Unit 4 - Fiscal Policy

What types of goods and services do governments supply?

• Imported goods and services
• Public goods, merit goods, and welfare payments
• Private goods and services
• Luxury goods and services

What is one potential benefit of government spending on welfare schemes and benefits?

• No impact on living standards
• Stagnant living standards
• Decreased living standards
• Increased living standards

What is the purpose of levying taxes on foreign goods entering the domestic market?

• To reduce consumption of demerit goods
• To manage the economy
• To protect home industries
• To fund public goods and services

What is the purpose of a budget?

• To allocate resources efficiently
• To reduce government debt
• To show government revenue and expenditure
• To forecast economic growth

How can taxes be used as a tool for managing the economy?

• To fund public goods and services
• To protect home industries
• To manage aggregate demand and supply
• To reduce consumption of demerit goods

Why do governments levy taxes?

• To reduce consumption of demerit goods
• To fund public goods and services
• To manage the economy
• To protect home industries

Which of the following is an example of government spending?

• Investment in education
• Private investment in a new factory
• Consumer spending on groceries
• Donations to a charity

What are the various sources of government revenue?

• Grants in aid
• Interest on government bonds and loans
• Incomes from fines and penalties
• All of the above

What are the potential effects of increased government spending on infrastructure?

• Decreased productivity and growth
• Increased productivity and growth
• Reduced living standards
• Increased inequality

What is a budget?

• A report on government debt
• A plan for reducing government spending
• A financial statement showing government revenue and expenditure
• A forecast of economic growth