#1
Which of the following is an example of a market intervention by the government?
Setting maximum prices
ExplanationGovernment intervention to control prices in the market.
#2
What is the effect of imposing tariffs on imported goods?
Increases domestic production
ExplanationTariffs boost domestic production by limiting imports.
#3
What is the purpose of quantitative easing as a monetary policy tool?
To stimulate lending and spending
ExplanationQuantitative easing boosts lending and consumer spending.
#4
Which of the following is a potential consequence of implementing rent control policies in urban areas?
Reduced housing supply
ExplanationRent controls can discourage housing construction.
#5
Which of the following is a consequence of a contractionary monetary policy?
Reduced inflation
ExplanationContractionary policy aims to curb inflation rates.
#6
What is the economic effect of imposing a price floor in a market?
Decreased producer surplus
ExplanationPrice floor leads to surplus reduction for producers.
#7
Which of the following is NOT a tool of monetary policy intervention?
Fiscal stimulus
ExplanationFiscal stimulus is a fiscal policy tool, not monetary.
#8
What is the primary goal of antitrust laws in the context of market intervention?
To prevent monopolistic practices
ExplanationAntitrust laws aim to maintain competitive markets.
#9
Which of the following is a potential consequence of government subsidies to producers?
Decreased supply
ExplanationSubsidies can lead to oversupply, decreasing prices.
#10
What is the primary objective of expansionary monetary policy?
Stimulate economic growth
ExplanationExpansionary policy aims to boost economic activity.
#11
Which of the following is an example of an automatic stabilizer in fiscal policy?
Unemployment benefits
ExplanationUnemployment benefits help stabilize economy during downturns.
#12
In the context of market interventions, what does 'lender of last resort' refer to?
A central bank that provides emergency loans to financial institutions
ExplanationCentral bank providing emergency funds to banks.
#13
In the context of fiscal policy, what does 'crowding out effect' refer to?
Increase in government borrowing leading to higher interest rates
ExplanationGovernment borrowing reducing private sector lending.
#14
In the context of market interventions, what is the primary purpose of imposing trade sanctions?
Punish countries for violating human rights or international law
ExplanationSanctions are punitive measures against policy violators.
#15
In the context of fiscal policy, what is the goal of automatic stabilizers?
To automatically adjust fiscal policy in response to economic fluctuations
ExplanationStabilizers adjust policy to counter economic fluctuations.