CBSE Guess > Papers > Important Questions > Class XII > 2011 > Economics > Economics By Mr. Pranab Sharma

CBSE CLASS XII

Economics (Revision/Self Assessment test)

Page 11 of 11

101. During the Great Depression, real GDP decreased, unemployment soared, and the inflation rate was negative. Which would have been the appropriate federal government policy combination to improve economic performance?
     A) increase government expenditure, decrease taxes, increase the quantity of money
     B) increase government expenditure, decrease taxes, decrease the quantity of money
     C) decrease government expenditure, increase taxes, decrease the quantity of money
     D) do not change government expenditures or taxes , increase the quantity of money
     E) decrease government expenditures, increase taxes, do not change the quantity of money

102. During the late 1960s, real GDP increased, unemployment fell, and the inflation rate started to rise. Which would have been the appropriate federal government policy combination to improve economic performance by lowering the inflation rate?
     A) increase government expenditures, decrease taxes, increase the quantity of money
     B) increase government expenditures, decrease taxes, decrease the quantity of money
     C) decrease government expenditures, increase taxes, decrease the quantity of money
     D) do not change government expenditures or taxes , increase the quantity of money E) increase government expenditures, decrease taxes, do not change the quantity of money
103. President Reagan often stated he preferred supply side policies. Which of the following federal government policies would be considered supply side?

     i. decrease the quantity of money
     ii. lower taxes
     iii. lower the interest rate.

     A) i only
     B) ii only
     C) iii only
     D) i and iii
     E) i, ii, and iii
104. When the economy is in a recession, ________ taxes decrease while ________ spending increases and, as a result of this automatic fiscal policy, aggregate demand ________.
     A) needs-tested; induced; decreases
     B) induced; needs-tested; increases
     C) induced; discretionary; is not changed
     D) discretionary; needs-tested; increases E) discretionary; induced; is not changed
105. Government tax revenues ________ during an expansion and ________ during a recession, which leads to larger budget deficits during the ________ phase of the business cycle.
     A) increase; decrease; recession
     B) increase; increase; recession
     C) decrease; increase; expansion
     D) decrease; decrease; expansion
     E) increase; decrease; expansion
106. Government need-based expenditure ________ during an expansion and ________ during a recession, which leads to larger budget deficits during the ________ phase of the business cycle.
     A) increases; decreases; recession
     B) decreases; increases; expansion
     C) decreases; increases; recession
     D) decreases; decreases; expansion
     E) increases; decreases; expansion
107. Assume the federal government raises taxes (a contractionary fiscal policy). If the tax increase affects AS and AD equally, then real GDP will ________ and the price level will ________.
     A) decrease; decrease
     B) increase; be unchanged
     C) increase; increase
     D) decrease; be unchanged
     E) increase; decrease

 

Submitted By Mr. Pranab Sharma
Email Id : [email protected]