1.Crowding-Out Effect refers to:

a.Government expenditure leading to higher interest rate

b.Government expenditure leading to lower consumption expenditure

c.Government expenditure leading to lower investment expenditure

d.All of the above

2.A Contractionary Fiscal Policy will be helpful in case of:

a.Recessionary Gap

b.Inflationary Gap

c.None of the above

d.All of the above

3.Economic Growth can happen when:

a.Physical capital stock goes up

b.Natural resources are abundant

c.All of the above

d.Only option (a)

4.Fiscal Policy is a fail-proof measure to counter Recessionary Gap:

a.True

b.False

5.When government imposes quota:

a.Consumer surplus goes down

b.Producer surplus goes up

c.Importers' revenue goes up

d.All of the above

6.Fiscal Policy is most effective when:

a.When there is partial crowding out effect

b.Complete crowding out effect

c.Wait & See lag

d.None of the above

7.VAT depends on:

a.Final product price

b.Final unit cost of the product

c.All of the above

d.None of the above

8.International Trade should be based upon:

a.Comparative Advantage

b.Specialization

c.All of the above

d.None of the above

9.Governments want to restrict international trade because:

a.It has an adverse effect on the entire society

b.It can lower the standard of living of the consumers

c.It benefits one group at the expense of the other group

d.None of the above

10.When governments impose tariff:

a.Consumer Surplus goes down

b.Importers gain more

c.Producer surplus goes down

d.All of the above