Fiscal Policy

The term ___________ refers to legislation or policies at all levels of governments (federal, state and local) that relate to expenditures and taxation.

• fiscal policy

• foreign policy

• monetary policy

By changing the amount of taxes people pay or the amount of spending by the government, fiscal policy influences _____________.

• the weather
• people's health
• the economy
• global politics

Throughout most of the 20th century and into the 21st century, the United States federal government has operated at a _________, where government expenditures have exceeded government revenues.

• balanced budget
• government surplus
• budget surplus
• budget deficit

Each year that the federal government runs a deficit, it adds to the __________.

• trade deficit
• budget surplus
• national debt
• inflation rate

The fiscal policy tools available to the government are changes in government __________ and changes in ___________. 

• government spending, taxes
• exports, imports
• interest rates, inflation
• unemployment, GDP

During a time of inflation (or increasing overall price level), the government may decide to pursue _________________ fiscal policy to curtail economic activity and curb inflation.

• expansionary
• loose
• contractionary
• stimulative

The fiscal policy tools used to combat inflation include lowering government _____________ or increasing ____________.

• inflation rate, GDP
• unemployment benefits, tariffs
• interest rates, borrowing
• spending, taxes

______________ fiscal policy is rarely implemented by policymakers because it is politically very difficult.

• Contractionary
• Expansionary
• Ineffective
• Neutral

When the government wishes to promote full employment and economic growth at a time when the economy is in a period of recession, it can use fiscal policy tools designed to increase ____________ and investment ___________ in the economy.

• inflation and deflation
• exports and imports
• taxes and savings
• consumption and investment

_________________fiscal policy is often attractive to legislators because it is popular among voters.

• Expansionary
• Contractionary
• Neutral
• Ineffective