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Other Subjects MCQs With Answers
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The J-Curve effect occurs because in the short run after currency devaluation:
AExport and import quantities are relatively inelastic due to pre-existing contracts
BDomestic inflation falls to zero
CImport prices drop instantly
DExport demand shrinks to zero
The Triffin Dilemma highlights the inherent instability of an international monetary system reliant on:
AGold reserves backing all paper currencies
BA single national currency as the global reserve currency
CFloating exchange rate regimes
DMultilateral trade agreements
The Ricardian Equivalence Hypothesis asserts that government deficit spending funded by borrowing:
ASignificantly increases current aggregate demand
BPermanently lowers interest rates
CHas no net impact on aggregate demand because taxpayers anticipate future tax increases to pay off debt
DEliminates national debt completely
The Balanced Budget Multiplier (when an increase in government spending is matched by an equal increase in taxes) is equal to:
AZero
BFive
CInfinity
DOne
Incidence of a tax refers to the:
AUltimate economic burden of the tax
BInitial legal liability to pay the tax
CCost of collecting the tax by authorities
DTax evasion rate
If demand for a good is perfectly inelastic, the entire economic burden of a specific sales tax falls on:
AThe producers/sellers
BThe consumers
CThe government treasury
DForeign exporters
The Peacock-Wiseman Hypothesis explains growth in public expenditure through periodic jumps called the:
ADemonstration Effect
BCrowding-out Effect
CDisplacement Effect
DPigou Effect
The Principle of Minimum Aggregate Sacrifice in taxation theory was advocated by Edgeworth to justify:
AFlat proportional taxation
BRegressive taxation
CIndirect sales taxation
DProgressive taxation
Current account convertibility of a currency means the freedom to convert it for:
AImport/export of goods, services, and remittance transactions
BPurchase of foreign real estate assets
CForeign stock market acquisitions
DLong-term sovereign debt buying
In the Cambridge Cash Balance Approach to money demand (M = kPY), ‘k’ represents:
AThe velocity of money circulation
BThe real interest rate
CThe fraction of nominal income individuals desire to hold as cash balances
DThe marginal propensity to consume