ASSIGNMENT
Economy- 02
Q.1) What is an indirect tax? Q.4) What is a likely consequence of a price
(a) A tax imposed on income earned by ceiling set below the equilibrium price?
individuals and corporations. (a) A surplus of goods.
(b) A tax imposed on the profits of (b) A shortage of goods.
businesses. (c) An increase in the quantity supplied.
(c) A tax levied on spending to purchase (d) A decrease in consumer demand.
goods and services, paid to the
government by consumers. Q.5) Which of the following is a primary
(d) A tax on the ownership of property, such reason for governments to impose price
as land or buildings. floors?
(a) To decrease the demand for essential
Q.2) Which of the following is NOT a reason goods.
governments impose indirect taxes? (b) To encourage competition among
(a) To generate revenue for government producers.
operations. (c) To support farmers' incomes or increase
(b) To discourage the consumption of goods wages for low-skilled workers.
deemed harmful to society. (d) To reduce the cost of production for
(c) To redistribute income by taxing luxury businesses.
goods primarily consumed by
high-income earners. Q.6) What is the definition of allocative
(d) To encourage increased production of efficiency?
essential goods. (a) Producing goods and services at the
lowest possible cost.
Q.3) How does a per-unit subsidy affect the (b) Distributing resources in a way that
supply curve? maximizes social welfare.
(a) It shifts the supply curve upward. (c) Maximizing profits for businesses.
(b) It shifts the supply curve downward. (d) Ensuring that all factors of production are
(c) It does not affect the supply curve. fully employed.
(d) It makes the supply curve steeper.
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ASSIGNMENT
Economy- 02
Q.7) Which of the following is an example of a (c) A tax on the income earned by
negative consumption externality? individuals.
(a) A beekeeper's bees pollinating a nearby (d) A tax imposed on the profits of
orchard. businesses.
(b) Secondhand smoke from cigarette
Q.11) What impact does a per-unit subsidy
smoking.
typically have on consumer prices?
(c) A homeowner's well-maintained garden
(a) It leads to an increase in consumer
enhancing the neighborhood's
prices.
aesthetics.
(b) It leads to a decrease in consumer prices.
(d) A company training its employees,
(c) It has no impact on consumer prices.
leading to a more skilled workforce.
(d) It makes consumer prices more volatile.
Q.8) Which of the following is not a leakage in Q.12) What is the role of non-price rationing
the circular flow of income model? mechanisms in markets with price ceilings?
(a) Savings (a) To eliminate the shortage created by the
(b) Taxes price ceiling.
(c) Investment (b) To determine the equilibrium price.
(d) Imports (c) To allocate goods and services when the
price mechanism is not allowed to
function freely.
Q.9) Which of the following is an example of a
(d) To increase the quantity supplied by
specific tax?
producers.
(a) A 10% tax on all sales of clothing.
(b) A Rs. 5 tax on each pack of cigarettes.
Q.13) What is a common challenge associated
(c) A 25% tax on the profits of corporations.
with government purchases of surplus goods
(d) A tax on the value of real estate.
resulting from price floors?
(a) A decrease in consumer demand.
Q.10) Which of the following best describes an (b) An increase in imports.
Ad Valorem tax? (c) The cost of storing and managing the
(a) A fixed amount of tax imposed on each surplus.
unit of a good. (d) A decrease in the quality of goods
(b) A tax levied as a percentage of the price produced.
of a good.
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ASSIGNMENT
Economy- 02
Q.14) Which of the following policy tools is (d) A monopsony is characterized by perfect
often used to encourage the consumption of competition, while an oligopsony is
goods with positive externalities? characterized by imperfect competition.
(a) Taxes
(b) Subsidies
Q.17) What does an outward shift of the
(c) Price floors
long-run aggregate supply (LRAS) curve
(d) Tariffs
typically represent?
(a) An increase in the general price level.
Q.15) Which of the following is a key
(b) A decrease in the level of potential
component of fiscal policy?
output.
(a) Setting interest rates to control
(c) An increase in the economy's productive
borrowing costs.
(b) Regulating the money supply to influence capacity.
inflation. (d) A decrease in the quantity of factors of
(c) Adjusting government spending and production.
taxation levels to influence economic
activity. Q.18) Consider the following pairs:
(d) Implementing trade policies to manage
Micro Concepts Macro Concepts
imports and exports.
1 Decrease in Recession
Q.16) What is the main distinction between a Demand
monopsony and an oligopsony market
2 Increase in Demand Economic Growth
structure?
(a) A monopsony has a single buyer, while an 3 Decrease in Supply Supply Shock
oligopsony has a few dominant buyers.
4 Increase in Supply Inflation
(b) A monopsony involves differentiated
products, while an oligopsony involves How many of the above pairs are correctly
homogeneous products. matched?
(c) A monopsony has high barriers to entry, (a) One pair
while an oligopsony has low barriers to (b) Two pairs
entry. (c) Three Pairs
(d) All four
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ASSIGNMENT
Economy- 02
Q.19) Which of the following market (b) Firms investing in new capital
structures is characterized by a large number equipment.
of firms selling differentiated products? (c) Governments increasing spending on
(a) Perfect competition infrastructure projects.
(b) Monopoly (d) Foreign consumers buying domestically
(c) Oligopoly produced goods.
(d) Monopolistic competition
Q.23) What does the concept of dynamic
Q.20) Which factor is most likely to cause an equilibrium in the circular flow of income
increase in aggregate demand? model suggest?
(a) An increase in interest rates (a) Incomes, expenditures, and output
(b) A decrease in consumer confidence remain constant over time.
(c) A decrease in government spending (b) Leakages and injections always offset
(d) A decrease in income taxes each other perfectly.
(c) Changes in one part of the economy can
Q.21) What does the long-run aggregate lead to adjustments in other parts.
supply (LRAS) curve represent in the new (d) The economy is always at full
classical model? employment.
(a) The relationship between the price level
and the level of output in the short run. Q.24) Which of the following situations is
(b) The economy's potential output at full MOST likely to lead to a decrease in aggregate
employment. supply?
(c) The total amount of goods and services (a) A decrease in oil prices.
demanded at different price levels. (b) An increase in business taxes.
(d) The point where aggregate demand (c) A decrease in import prices.
equals aggregate supply in the long run. (d) An increase in government subsidies to
firms.
Q.22) Which of the following is an example of
a leakage in the circular flow of income
model?
(a) Households buying imported goods.
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ASSIGNMENT
Economy- 02
Q.25) What does the intersection of the (b) The full-employment level of output.
aggregate demand (AD) curve and the (c) The short-run equilibrium price level and
short-run aggregate supply (SRAS) curve output.
determine? (d) The potential growth rate of the
(a) The long-run equilibrium price level. economy.
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ASSIGNMENT
Economy- 02
