If the economy grows the government’s budget position will automatically ?

Related Mcqs:

1. If two countries start with the same real GDP/person and one country grows at 2 percent while the other grows at 4 percent ?

   A. one country will always have 2 percent more real GDP/person than the other
   B. the standard of living in the country growing at 4 percent will start to accelerate away from the slower growing country due to compound growth
   C. the standard of living in the two countries will converge
   D. Next year the country growing at 4 percent will have twice the GDP/person as the country growing at 2 percent

2. 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

3. According to Lewis’s model the dual economy grows only when ?

   A. the modern sector increases its output share relative to the traditional sector
   B. agricultural sector uses modern equipment
   C. agricultural sector hires labor economically
   D. modern manufacturing sector is labor intensive

4. Refer to Exhibit 6.Suppose the economy is in long-run equilibrium at point E. A sudden increase in government spending should move the economy in the direction of point ?

   A. d
   B. G
   C. E
   D. b

5. Starting from a balanced budget, for a given tax rate, an increasing in income will cause the government budget to ?

   A. move into surplus
   B. move into deficit
   C. remain unchanged
   D. None of the above above

6. Refer to Exhibit 6.If People in the economy expect inflation to be 6 percent but inflation turn out to be 3 percent the economy is operating at point ?

   A. H
   B. c
   C. d
   D. F

7. Refer to Exhibit 6.If People in the economy expect inflation to be 3 percent and inflation is 3 percent the economy is operating at point ?

   A. b
   B. I
   C. a
   D. H

8. Refer to Exhibit 6. Suppose the economy is Operating in long-run equilibrium at point E. An unexpected monetary contraction will move the economy in the direction of point ?

   A. H
   B. F
   C. E
   D. c

9. Suppose the economy is initially in long run equilibrium Then suppose there is a drought that destroys much of the wheat crop if policymakers allow the economy to adjust to long-run equilibrium on its own, according to the model to aggregate demand and aggregate supply what happens to prices and output in the long run ?

   A. Output rises; prices are unchanged from the initial value
   B. Output and the price level are unchanged from their initial values
   C. Output falls; prices are unchanged from the initial value
   D. Prices fall; output is unchanged from its initial value

10. The market power effect of an international joint venture can lead to welfare losses for the domestic economy unless offset by cost reductions. Which type of cost reduction would not lead to offsetting welfare gains for the overall economy ?

    A. R&D generating welfare improved technology
    B. development of more productive machinery
    C. new work rules promoting workers efficiency
    D. lower wages extracted from workers