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

A. Worsen
B. Improve
C. Stay the same
D. Increase with inflation

In a regressive tax system ?

A. The amount of tax paid increase with income
B. The marginal rate of tax decrease with more income
C. The average rate of tax falls as income increase
D. The average rate of tax is constant as income increases

A government might use tax to ?

A. Discourage consumption of positive externalities
B. Discourage consumption of public goods
C. Discourage consumption of merit goods
D. Discourage consumption of negative externalities

An externality is ?

A. the benefit that accrues to the buyer in a market
B. the cost that accrues to the seller in a market
C. none of these answers
D. the compensation paid to a firm’s external consultants.

A positive externality generates ?

A. A social cost curve that is above the supply curve (private cost curve) for a good
B. None of these answers
C. A social value curve that is above the demand curve (private value curve) for good
D. A social value curve that is below the demand curve (private value curve) for a good

The budget deficit tends to decrease then ?

A. Gdp decrease rapidly
B. Gdp remains unchanged
C. Gdp decrease slightly
D. Gdp increase

The implementation lag for monetary policy is generally ?

A. The same as it is for fiscal policy
B. Much shorter than it is for fiscal policy
C. Mush longer than it is for fiscal policy
D. Unrelated to central bank action

The parable of Riding a Switchback suggest that stabilizing policy ?

A. Is not sufficiently stimulating or contracting the economy at any time
B. Is effective
C. Is stimulating or contracting the economy at the wrong times
D. Is desirable

As the required reserve ratio is decreased the money multiplier ?

A. Could either increase or decrease
B. Decrease
C. Increase
D. Remain the same, as long as bank hold no excess reserves

Goodhart’s Law suggests that ?

A. Bad money drives out good
B. Monetary policy can only be effective if it is a long-term policy
C. Controlling one part of the money supply will merely result in that item becoming less important
D. The money supply must only expand at the rate of growth of real national income