#1
What is the primary goal of fiscal policy?
Maximize government revenue
Minimize inflation
Minimize unemployment
Maximize corporate profits
#2
Which economic indicator is often considered a lagging indicator in the business cycle?
Consumer Price Index (CPI)
Gross Domestic Product (GDP)
Unemployment Rate
Stock Market Index
#3
What is the difference between fiscal policy and monetary policy?
Fiscal policy involves government spending and taxation, while monetary policy involves control over the money supply and interest rates.
Fiscal policy is executed by the central bank, while monetary policy is implemented by the government.
Fiscal policy focuses on regulating inflation, while monetary policy focuses on managing unemployment.
Fiscal policy is used to influence international trade, while monetary policy is limited to domestic economic conditions.
#4
In the context of fiscal policy, what is the purpose of an automatic stabilizer?
To stabilize interest rates
To automatically adjust to economic fluctuations without explicit government action
To control inflation through targeted interventions
To maximize government revenue
#5
What is the primary purpose of a trade deficit in the context of international economics?
To boost domestic production
To reduce inflation
To increase foreign investment
To finance the purchase of imported goods and services
#6
Which economic concept refers to the total value of all goods and services produced in a country within a specific time period?
Gross Domestic Product (GDP)
Consumer Price Index (CPI)
Inflation Rate
Aggregate Demand
#7
What is the Phillips Curve used to illustrate in economic theory?
The relationship between inflation and unemployment
The impact of taxation on consumer spending
The elasticity of demand for luxury goods
The concept of diminishing marginal utility
#8
What is the difference between monetary policy and fiscal policy?
Monetary policy involves government spending, while fiscal policy involves controlling the money supply.
Fiscal policy involves changes in interest rates, while monetary policy involves changes in government spending.
Monetary policy is controlled by the central bank, while fiscal policy is controlled by the government.
Fiscal policy is focused on controlling inflation, while monetary policy is focused on government revenue.
#9
What does the term 'crowding out' refer to in the context of fiscal policy?
An increase in private sector investment due to government spending.
A decrease in government spending resulting from increased private sector investment.
The government's inability to borrow money from the public.
An increase in interest rates due to excessive government borrowing.
#10
Which of the following is an example of expansionary fiscal policy?
Increasing taxes to reduce consumer spending
Decreasing government spending to control inflation
Increasing government spending to stimulate the economy
Raising interest rates to encourage saving
#11
In economic terms, what does the term 'elasticity' measure?
The responsiveness of quantity demanded to a change in price.
The level of government intervention in the market.
The total revenue generated by a firm.
The stability of a currency in the foreign exchange market.
#12
In the context of fiscal policy, what does the term 'automatic stabilizers' refer to?
Government interventions to control interest rates
Programs that automatically adjust to economic fluctuations without explicit government action
Tax policies that favor specific industries
Government subsidies for essential goods
#13
What is the Laffer Curve used to depict in economics?
The relationship between tax rates and government revenue
The impact of interest rates on investment
The supply and demand dynamics in the labor market
The effects of inflation on savings
#14
In the IS-LM model, what does the LM curve represent?
Equilibrium in the goods market
Equilibrium in the money market
The relationship between investment and saving
The impact of fiscal policy on unemployment
#15
According to the Ricardian equivalence theorem, how do individuals respond to government deficits?
Increase saving in anticipation of future tax increases.
Decrease saving to stimulate economic growth.
Remain indifferent to government deficits.
Increase consumption to boost demand.
#16
Which fiscal policy tool involves adjusting tax rates based on an individual's income level?
Discretionary fiscal policy
Automatic stabilizers
Progressive taxation
Supply-side economics
#17
What is the primary objective of counter-cyclical fiscal policy?
Stabilizing the economy by reducing inflation
Enhancing economic growth during periods of recession
Minimizing government intervention in the market
Promoting income inequality through tax cuts