Business Economics

261. A situation where the firm is not in a position to recover its variable costs at the prevailing prices is known as:

  1. Point of inflation
  2. Equilibrium point
  3. Optimum point
  4. None of these
Correct answer: (D)
None of these

262. The traffic which maximizes a country's economic welfare is called

  1. Discriminatory traffic
  2. Protective traffic
  3. Optimum traffic
  4. Non-Discriminatory traffic
Correct answer: (D)
Non-Discriminatory traffic

263. Suppose that the MPC out of disposable income was 0.8 and the marginal tax rate was 0.25 for a given economy. In this case, the value of the tax multiplier in the simple Keynesian model would be

  1. 1
  2. -2.
  3. 2.5
  4. 2
  5. None of the above
Correct answer: (B)
-2.

264. The role of the progressive tax system as an autonomous fiscal stabilizer requires that the budget

  1. Should require actual deficits be equal to zero on average
  2. Should go into a surplus at appropriate points in the business cycle.
  3. Cannot have a structural deficit component
  4. Both a & b
  5. None of the above
Correct answer: (B)
Should go into a surplus at appropriate points in the business cycle.

265. According to the partisan theory,

  1. Politicians are viewed as working only for their own welfare.
  2. There are two parties with flexible goals
  3. Moderates and liberals often switch political goals
  4. Macroeconomic policy is not a key focus of most politicians
  5. None of these
Correct answer: (A)
Politicians are viewed as working only for their own welfare.

266. Which of the following are the most frequently utilized tools of fiscal policy in the United States?

  1. Indirect business taxes
  2. Corporate income taxes
  3. Inheritance taxes
  4. Personal income taxes
Correct answer: (D)
Personal income taxes

267. Which of the following statements are(is) correct?

  1. Expansionary monetary policy and expansionary fiscal that leads to budget deficits create low interest rates
  2. High interest rates in the first half of the 1980s resulted from falls in the budget deficit under the Reagan administration
  3. The best monetary-fiscal policy mix to keep interest rates low would be to raise taxes and raise the money supply
  4. The answer depends upon the school of thought used to evaluate the effects of deficit policies
Correct answer: (D)
The answer depends upon the school of thought used to evaluate the effects of deficit policies

268. The cyclical deficit is that portion of the deficit

  1. That results form the economy being below the natural rate of output
  2. That would exist even if the economy were at its natural rate of output
  3. Is a function of the level of automatic stabilizers
  4. Both a & c
Correct answer: (D)
Both a & c

269. Adam Smith advocated

  1. Laissez Faire
  2. Division of Labour
  3. Both of these
  4. None of these
Correct answer: (C)
Both of these

270. When an individual's income falls(while everything else remains the same), his demand for an inferior good:

  1. Increases
  2. Decrease
  3. Remains unchanged
  4. We cannot say without additional information
Correct answer: (B)
Decrease
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