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Tax Related MCQs

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Question;1. If personal taxes were decreased and resource productivity increased simultaneously, the equilibrium _____.a) output would riseb) price level would necessarily fallc) output would falld) price level would necessarily rise2. The quantity theory of money states that _____.a) the money supply divided by the velocity of money equals the price level divided by real outputb) the money supply times the price level equals real output divided by the velocity of moneyc) the money supply times the velocity of money equals the price level times real outputd) the money supply times the price level equals real output times the velocity of money3. Paying an above-equilibrium wage rate might reduce unit labor costs by _____.a) permitting the firm to attract lower-quality laborb) increasing the supply of laborc) increasing voluntary worker turnoverd) increasing the cost to workers of being fired for shirking4. Inflation is undesirable because it _____.a) usually is accompanied by declining real GDPb) reduces everyone's standard of living in the same proportionc) invariably leads to hyperinflationd) arbitrarily redistributes real income and wealth5. Suppose that in the clothing market, production costs have fallen, but the equilibrium price and quantity purchased have both increased. Based on this information you can conclude that _____.a) the supply of clothing has grown faster than the demand for clothingb) there is no way to determine what has happened to supply and demand with this informationc) the supply of and demand for clothing have grown by the same proportiond) demand for clothing has grown faster than the supply of clothing6. Construction workers frequently sponsor political lobbying in support of greater public spending on highways and public buildings. One reason they do this is to _____.a) restrict the supply of construction workersb) increase the price of substitute inputsc) increase the demand for construction workersd) increase the elasticity of demand for construction workers7. Expansionary fiscal policy is so named because it _____a) is aimed at achieving greater price stabilityb) can motivate an expansion of real GDPc) involves an expansion of the nation's money supplyd) can only be attained by expanding government consumption8. A rise in the domestic interest rate leads to capital _____.a) outflows and exchange rate depreciationb) outflows and exchange rate appreciationc) inflows and exchange rate depreciationd) inflows and exchange rate appreciation9. The average cost curves (AVC and ATC) should be minimized _____.a) where MC = ATC and MC = AVCb) where ATC = AVCc) where TC starts to increase at a faster rated) where FC = ATC and FC = AVC10. The real wage will rise if the nominal wage _____.a) increases more rapidly than the general price levelb) increases at the same rate as labor productivityc) falls more rapidly than the general price leveld) falls at the same rate as the general price level11. the most important pricing strategy for a perfectly competitive firm is _____.a) advertisingb) minimizing costc) product differentiationd) maximizing sales12. Price is constant or given to the individual firm selling in a purely competitive market because _____.a) each seller supplies a negligible fraction of total supplyb) the firm's demand curve is downward slopingc) of product differentiation reinforced by extensive advertisingd) there are no good substitutes for its product13. All economies of scale are achieved at the minimum of _____.a) average total costb) total costc) average fixed costd) average variable cost14. Suppose the price level is fixed, the MPC is.5, and the GDP gap is a negative $100 billion. To achieve full-employment output (exactly), government should _____.a) increase government expenditures by $50 billionb) reduce taxes by $50 billionc) increase government expenditures by $100 billiond) reduce taxes by $200 billion15. An industry comprising a small number of firms, each of which considers the potential reactions of its rivals in making price-output decisions, is called _____.a) pure competitionb) oligopolyc) monopolistic competitiond) pure monopoly16. An economy's aggregate demand curve shifts leftward or rightward by more than changes in initial spending because of the _____.a) real-balances effectb) multiplier effectc) wealth effectd) net export effect17. A third-degree price discrimination can be applied to which of the following market structures?a) a perfect competitionb) a monopolyc) a monopolistic competitiond) an oligopoly18. Inflation in U.S. prices will cause _____.a) a decrease in the demand for U.S. dollars and a depreciation in the exchange rateb) a decrease in the supply of U.S. dollars and an appreciation in the exchange ratec) an increase in the demand for U.S. dollars and an appreciation in the exchange rated) an increase in the supply of U.S. dollars and a depreciation in the exchange rate19. A good real-world example of monopolistic competition is _____.a) gas stationsb) lawyersc) groceries storesd) Time Warner Cable20. A firm under monopolistic competition will earn _____.a) a positive economic profit as it has some monopoly powerb) a positive economic profit as it sets MC = MRc) zero economic profit as its P = ATCd) zero economic profit as it sets P = MC21. Investing in R&D is more likely to occur in markets where _____.a) firms have monopoly power protected by regulatory barriersb) markets are oligopoly markets with strong collusion agreementsc) markets are closely competitive markets with close to zero economic profitsd) markets are monopolistic competitive markets22. Suppose that US prices rise 4% over the next year while prices in Mexico rise 6%. According to the purchasing power parity theory of exchange rates, what should happen to the exchange rate between the dollar and the peso?a) The dollar should depreciate.b) The peso should depreciate.c) The dollar will be revalued.d) The peso should appreciate.23. Other things equal, a decrease in the real interest rate will _____.a) move the economy downward along its existing investment demand curveb) move the economy upward along its existing investment demand curvec) shift the investment demand curve to the leftd) shift the investment demand curve to the right24. Which of the following is a nonprice barrier of entry?a) huge sunk costb) advertisingc) product differentiationd) discounts25. Camille's Creations and Julia's Jewels both sell beads in a competitive market. If at the market price of $5, both are running out of beads to sell (they can't keep up with the quantity demanded at that price), then we would expect both Camille's and Julia's to _____.a) lower their price and reduce their quantity suppliedb) raise their price and increase their quantity suppliedc) lower their price and increase their quantity suppliedd) raise their price and reduce their quantity supplied26. Suppose productivity rises in a particular economy, but wages stay the same. Other things equal, _____.a) the supply curve will shift rightwardb) expenditures curve will shift rightwardc) the supply curve will shift leftwardd) the demand curve will shift leftward27. GDP understates the value of output produced by an economy because it _____.a) excludes the value of the wages and benefits of government employeeb) includes transactions that do not take place in organized markets, such as home cooked mealsc) excludes value added from the underground economy, such as tips taken under the tabled) includes environmental degradation caused by increased output production28.Other things equal, a decrease in corporate income taxes will _____.a) have no effect on the location of the investment demand curveb) shift the investment demand curve to the rightc) decrease the market price of real capital goodsd) shift the investment demand curve to the left29. If the wage rate increases, _____.a) a purely competitive producer will hire less labor, but an imperfectly competitive producer will notb) an imperfectly competitive producer will hire less labor, but a purely competitive producer will notc) a purely competitive and an imperfectly competitive producer will both hire less labord) an imperfectly competitive producer may find it profitable to hire either more or less labor30. In which of the following industries are economies of scale exhausted at relatively low levels of output?a) aircraft productionb) concrete mixingc) newspaper printingd) automobile manufacturing

 

Paper#51414 | Written in 18-Jul-2015

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