MCQs on Public Finance
Multiple Choice Questions Public Finance and Budgeting Sheet 1 1. Positive economics (a) does not depend on market interactions. (b) only looks at the best parts of the economy. (c) examines how the economy actually works (as opposed to how it should work). (d) is very subjective. 2. The Coase theorem has problems because (a) generally, bargaining costs are not zero. (b) individuals are not concerned with others. (c) markets always exist. (d) all of the above. 3. The marginal rate of substitution is (a) the slope of the Pareto curve. (b) the slope of the contract curve. (c) the slope of the utility possibilities curve. (d) the slope of the indifference curve. 4. The slope of the production possibilities curve is the (a) marginal rate of substitution. (b) contract curve. (c) marginal rate of transformation. (d) offer curve. 5. The First Fundamental Theorem of Welfare Economics requires (a) producers and consumers to be price taker