Question

57. Which of the following would be expected to stimulate the economy the LEAST over the near term? (a) reducing tax rates on the highest-income taxpayers; (b) funds spent on the space program; (c) funds spent on school lunch programs; (d) higher wages for government workers.

58. According to trade theory, an increase in government purchases or a decrease in taxes shrinks national savings, shifts to aggregate saving schedule to the left and results in: (a) a rise in Tobin’s “q;” (b) an immediate decline in the fiscal deficit; (c) a balance of payments surplus; (d) a larger trade deficit.

59. The Fourth Industrial Revolution likely will result in all of the following, except: (a) elimination of many low-skill service jobs; (b) a decline in entrepreneurship, especially in the developed market economies; (c) greater digitalization of outputs; (d) dematerialization of outputs.

60. If the level of national income exceeds its equilibrium level, we can anticipate that: (a) businesses will attempt to rid themselves of an unintended buildup in inventories; (b) national income will rise further; (c) actual aggregate spending is greater than expected aggregate spending; (d) none of the above.

Answer 1

Answer 57:

Option b. Funds spent on the space program are expected to stimulate the economy least over the near term because economy is currently facing thee problem of Covid-19 outbreak and increase in defence expenditure will not stimulate the economy.

Answer 58:Option d. This will result in trade deficit because interest rate increases which results in appreciation of currency and this leads to fall in the level of Net Exports in the economy.

Answer 59: Option c.

The Fourth Industrial Revilution will result in promotion of entrepreneurship rather than a decline in the level of entrepreneurship in the economy.

Answer 60:Option C.

If the level of national income exceeds its equilibrium level, we can anticipate that actual aggregate spending in the economy is greater than the expected aggregate spending. This is because there is inflationary gap in the economy when the level of national income exceeds its equilibrium level.