Micro Economics MCQ (GK Set-1) with Answers

To finance all government spending by loans

To finance all government spending by taxes.

To finance government capital spending by loans and government current spending by taxes

To finance government capital spending by taxes and government current spending by loans.

An increase in government spending financed by loans can crowd out other spending in the economy.

A structural deficit is the government would have if it adopted its current policies and output was at the potential level

The last and current UK governments have favoured trying to ensure that, each year, total government borrowing equals total net government investment

A cyclically adjusted deficit is the same as a structural deficit.

) If all the debt was in the form of bonds owned by the country’s own citizens, then the debt would not be a burden to the country’s taxpayers

If all the debt was in the form of bonds owned by the country’s own citizens, then the debt would not be a burden to the country’s citizens

A high debt might make lenders worry if the government could repay its loans and so raise the interest rate people wanted when they lent to it.

A high debt would make it difficult for the government to respond to any future downturns in its economy with expansionary fiscal policy.

A reduction in income tax rates.

An increase in firms’ non-labour costs.

A reduction in the benefits paid to unemployed people.

An increase in help for unemployed people to retrain.

Increase the school leaving age.

Discouraging firms from investing in new capital.

Make government departments more efficient.

Promoting competition.