Monetary Theory & Public Finance MCQs

What does GDP stand for?

A) Gross Development Product

B) General Demand Preference

C) Gross Domestic Product

D) Government Debt Provision

Which of the following is an example of direct taxes?

A) Value-added tax (VAT)

B) Corporate income tax

C) Sales tax

D) Excise duty

What does the term “fiat money” refer to?

A) Money backed by gold

B) Money with no intrinsic value

C) Money used for international trade

D) Money used in fiscal policy

Which type of monetary policy aims to reduce inflation?

A) Contractionary monetary policy

B) Expansionary monetary policy

C) Fiscal policy

D) Supply-side policy

What does the Laffer curve illustrate?

A) The relationship between tax rates and government revenue

B) The impact of inflation on interest rates

C) The impact of international trade on currency exchange rates

D) The relationship between imports and exports

What is the purpose of fiscal policy?

A) To regulate money supply

B) To control interest rates

C) To manage government revenue and expenditure

D) To regulate international trade

Which of the following is an example of an indirect tax?

A) Property tax

B) Excise duty

C) Corporate income tax

D) Personal income tax

Which monetary policy tool involves changing reserve requirements?

A) Discount rate adjustment

B) Open market operations

C) Reserve ratio adjustment

D) Quantitative easing

What is the role of the International Monetary Fund (IMF)?

A) To promote international trade

B) To provide financial assistance to developing countries

C) To regulate global financial markets

D) To oversee monetary policy in member countries

What is the primary goal of supply-side economics?

A) To stimulate demand for goods and services

B) To reduce government spending

C) To increase production and supply of goods

D) To control inflation rates