#1
Which of the following is a key component of fiscal policy?
Monetary policy
Tax policy
Foreign policy
Educational policy
#2
Which government agency is responsible for conducting monetary policy in the United States?
The Department of the Treasury
The Federal Reserve
The Securities and Exchange Commission
The Office of Management and Budget
#3
According to the theory of rational expectations, how do individuals form expectations about future economic conditions?
Based on past experiences and historical data
Through trial and error
By systematically analyzing all available information
By following the opinions of economic experts
#4
According to the Triffin dilemma, what issue arises when a single currency serves as the world's primary reserve currency?
Increased global economic stability
Trade imbalances and instability
Higher levels of inflation
Enhanced monetary policy coordination
#5
In the context of fiscal policy, what does 'discretionary' mean?
Automatic and predetermined
Based on government regulations
Subject to the decision of policymakers
Influenced by external factors
#6
What is the primary goal of expansionary fiscal policy?
Reduce inflation
Stimulate economic growth
Increase unemployment
Contract the economy
#7
Who is considered the father of modern macroeconomics?
John Maynard Keynes
Milton Friedman
Adam Smith
Karl Marx
#8
What is the purpose of the automatic stabilizers in fiscal policy?
To increase government spending during recessions
To decrease taxes during economic expansions
To automatically adjust fiscal policy without legislative action
To control inflation through monetary policy
#9
In the context of fiscal policy, what does the term 'crowding out' refer to?
Increased public investment stimulating private investment
Decreased private investment due to increased government borrowing
Government interventions in the foreign exchange market
Expansionary monetary policy leading to inflation
#10
What is the primary purpose of countercyclical fiscal policy?
To exacerbate economic downturns
To amplify economic expansions
To mitigate the impact of economic fluctuations
To stabilize inflation
#11
What is the Laffer Curve used to illustrate?
The relationship between taxes and government spending
The trade-off between inflation and unemployment
The impact of interest rates on investment
The relationship between tax rates and tax revenue
#12
According to the Ricardian equivalence theorem, how do individuals respond to changes in government spending?
They increase consumption
They decrease consumption
They save more
They invest in the stock market
#13
Which economic theory suggests that the government should have a minimal role in the economy, and markets should operate freely?
Keynesian economics
Monetarism
Classical economics
Austrian economics
#14
What is the concept of the 'liquidity trap' in the context of fiscal and monetary policy?
A situation where interest rates are very high
A situation where interest rates are very low, and saving is preferred over spending
A situation where inflation is uncontrollable
A situation where the money supply is insufficient
#15
Which of the following is an example of discretionary fiscal policy?
Unemployment benefits automatically increasing during a recession
A one-time tax rebate to stimulate consumer spending
The use of automatic stabilizers
Maintaining a balanced budget at all times