Macroeconomics Quiz

When is the budget of a government described as balanced?

• When direct taxes and indirect taxes are equal.

• When exports and imports are equal

• When government spending and revenue are equal

• When the demand for money and the supply of money are equal

Which one of the following types of household is most likely to spend the highest proportion of its disposable income?

• High income, middle-aged with no children

• Low income, young single parent with young children

• Middle income, young single person with no children

• High income, middle-aged couple with two grown-up children

A government fixes the rate of income tax at $0.15 per dollar earned. Which word describes this type of tax?

• Indrect

• Progressive

• Proportional

• Regressive

A government wishes to stimulate economic activity in its national economy. Which action will assist this?

• Decreasing government investment

• Decreasing income tax

• Increasing indirect taxation

• Increasing interest rates

India is experiencing rapid growth in air travel. The number and size of airlines is increasing every year. Which effect arising from this growth is an external economy of scale?

• Banks offer low-cost credit facilities to large airlines

• Fuel suppliers charge lower prices to airlines that buy in bulk

• Colleges are established to train flight crew

• Larger airlines operate aircraft which can carry more passengers

A government may adopt a number of supply-side policies to encourage economic growth. Which of the following is a supply-side policy?

• Increasing the money supply

• Lowering interest rates

• Reducing direct taxation

• Retraining unemployed workers

A firm intends to expand its scale of production by investing in additional factory space and machinery. What immediate impact will this decision have on its costs?

• Total variable costs will rise

• Total fixed costs will rise

• Total cost will be unchanged

• Average costs will rise

Labour force participation has been rising over time in many countries. What is the most likely reasons for this trend?

• Unemployment has fallen

• More females have entered employment

• The working population has increased

• More people are retiring earlier

Government advisors have suggested the following policies to reduce youth unemployment. Which policy would not increase public expenditure?

• Cutting the minimum wage paid to young people

• Raising the school-leaving age

• Giving a subsidy to employers to recruit young people

• Introducing a national military service for all

What exists in a highly competitive market but not in monopoly?

• Barriers to entry

• Economies of scale

• Many sellers

• Product differentiation