MCQ

The thrust of government fiscal policy is countercyclical when:

(a) Government expenditure and taxation are increased in an economic expansion.

(b) Government expenditure is reduced and taxation is increased in an economic

downturn.

(d) None of the above.

Which of the following statements is false?

(a) Automatic stabilisers reduce the impact of economic shocks that arise from cyclical

fluctuations.

(b) Automatic stabilisers are deliberately put in place by government e.g. increase in

jobseekers allowance.

government at the time of the economic shock.

(d) All of the above are false.

A12. If a Central Bank wished to increase the supply of money, it should:

(a) Buy government bonds and securities in the money market.

(b) Sell government bonds and securities in the money market.

(d) Increase the reserve ratio.

The Circular Flow of Income for an open economy is:

(a) The relationship of resources and incomes between firms and households.

(b) The relationship of resources and incomes between firms and governments.

institutions.

(d) The flow of all transactions (flow of receipts and expenditure) in an economy plus the foreign

market (international trade).

Government policies that focus on increasing production rather than demand

are called:

(a) De-regulation policies.

(b) Supply-side policies.

(d) Privatisation policies.

A22. If the exchange rate of Euros to American dollars was €1.00 = $1.05 yesterday and

today is €1.00 = $0.95, then:

(a) The euro appreciated in value relative to the American dollar.

(b) The euro depreciated relative in value to the American dollar.

today than they were yesterday.

(d) Both (b) & (c) are correct

The value of Nominal GDP in the base year equals:

(a) The value of current year output in prices of the base year.

(b) The value of current year output in prices of the current year.

(d) The value of base year output in prices of the current year.

The thrust of government fiscal policy is expansionary when:

(a) Expenditure and taxation are increased.

(b) Government expenditure is reduced and taxation is increased.

(d) Government expenditure is increased and taxation is reduced.

Inflation

(a) reduces both the purchasing power of the euro and one's real income.

(b) reduces the purchasing power of the euro and increases one's real income.

income.

(d) increases the purchasing power of the euro and reduces one's real income.

If policymakers wanted to tackle a recession using monetary policy, which of the

following would be most applicable:

(a) Decreasing taxes.

(b) Increasing interest rates.

(d) Increasing transfer payment.

Which is an example of discretionary fiscal policy?

(a) The government increases the money supply.

(b) The government decreases the exchange rates.

(d) None of the above are false.

If a Central Bank wished to reduce the supply of money, it should:

(a) Sell government bonds and securities in the money market.

(b) Raise the rate of discount (Bank rate).

(d) Do any or all of the above.

Which of the following would cause the Euro to depreciate relative to the US

dollar, all things being equal?

(a) A fall in GDP (National Income) in the US.

(b) News, which suggest that prospects for EU firms are improving.

(d) An expected rise in the value of the Euro relative to the US Dollar.

John M. Keynes is best known for advocating:

(a) A policy of annually balancing the budget.

(b) An increase in government spending when the economy is in a recession.

(d) Expansionary fiscal policy during a boom.

A1. The Phillips curve shows the relationship between the: (a) Nominal interest rate and the real interest rate. (b) Real interest rate and the unemployment rate. (c) Unemployment rate and the inflation rate. (d) Expected rate of inflation and the nominal interest rate.

Irelands Balance of Payments showed a current account ________ of 0.4bn in Q4

2023. This was ______% of GDP. The country’s current account balance was

_______, Ireland was a net _______from the rest of the world.

(a) Deficit, -0.3%, negative, borrower.

(b) Surplus, 0.3%, positive, lender.

The thrust of government fiscal policy is countercyclical when:

(a) Government expenditure and taxation are increased in an economic expansion.

(b) Government expenditure is reduced and taxation is increased in an economic

downturn.

(d) None of the above

Which of the following is designed to measure unemployment in Ireland?

(a) CPI The National Income & Expenditure Accounts.

(b) Labour Force Survey.

(d) The Live Register.

. In Ireland if GDP was €11,000, Investment was €4,000, Government Expenditure

was €2,000, Consumption was €2,000 & Imports were €1,000. What is the value

of Net exports?

(a) €4,000

(b) €3,000

(d) €1,000.

If policymakers wanted to tackle inflation using monetary policy, which of the

following would be most applicable:

(a) Increase taxes & increase the interest rate.

(b) Increase the reserve ratio & increase expenditure.

(d) Increase the reserve ratio & increase interest rates.

If a Central Bank wished to increase the supply of money, it should: (a) Buy government bonds and securities in the money market. (b) Sell government bonds and securities in the money market. (c) Increase the rate of discount (Bank rate). (d) Increase the reserve ratio.