Fiscal Policy Flashcard

Front

What is fiscal policy primarily concerned with?

Back

Managing government spending and taxation

Front

Which of the following is an example of expansionary fiscal policy? Increasing taxes, Cutting government spending, Increasing government expenditure, Raising interest rates

Back

Increasing government expenditure

Front

What is a government budget deficit?

Back

When government expenditures exceed revenue

Front

How does a contractionary fiscal policy affect aggregate demand?

Back

Decreases aggregate demand

Front

What is a budget surplus?

Back

When government expenditure is less than government revenue.

Front

Which component is NOT part of aggregate demand? Consumer spending, Investment spending, Net exports, Technological advancements

Back

Technological advancements

Front

What effect does a decrease in taxes generally have on aggregate demand?

Back

Increases aggregate demand

Front

Which fiscal policy tool can be used to combat inflation? Options: Increasing money supply, Increasing government spending, Decreasing taxes, Decreasing government spending

Back

Decreasing government spending

Front

What is the result of a government running a budget surplus?

Back

National debt decreases

Front

Which of the following is not a common limitation of Expansionary Fiscal Policy? Certain sectors of the economy can be targeted, Political Pressures often influence / affects policies, There is a time lag with implementing fiscal policy, "Crowding Out" effect may limit investment spending

Back

Certain sectors of the economy can be targeted