Macroeconomics

The production of which type of product has to be financed by taxation ?

• those that are unprofitable

• those that are both non rival and non excludable

• those that have higher social costs than private costs

• those that are luxury items

What is macroeconomic policy objective?

• to increase employment

• to increase the output of the car industry

• to reduce the price level

• to reduce economic growth

Which change is most likely to reduce total demand ?

• an increase in investment

• an increase in savings

• a reduction in government tax revenue

• a reduction in imports

How may fiscal policy increase total (aggregate) demand?

• by cutting the rate of interest

• by cutting the rate of taxation

• by increasing the budget surplus

• by increasing the money supply

Which policy measure is an example of monetary policy designed to reduce total (aggregate) demand?

• a limit placed on bank lending

• a reduction in interest rates

• a rise in income tax

• a switch in government spending from consumer to capital goods

Which policy measure would be classified as a fiscal policy instrument?

• a cut in the interest rate of interest

• an increase in the money supply

• the imposition of a quota

• a rise in government spending on defence

What is meant by incidence of taxation ?

• how the tax burden is shared between consumers and producers

• the extent to which tax is evaded

• what proportion of the country's products are taxed

• who receives the tax revenue raised

What is meant by a regressive tax ?

• one designed to create a more even distribution of income

• one which is impossible to evade

• one which is earning less tax revenue than previously

• one which takes a larger percentage of tax from the poor than the rich

Which feature is a quality of good tax ?

• Convenience

• Divisibility

• Durability

• Homogeneity

Why may full employment and price stability conflict as government aims?

• full employment may benefit from a fall in the exchange rate whereas price stability may benefit from a rise in the exchange rate

• full employment may benefit from an increase in aggregate supply whereas price stability may benefit from a decrease in aggregate supply

• to achieve full employment may require a decrease in aggregate demand whereas to achieve price stability may require an increase in aggregate demand

• to achieve full employment may require an increase in the rate of interest whereas price stability may require a decrease in the rate of interest.