In: Economics
1. Which of the following is a sustained rise over time
in a nation's production of goods and services?
a. |
Nominal GDP |
|
b. |
Real GDP |
|
c. |
Economic growth |
|
d. |
Inflation |
2. Which of the following would be the best fiscal policy to use during a recession?
a. |
Increase income tax rates |
|
b. |
Raise interest rates |
|
c. |
Decrease income tax rates |
|
d. |
Cut government spending |
3. _____ are people who risk their time, money, and other resources to start and manage a business.
a. |
Stakeholders |
|
b. |
Venture capitalists |
|
c. |
Stockholders |
|
d. |
Entrepreneurs |
4. How do higher income taxes typically affect the economy?
a. |
Higher income taxes result in household and business having less income, which encourages more spending. |
|
b. |
Higher income taxes result in household and business having less income, which discourages spending. |
|
c. |
Higher income taxes result in household and business having more income, which encourages more spending. |
|
d. |
Higher income taxes result in household and business having more income, which discourages more spending. |
1.Ans: c) Economic growth
Explanation:
A sustained rise over time in a nation's production of goods and services is called economic growth.
2.Ans: c) Decrease income tax rates
Explanation:
During recession the central government adopts an expansionary fiscal policy. Under this policy , government spending increases whereas tax rate decreases. So that both the consumption and investment expenditue increase in the economy.
3.Ans: d) Entrepreneurs
Explanation:
Entrepreneurs are people who risk their time, money, and other
resources to start and manage a business.Explanation:
4.Ans: b) Higher income taxes result in household and business having less income, which discourages spending.
Explanation:
Disposable income = Income - direct tax
Higher disposable income encourages more spending whereas lower disposable income discourages spending.
So higher income taxes result in household and business having less income, which discourages spending.