Important Economic Curves and Indicators CDS Questions

CDS Economy

Important Economic Curves and Indicators MCQ Questions


1.
An Indifference Curve represents combinations of two goods that give the consumer:
A.
Maximum income
B.
Minimum cost
C.
Maximum tax
D.
The same level of satisfaction (utility)
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ANSWER :
D. The same level of satisfaction (utility)
2.
On the Laffer Curve, the same amount of tax revenue can generally be collected at:
A.
Two different tax rates (one low, one high) — except at the peak
B.
Only a 100% tax rate
C.
Only one tax rate
D.
Any tax rate equally
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ANSWER :
A. Two different tax rates (one low, one high) — except at the peak
3.
The Laffer Curve provides an economic justification for the policy of:
A.
Abolishing all taxes
B.
Fixing prices
C.
Cutting (very high) tax rates to potentially boost revenue and growth
D.
Raising tax rates indefinitely
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ANSWER :
C. Cutting (very high) tax rates to potentially boost revenue and growth
4.
The income elasticity of demand for a normal good is:
A.
Always zero
B.
Always infinite
C.
Positive
D.
Negative
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ANSWER :
C. Positive
5.
The simultaneous occurrence of high inflation AND high unemployment, which challenged the original Phillips Curve, is called:
A.
Reflation
B.
Disinflation
C.
Deflation
D.
Stagflation
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ANSWER :
D. Stagflation
6.
A demand curve normally slopes downward from left to right because of:
A.
The law of demand (inverse price-quantity relationship)
B.
The law of supply
C.
The Laffer effect
D.
Engel's Law
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ANSWER :
A. The law of demand (inverse price-quantity relationship)