Government Fiscal Policy and National Debt Quiz

Explore fiscal economics with this quiz. Learn about tools, impacts, and entities involved in government fiscal policy and national debt.

Practice Learn Test

What is the primary goal of government fiscal policy?

To control inflation

To maximize profits

To promote economic stability

To regulate international trade

Which of the following is a tool used in expansionary fiscal policy?

Decreasing government spending

Increasing taxes

Increasing government spending

Decreasing interest rates

What is the relationship between fiscal policy and national debt?

Fiscal policy has no impact on national debt

Expansionary fiscal policy always increases national debt

Contractionary fiscal policy always decreases national debt

Fiscal policy can influence the level of national debt

How does a budget surplus differ from a budget deficit?

A surplus occurs when government spending exceeds revenue, while a deficit occurs when revenue exceeds spending

A surplus occurs when government revenue exceeds spending, while a deficit occurs when spending exceeds revenue

Both a surplus and a deficit occur when there is a balance between revenue and spending

There is no difference between a surplus and a deficit

What is the role of automatic stabilizers in fiscal policy?

They amplify economic fluctuations

They reduce government spending during recessions

They automatically adjust to counteract economic fluctuations

They have no impact on the economy

In fiscal policy, what does the term 'discretionary spending' refer to?

Spending that is automatically determined by economic conditions

Spending that is authorized by specific legislation and can be adjusted annually

Spending that is fixed and cannot be changed

Spending that is solely determined by the President

Which entity is responsible for creating and implementing fiscal policy in the United States?

Federal Reserve

Congress and the President

Department of Treasury

World Bank

What is the crowding-out effect in fiscal policy?

Increased government spending stimulates private investment

Increased government borrowing leads to reduced private sector borrowing

Decreased government spending leads to increased private sector investment

Decreased government borrowing leads to reduced private sector savings

What is the Laffer Curve in the context of fiscal policy?

A curve depicting the relationship between tax rates and government spending

A curve illustrating the relationship between tax rates and tax revenue

A curve showing the impact of inflation on government debt

A curve representing the trade balance between nations

#10

What is the debt-to-GDP ratio used for in analyzing national debt?

To measure the size of the government debt in absolute terms

To compare the level of government debt to the overall size of the economy

To determine the interest rates on government bonds

To assess the impact of government spending on inflation

#11

What is the Phillips Curve and how does it relate to fiscal policy?

It shows the relationship between inflation and unemployment, influencing policy decisions on taxation

It represents the trade-off between government spending and national debt

It measures the impact of interest rates on consumer spending

It illustrates the impact of fiscal policy on international trade