Government Budgeting and Fiscal Responsibility Quiz

Test your knowledge on public finance with questions on government budget components, fiscal deficit, debt-to-GDP ratio, and more.

Practice Learn Test

Which of the following is a component of the government budget?

Consumer spending

Investment by private firms

Government expenditure

Exports and imports

What is the primary objective of fiscal responsibility?

To increase government spending

To reduce government debt

To expand fiscal deficit

To encourage inflation

What does a balanced budget imply?

Government spending is equal to government revenue

Government spending exceeds government revenue

Government revenue exceeds government spending

Government debt is increasing

What is the 'fiscal deficit' in a government budget?

The excess of government revenue over government expenditure

The excess of government expenditure over government revenue

The difference between exports and imports

The difference between savings and investment

What is the 'debt-to-GDP ratio' used for in government budgeting?

To measure government revenue

To measure government expenditure

To measure the affordability of government debt

To measure government savings

What is a 'surplus budget'?

When government revenue equals government expenditure

When government revenue exceeds government expenditure

When government expenditure exceeds government revenue

When government debt is at its peak

How does a government finance its deficit?

Through printing more money

Through borrowing from the central bank

Through increasing taxes

Through decreasing government expenditure

What is the role of a 'budget deficit' in fiscal policy?

To encourage savings

To stabilize economic growth

To reduce government debt

To increase government revenue

What is the primary goal of an expansionary fiscal policy?

To decrease aggregate demand

To decrease government spending

To increase unemployment

To stimulate economic growth

#10

What is the purpose of using fiscal policy in government budgeting?

To control inflation

To influence economic activity

To regulate international trade

To control population growth

#11

What is the difference between fiscal policy and monetary policy?

Fiscal policy involves regulating money supply, while monetary policy involves government spending.

Fiscal policy involves government taxation and spending, while monetary policy involves regulating money supply and interest rates.

Fiscal policy involves setting interest rates, while monetary policy involves government taxation.

Fiscal policy involves regulating international trade, while monetary policy involves government borrowing.

#12

What are 'automatic stabilizers' in fiscal policy?

Policies that automatically reduce government spending during economic downturns

Policies that automatically increase government spending during economic downturns

Policies that automatically increase taxes during economic expansions

Policies that automatically reduce taxes during economic expansions

#13

How does 'crowding out' affect private investment?

It encourages private investment by reducing interest rates.

It discourages private investment by raising interest rates.

It has no impact on private investment.

It stimulates private investment through tax incentives.

#14

How does 'discretionary fiscal policy' differ from 'automatic stabilizers'?

Discretionary fiscal policy is government intervention in response to economic conditions, while automatic stabilizers are built-in features of the tax and transfer systems.

Discretionary fiscal policy is automatic and does not require government intervention, while automatic stabilizers are decided by the government.

Discretionary fiscal policy and automatic stabilizers are synonymous terms.

Discretionary fiscal policy is solely focused on reducing government debt, while automatic stabilizers target economic growth.

#15

What is the 'Laffer curve' in the context of fiscal policy?

A curve showing the relationship between government spending and inflation

A curve illustrating the relationship between tax rates and government revenue

A curve depicting the relationship between interest rates and investment

A curve representing the relationship between fiscal deficit and GDP growth

#16

What is the main drawback of a contractionary fiscal policy during a recession?

It may lead to increased inflation

It may exacerbate the recession

It may lead to excessive government borrowing

It may increase consumer spending