Fiscal Policy

Fiscal Policy is concerned with...

• The control of the money supply in the economy

• Regulating international trade and tariffs

• The management of government revenue and expenditure

• Encouraging economic growth through monetary measures

Which of the following is an example of expansionary fiscal policy?

• Decreasing government spending and increasing taxes

• Decreasing government spending and decreasing taxes

• Increasing government spending and increasing taxes

• Increasing government spending and decreasing taxes

During an economic recession, the government is likely to implement

• Expansionary fiscal policy to boost economic growth

• Contractionary fiscal policy to increase unemployment

• Contractionary fiscal policy to reduce inflation

• Expansionary fiscal policy to increase taxes

The main goal of contractionary fiscal policy is to

• Decrease government spending and increase taxes

• Increase government spending and decrease taxes

• Increase government borrowing to boost investment

• Decrease interest rates to encourage borrowing

When government expenditure exceeds government revenue, it results in:

• A budget surplus

• A balanced budget

• A budget deficit

• A trade surplus

Which of the following would be considered an automatic stabilizer in fiscal policy?

• Increasing tax rates during an economic boom

• Cutting government spending during a recession

• Providing unemployment benefits during a downturn

• Implementing one-time tax rebates to stimulate spending

To combat inflation, a government may implement:

• Expansionary fiscal policy

• Contractionary fiscal policy

• Loose monetary policy

• Increasing public investment

Which of the following is an example of a fiscal policy tool?

• Open market operations

• Reserve requirements

• Discount rate

• Government spending

A government reduces income tax rates for individuals and businesses to encourage consumer spending and investment. This is an example of:

• Contractionary fiscal policy

• Expansionary fiscal policy

• Monetary policy

• Trade policy

In a period of economic boom, what fiscal policy action is most appropriate?

• Decreasing government spending and increasing taxes.

• Increasing government spending and decreasing taxes

• Increasing government spending and increasing taxes.

• Decreasing government spending and decreasing taxes