Micro Economics MCQ (GK Set-1) with Answers

Simply wait for the labour market to return output to the potential level.

Apply a contractionary fiscal policy.

Announce a credible zero target for inflation.

Apply a supply-side policy to shift LAS to the right?

Governments might use them in a way which leads to political business cycles.

Discretionary fiscal policies may act too late.

Discretionary monetary policies lose any power that a rules policy has to hold inflationary expectations down.

They need to be announced in advance.

The interest rate.

The rate of growth of the money stock.

The current inflation rate.

The expected inflation rate in two years’ time.

Interest rate control.

Open market operations.

Quantitative easing.

Reserve ratio controls.

The increased Bank Rate will increase the value of sterling

The increased Bank Rate will increase people’s wealth

The increased Bank Rate will lead to increases in other nominal interest rates.

The increased Bank Rate will reduce the incomes people expect to have in future.