Accounting and Finance MCQs

Ability to pay is commonly measured using income, wealth, or consumption.
It supports progressive taxation and vertical equity.

A price increase for one substitute tends to raise demand for the other.
Tea and coffee may act as substitutes.

GDP measures production within national borders.
Only final output is counted to avoid double counting.

Horizontal equity concerns equal treatment of equals.
Defining similar economic circumstances can be complex.

A higher price for one complement tends to reduce demand for the other.
Cars and fuel are common examples.

The value of intermediate inputs is included in the price of final goods.
Counting both would overstate production.

Vertical equity addresses fair treatment across different income or wealth levels.
Progressive structures are often justified by this principle.

At equilibrium, planned purchases equal planned sales.
There is no pressure from shortage or surplus to change price.

Nominal GDP reflects both price and quantity changes.
It cannot alone show real production growth.

Central governments may transfer revenue to provinces, states, or municipalities.
Transfers can address expenditure needs and revenue differences.

A shortage creates upward pressure on price in a competitive market.
Buyers seek more than sellers offer.

Real GDP isolates changes in quantities produced.
It is used to compare economic output over time.