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Question-1
A outside shift in the demand for money other things being equal should lead to
(A)
A lower interest rate but the same quantity of money
(B)
A higher interest rate but the same quantity of money
(C)
A higher quantity of money but lower interest rates
(D)
A higher quantity of money but the same interest rate
Question-2
A reflationary fiscal policy could include
(A)
Lower interest rate
(B)
Increased lending by the banks
(C)
An increase in corporation tax
(D)
An increase in discretionary government spending
Question-3
The precautionary demand for money is
(A)
An idle balance
(B)
An active balance
(C)
Directly related to interest rates
(D)
Inversely related to income
Question-4
A fall in interest rates is likely to
(A)
Increase aggregate demand
(B)
Increase savings
(C)
Decrease consumption
(D)
Decrease exports
Question-5
The liquidity trap occurs when the demand for money
(A)
Is perfectly interest elastic
(B)
Is perfectly interest inelastic
(C)
Means that an increase in money supply leads to a fall in the interest rate
(D)
Means that an increase in the money supply leads to an increase in the interest rate
Question-6
To reduce the supply of money the government could
(A)
Reduce interest rates
(B)
Buy back government bonds
(C)
Sell government bonds
(D)
Encourage banks to lend
Question-7
A government might use tax to
(A)
Discourage consumption of goods with positive externalities
(B)
Discourage consumption of merit goods
(C)
Discourage consumption of public goods
(D)
Discourage consumption of goods with negative externalities
Question-8
According to the quantity theory of money supply is most likely to lead to inflation if
(A)
The velocity of circulation decreases
(B)
The number of transactions decreases
(C)
There is deflation
(D)
The velocity of circulation and the number of transactions is constant
Question-9
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-10
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 as income increases
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Std 10
ICSE/ISC
Practice in Related Chapters
Alternative Market Structure: Basic Concepts
Demand and Supply: Basic Concepts
The Productive Mechanism
State and Economic Development
Money and Banking: Basic Concept
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