6_Fiscal Policy Flashcard

Front

Fiscal policy is:

Back

The use of government spending and tax collection to influence the economy

Front

Which best describes "expansionary fiscal policy"?

Back

Increasing government spending and lowering taxes

Front

Which best describes "contractionary fiscal policy"?

Back

Decreasing government spending and increasing taxes

Front

Which fiscal policy would you want to use at point 3?

Back

Expansionary

Front

During a contraction / recession, the Federal Government should use

Back

an expansionary fiscal policy

Front

If the unemployment rate is rising and GDP is falling, what fiscal policy action should the federal government MOST likely follow? Options: decreasing taxes, decreasing spending, decreasing the money supply, decreasing the reserve requirement.

Back

decreasing taxes.

Front

If an economy experiences a dramatic rise in prices (inflation), which fiscal policy action could be taken? Options: Selling securities on the open market, Raising interest rates, Reducing government spending, Raising reserve requirements

Back

Reducing government spending

Front

The Federal government is concerned that economic growth is too high, that it is unsustainable, and that inflation is resulting. Which fiscal policy might be enacted to reduce inflation? Options: Increasing taxation, Open market sales, decreasing taxation, Increasing government spending

Back

Increasing taxation

Front

His ideas rose to power in the 1930s. He believed that government should do something to spark economic activity during an economic downturn.

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John Maynard Keynes

Front

Expansionary fiscal policies lead to ___________________ spending.

Back

deficit