Tag: public finance

Questions Related to public finance

Higher the level of income, Higher is the level of Savings. This statement is ______________.

business economics and quantitative methods government budget and economy consumer's budget public finance indifference curve

  1. True

  2. False

  3. Partially True

  4. None of the above

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Correct Option: A

A relative price is?

business economics and quantitative methods government budget and economy consumer's budget public finance indifference curve

  1. Price expressed in terms of money

  2. What you get paid for babysitting your cousin

  3. The ratio of one money price to another

  4. Equal to a money price

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Correct Option: C
Explanation:
A relative price is the price of a commodity such as a good or service in terms of another; i.e., the ratio of two prices.

The slope of price line is given by the ______________.

business economics and quantitative methods government budget and economy consumer's budget public finance indifference curve

  1. taste and preferences of the consumer

  2. prices of both the commodities

  3. price of commodity $X$ alone

  4. price of commodity $Y$ alone

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Correct Option: B
Explanation:

The slope of price line is a ratio of prices of both the commodities 'X' and 'Y'. Thus, it is given by the prices of both the commodities.

Position of the price line would ________ with a change in the money income of the consumer.

business economics and quantitative methods government budget and economy consumer's budget public finance indifference curve

  1. not change

  2. change

  3. depend on other factors

  4. none of the above

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Correct Option: B
Explanation:

Position of the price line would change with change in money income of the consumer, because money income determines the budget/purchasing power of the consumer.

Given the income of the consumer, the slope of the price line is determined by the __________.

business economics and quantitative methods government budget and economy consumer's budget public finance indifference curve

  1. Price of $X$

  2. Price of $Y$

  3. Ratio of prices of $X$ and $Y$

  4. none of the above

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Correct Option: C
Explanation:

The slope of price line is determined by the ratio of prices of both the commodities 'X' and 'Y'. It is the locus of all the bundles of 'X and Y' that can be bought with the given income of the consumer.

The total effect of a price change of a commodity is _______________.

business economics and quantitative methods government budget and economy consumer's budget public finance indifference curve

  1. substitution effect plus price effect

  2. substitution effect plus income effect

  3. substitution effect plus demonstration effect

  4. substitution effect minus income effect

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Correct Option: B

Consumer's equilibrium condition can be written as ___________.

business economics and quantitative methods government budget and economy consumer's budget public finance indifference curve

  1. $\dfrac{MU _x}{P _x} = \dfrac{MU _y}{P _y}$

  2. $\dfrac{MU _x}{P _x} > \dfrac{MU _y}{P _y}$

  3. $\dfrac{MU _x}{P _x} < \dfrac{MU _y}{P _y}$

  4. $\dfrac{P _x}{MU _x} = \dfrac{P _y}{MU _y}$

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Correct Option: A

Slope of budget line is _______.

business economics and quantitative methods government budget and economy consumer's budget public finance indifference curve

  1. MRS

  2. $\dfrac{MU _x}{MU _y}$

  3. $\dfrac{P _x}{P _y}$

  4. $\dfrac{P _y}{P _x}$

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Correct Option: C

Budget line is also called _________.

business economics and quantitative methods government budget and economy consumer's budget public finance indifference curve

  1. consumption possibility line

  2. production possibility line

  3. distribution possibility line

  4. saving possibility line

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Correct Option: A

Convex indifference curve is explained by _________.

business economics and quantitative methods government budget and economy consumer's budget public finance indifference curve

  1. diminishing MRS

  2. increasing MRS

  3. constant MRS

  4. none of the above

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Correct Option: A