Tag: government budget and economy

Questions Related to government budget and economy

Given the money income and the price, the line which shows all different combinations of two goods that a consumer can buy by spending all his income is called __________.

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

  1. production line

  2. budget line

  3. iso-cost line

  4. none of these

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Correct Option: B

Budget line indicates __________.

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

  1. price ratio

  2. income ratio

  3. cost ratio

  4. none of these

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Correct Option: A

A shift in the budget line, when prices are constant, is due to:

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

  1. change in demand

  2. change in income

  3. change in preferences

  4. change in utility

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Correct Option: B

Slope of budget line is Indicated by:

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

  1. $\displaystyle \frac{P _X}{P _Y}$

  2. $\displaystyle \frac{P _Y}{P _X}$

  3. $P _X = P _Y$

  4. all of these

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Correct Option: A

When price of Good-Y (shown on Y-axis) rises:

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

  1. price line shifts to the right

  2. price line shifts to the left

  3. price line rotates to the right

  4. price line rotates to the left

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Correct Option: D

Write true or false with a reason:
All attainable combinations of Good-X and Good-Y are below the budget line of a consumer.

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

  1. True

  2. False

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Correct Option: B
Explanation:

False. 

All attainable combinations of Good-X and Good-Y are below as well as along the budget line.

Any point above the consumer's equilibrium point is desirable but is not attainable because ________.

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

  1. income and prices are given

  2. taste and income and given

  3. preference and prices are given

  4. none of the above

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Correct Option: A

In indifference curve theory, price effect is split into which two effects?

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

  1. Price effect and output effect

  2. Price effect and substitution effect

  3. Price effect and income effect

  4. Substitution effect and income effect

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Correct Option: D