deflator |
| D. | Producer price index (PPI) |
| Answer» D. Producer price index (PPI) | |
| 66. |
All of the following are debit items in the balance of payments except ? |
| A. | capital outflows |
| B. | merchandise exports |
| C. | private gifts to foreigners |
| D. | foreign aid granted to other nations |
| Answer» C. private gifts to foreigners | |
| 67. |
All of the following are credit items in the balance of payments except ? |
| A. | investment inflows |
| B. | merchandise exports |
| C. | payments for American services to foreigners |
| D. | private gives to foreign residents |
| Answer» E. | |
| 68. |
Aggregate demand without a foreign sector is the sum of ? |
| A. | C + 1 |
| B. | C + G |
| C. | I + G |
| D. | C + 1 + G |
| Answer» E. | |
| 69. |
Aggregate demand in an economy trading internationally with a government sector can be written as ? |
| A. | AD = C + I |
| B. | AD = C + I + G |
| C. | AD = C + I + G + X + Z |
| D. | AD = C + I + G + X – Z |
| Answer» E. | |
| 70. |
Aggregate demand includes only ? |
| A. | consumer expenditure government expenditure and investment |
| B. | consumer expenditure investment government expenditure and exports less imports |
| C. | consumer debt investment debt and government debt |
| D. | consumer expenditure and investment |
| Answer» B. consumer expenditure investment government expenditure and exports less imports | |
| 71. |
According to the classical economists, the only gainers from growth would be ? |
| A. | landlords |
| B. | peasants |
| C. | The army |
| D. | politicians |
| Answer» B. peasants | |
| 72. |
A nation wishing to reduce its current account deficit would be advised to ? |
| A. | engage in more government spending |
| B. | reduce government taxes |
| C. | increases private investment spending |
| D. | decrease domestic consumption |
| Answer» E. | |
| 73. |
A nation will a current account deficit will be ? |
| A. | lending more money to other nations |
| B. | experiencing a surplus in exports of goods an services |
| C. | reducing its indebtedness to other nations |
| D. | going further into debt with other nations |
| Answer» E. | |
| 74. |
A linear consumption function with a positive slope less than one means that if income increases consumption will ? |
| A. | fall |
| B. | not change |
| C. | fluctuate |
| D. | increase |
| Answer» E. | |
| 75. |
A current account surplus implies that ? |
| A. | the country is a net lender to the rest of the world |
| B. | the country is running a net capital account surplus |
| C. | foreign investment in domestic securities is at very low levels |
| D. | All of the above |
| Answer» B. the country is running a net capital account surplus | |
| 76. |
A country’s transactions with the rest of the world are recorded in the ? |
| A. | balance of international indebtedness |
| B. | balance of financial transactions |
| C. | balance of payments |
| D. | income statements |
| Answer» D. income statements | |
| 77. |
A country that is a net international debtor initially experiences a (an) ? |
| A. | larger savings pool available to finance domestic spending |
| B. | higher interest rate which leads to lower domestic investment |
| C. | loss of funds to trading partners overseas |
| D. | decrease in its services exports to other countries |
| Answer» B. higher interest rate which leads to lower domestic investment | |
| 78. |
A capital account surplus might be expected to cause a current account deficit because the associated ? |
| A. | capital outflow would cause the nation’s currency to depreciate contributing to a trade deficit |
| B. | capital inflow would cause the nation’s currency to depreciate contributing to a trade deficit |
| C. | capital inflow would cause the nation’s currency to appreciate contributing to a trade deficit |
| D. | capital outflow would cause the nation’s currency to appreciate contributing to a trade deficit |
| Answer» D. capital outflow would cause the nation’s currency to appreciate contributing to a trade deficit | |