Important Monetary economics mcqs for all types of test preparation related to studies of economics.
Monetary Economics MCQs
Monetary policy effects the _________ and __________?
A. reserve, unemployment
B. money supply, interest rate
C. taxes, exchange rate
D. stock price, minimum wage
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
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
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
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
_______ 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
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
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
Automatic stabilisers act to ____ government expenditures and ____ government revenues during recessions ?
A. increase: increase
B. decrease; decrease
C. increase; decrease
D. decrease; increase
The negative effect on the economy that occurs when average tax rates increase because taxpayers have moved into higher income brackets during an expansion is ?
A. debt burden
B. the Laffer curves
C. bracket creep
D. fiscal drag
Time lags which often erode effectiveness of monetary and fiscal policy measures represent ?
A. delays in the response of the economy is stabilization policy
B. the foreign response to price changes
C. the change in exports and imports prices
D. the change in exchange rates
The multiple by which total deposits can increase for every pound increase in reserves is the ?
A. Money multiplier
B. liquidity ratio
C. bank’s line of credit
D. required reserve ratio
The idea that the money supply should change to accommodate changes in aggregate demand is associated with the idea of ?
A. Margaret Thatcher
B. Ronald Reagan
C. Milton Friedman
D. John Maynard Keynes
By financial crowding out economist mean ?
A. credit rationing
B. government borrowing drives up interest rates
C. Bank of England controls on commercial bank lending
D. what the government borrows cannot be used for private investment
If the state Bank of Pakistan wished to pursue an expansionary monetary policy it would ?
A. increase the minimum reserve asset ratio.
B. buy government securities on the open market
C. raise interest rates
D. sell government securities on the open market
Fiscal drag occurs when ?
A. Tax bands do not increase with inflation
B. Tax rates move inversely with inflation
C. Government spending falls to reduce aggregate demand
D. Tax banks increase with inflation
Imagine there is no tax on income up to Rs 1000 after that there is a tax of 505 what is the average tax rate on an income of Rs 20,000 ?
A. Rs 50000
B. 20%
C. 25%
D. Rs 10000
The marginal rate of tax paid is ?
A. The total tax paid / total income
B. Total income / total tax paid
C. Change in the tax paid / change in income
D. Change in income / change in tax paid
The public Sector Net Cash Requirement (PSNCR) is ?
A. A measure of the country’s trade position
B. A measure of the country’s budget position
C. A measure of the country’s total debt
D. A measure of the government’s monetary stance
As an economy grows ?
A. The government’s budget position should automatically improve
B. The government’s budget position should automatically worsen
C. This will have no effect on the government’s budget position
D. This will reduce the government’s tax revenue
Net taxes are ?
A. taxes paid by firms and households
B. the amount of money you have left after subtracting taxes
C. Taxes paid by firms and households to the government
D. government expenditures minus government revenues
Automatic stabilizers act to ______ government expenditures and _______ government revenue during an expansionary period?
A. increase; increase
B. decrease; increase
C. increase; decrease
D. decrease; decrease
The budget deficit tends to decrease then ?
A. GDP decrease rapidly
B. GDP remains unchanged
C. GDP decrease slightly
D. GDP increase
The implementation lag for monetary policy is generally ?
A. the same as it is for fiscal policy
B. much shorter than it is for fiscal policy
C. mush longer than it is for fiscal policy
D. unrelated to central bank action
As the required reserve ratio is decreased the money multiplier ?
A. could either increase or decrease
B. decrease
C. increase
D. remain the same, as long as bank hold no excess reserves
A reflationary (expansionist) fiscal policy could include ?
A. Lower interest rates
B. Increased lending by the banks
C. An increase in corporation tax
D. An increase in discretionary government spending
If the economy grows the government’s budget position will automatically ?
A. worsen
B. Improve
C. Stay the same
D. Increase with inflation
Read More: Economics MCQs related to different topics of economics Studies.
