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Chapter 23 Multiple Choice Questions
Return to Foundations of Economics 5e Student Resources
Chapter 23 Multiple Choice Questions
Money
Quiz Content
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A reflationary (expansionist) fiscal policy could include:
Lower interest rates
correct
incorrect
Increased lending by the banks
correct
incorrect
An increase in corporation tax
correct
incorrect
An increase in discretionary government spending
correct
incorrect
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If the economy grows, the government's budget position should automatically:
Worsen
correct
incorrect
Improve
correct
incorrect
Stay the same
correct
incorrect
Decrease with inflation
correct
incorrect
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Fiscal drag occurs when:
Tax bands do not increase with inflation
correct
incorrect
Tax rates move inversely with inflation
correct
incorrect
Government spending falls to reduce aggregate demand
correct
incorrect
Tax bands increase with inflation
correct
incorrect
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If the marginal rate of tax is 40% and consumers' income increases from £10,000 to £12,000:
The amount of tax paid will increase by £4,800
correct
incorrect
The amount of tax paid will increase by £4,000
correct
incorrect
The amount of tax paid will increase by £800
correct
incorrect
The total tax paid will be £4,800
correct
incorrect
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Imagine there is no tax on income up to £10,000; after that, there is a tax of 50%. What is the average tax rate on an income of £20,000?
£5,000
correct
incorrect
20%
correct
incorrect
25%
correct
incorrect
£10,000
correct
incorrect
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The marginal rate of tax paid is:
The total tax paid / total income
correct
incorrect
Total income / total tax paid
correct
incorrect
Change in the tax paid / change in income
correct
incorrect
Change in income / change in tax paid
correct
incorrect
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In a regressive tax system:
The amount of tax paid increases with income
correct
incorrect
The average rate of tax decreases with less income
correct
incorrect
The average rate of tax falls as income increases
correct
incorrect
The average rate of tax is constant as income increases
correct
incorrect
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The Public Sector Net Borrowing is:
A measure of the government's trade position
correct
incorrect
A measure of the government's budget position
correct
incorrect
A measure of the government's total debt
correct
incorrect
A measure of the government's monetary stance
correct
incorrect
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A government might use tax to:
Discourage consumption of goods with positive externalities
correct
incorrect
Discourage consumption of public goods
correct
incorrect
Discourage consumption of merit goods
correct
incorrect
Discourage consumption of goods with negative externalities
correct
incorrect
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A budget deficit is likely to:
Boost aggregate demand
correct
incorrect
Lead to less import spending
correct
incorrect
Lead to falling prices
correct
incorrect
Leads to more unemployment
correct
incorrect
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