#1
Which of the following is a tool of fiscal policy?
Monetary policy
Interest rates
Government spending
Foreign exchange rates
#2
What is the primary objective of fiscal policy?
To control inflation
To stabilize the economy
To regulate exchange rates
To promote international trade
#3
Which of the following is NOT a component of fiscal policy?
Government spending
Monetary policy
Taxation
Borrowing
#4
What is the term for the difference between government revenue and government expenditure?
Budget deficit
Budget surplus
Fiscal balance
National debt
#5
What is the term for a situation where government spending exceeds government revenue?
Budget deficit
Budget surplus
Fiscal balance
National debt
#6
Which of the following is true regarding expansionary fiscal policy?
It decreases government spending and increases taxes.
It decreases government spending and decreases taxes.
It increases government spending and decreases taxes.
It increases government spending and increases taxes.
#7
What is the crowding out effect in fiscal policy?
Increased government spending crowds out private investment.
Decreased government spending leads to increased private investment.
Increased government spending stimulates economic growth.
Decreased government spending reduces inflation.
#8
What is the main tool used by governments to finance fiscal deficits?
Printing more currency
Issuing bonds
Increasing taxes
Reducing government spending
#9
Which of the following is a goal of expansionary fiscal policy during a recession?
Reducing government spending
Increasing taxes
Increasing unemployment
Increasing aggregate demand
#10
What is the role of automatic stabilizers in fiscal policy?
They increase the volatility of the economy.
They offset fluctuations in economic activity without explicit government intervention.
They are tools used in discretionary fiscal policy.
They only affect long-term economic trends.
#11
Which of the following fiscal policy actions is contractionary?
Increasing government spending and decreasing taxes.
Decreasing government spending and increasing taxes.
Decreasing government spending and decreasing taxes.
Increasing government spending and increasing taxes.
#12
What is the relationship between fiscal policy and the national debt?
Fiscal policy has no impact on the national debt.
Expansionary fiscal policy decreases the national debt.
Contractionary fiscal policy increases the national debt.
Fiscal policy can impact the national debt depending on its implementation.
#13
In a scenario of high inflation, which fiscal policy action is most appropriate?
Increasing government spending
Decreasing taxes
Increasing taxes
Decreasing government spending
#14
What is the primary drawback of using fiscal policy to stabilize the economy?
It is too slow to implement.
It can lead to excessive government intervention.
It has no impact on inflation.
It relies too heavily on private sector cooperation.
#15
In a recession, which fiscal policy action would likely be the most effective?
Decreasing taxes
Increasing government spending
Decreasing government spending
Increasing taxes