24.objective

Question 1 A reflationary (expansionist) fiscal policy could include: a) Lower interest rates b) Increased lending by the banks c) An increase in corporation tax d) An increase in discretionary government spending Question 2 If the economy grows the government's budget position should automatically: a) Worsen b) Improve c) Stay the same d) Decrease with inflation Question 3 Fiscal drag occurs when: a) Tax bands do not increase with inflation b) Tax rates move inversely with inflation c) Government spending falls to reduce aggregate demand d) Tax bands increase with inflation Question 4 If the marginal rate of tax is 40% and consumers' income increase from Rs.10,000 to Rs.12,000: a) The amount of tax paid will increase by Rs.4,800 b) The amount of tax paid will increase by Rs.4,000 c) The amount of tax paid will increase by Rs.800 d) The total tax paid will be Rs.4,800 Question 5 Imagine there is no tax on income up to Rs.10000; after that, there is a tax of 50%. What is the average tax rate on anincome of Rs.20000? a) Rs.5000 b) 20% c) 25% d) Rs.10,000 Question 6 The marginal rate of tax paid is: a) The total tax paid / total income b) Total income / total tax paid c) Change in the tax paid / change in income d) Change in income / change in tax paid Question 7 In a regressive tax system: a) The amount of tax paid increases with income b) The average rate of tax decreases with more income c) The average rate of tax falls as income increases d) The average rate of tax is constant asincome increases Question 8 The Public Sector Net Cash Requirement(PSNCR) is: a) A measure of the government's tradeposition b) A measure of the government's budget position c) A measure of the government'stotal debt d) A measure of the government's monetary stance Question 9 A government might use tax to: a) Discourage consumption of goods with positive externalities b) Discourage consumption of public goods c) Discourage consumption of merit goods d) Discourage consumption of goods with negative externalities Question 10 A budget deficit is likely to: a) Boost aggregate demand b) Lead to less import spending c) Lead to falling prices d) Leads to more unemployment.