741. When wealthy alumni provide charitable contributions to their universities to reduce the tuition payments of current students it is an example of ?
A. an attempt to internalize a positive externality
B. an attempt to internalize a negative externality
C. a Pigouvian tax
D. a command-and-control policy

742. A negative externality generates ?
A. a social cost curve that is below the supply curve (private cost curve) for a good
B. none of these answers
C. a social cost curve that is below the supply curve (private cost curve) for a good
D. a social value curve that is above the demand curve (private value curve) for a good

743.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

744. If the State Bank of Pakistan wished to pursue a tight monetary policy it would ?
A. reduce the minimum reserve asset ratio.
B. buy government securities on the open market
C. lower interest rates
D. sell government securities on the open market

745. Over-funding is when the State Bank of Pakistan ?
A. sells less government bonds than are required to finance the PSBR
B. sells more government bonds than are required to finance the PSBR
C. sells government securities on the open market
D. buys government securities on the open market

746. A reflationary (expansionist) fiscal policy could include ?
A. Lower interest rates
B. Increased lending by the banks
C. An increase in corporation tax
D. An increase in discretionary government spending

747. If the marginal rate of tax is 40% and consumers income increase from Rs10,000 to Rs12,000 ?
A. The amount of tax paid will increase by Rs4,800
B. The amount of tax paid will increase by Rs4,000
C. The amount of tax paid will increase by Rs 800
D. The total tax paid will be Rs4,800

748. If the economy grows the government’s budget position will automatically ?
A. worsen
B. Improve
C. Stay the same
D. Increase with inflation

749. 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

750. 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

 

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