alleryStart learning →Structural deficit is 3% of GDP and cyclical deficit 2%. Total deficit?
- 3% of GDP
- 5% of GDP
- 1% of GDP
- 6% of GDP
Show answer and solution
Correct answer: B. 5% of GDP
The total deficit is the sum of the two parts, 3 + 2 = 5 percent of GDP.
CA Foundation Public Finance — practice questions — page 3
Explore 78 free Public Finance questions in CA Foundation Business Economics. Open each question or exercise to read its content, reference answers and available explanation.
Practise Public Finance with Quill →Public Finance questions and exercises with answers
Showing questions 61–78 of 78.
Structural deficit is 3% of GDP and cyclical deficit 2%. Total deficit?Read the answer and worked solution →Most economists say a recession calls for the government to do what?Read the answer and worked solution →Which measure compares spending and revenues over the very long term?Read the answer and worked solution →The delay between a stimulus and its effects being felt is called what?Read the answer and worked solution →Interest rate cuts failing to lift demand describe which situation?Read the answer and worked solution →Which 1920 book by A.C. Pigou argued for taxing external harms?Read the answer and worked solution →A Pigovian tax is set equal to which quantity?Read the answer and worked solution →A tax equal to the externality shifts which curve upward?Read the answer and worked solution →A negative externality is the gap between social cost and which cost?Read the answer and worked solution →Which is the prototypical example of a negative externality?Read the answer and worked solution →With positive externalities, output of the good tends to be what?Read the answer and worked solution →Taxing producers so prices reflect full costs is called what?Read the answer and worked solution →The Coase theorem needs which condition on transaction costs?Read the answer and worked solution →Whose theorem says private bargaining can fix externalities?Read the answer and worked solution →Why does Coasean bargaining fail for a polluting steel factory?Read the answer and worked solution →What did Pigou recommend to curb over-production causing external harm?Read the answer and worked solution →In a progressive tax system, higher earners pay what?Read the answer and worked solution →The free rider problem assumes people are modelled as what?Read the answer and worked solution →
Worked practice questions
Most economists say a recession calls for the government to do what?
- Raise tax rates sharply
- Freeze all spending
- Run a larger surplus
- Run a deficit deliberately
Show answer and solution
Correct answer: D. Run a deficit deliberately
A deliberate deficit adds demand and stimulates the economy in a downturn.
Which measure compares spending and revenues over the very long term?
- Budget surplus
- Cyclical deficit
- Fiscal gap
- Primary balance
Show answer and solution
Correct answer: C. Fiscal gap
The fiscal gap takes in promised future commitments and planned revenues over a long horizon.
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