#1
Which of the following is an example of a fiscal policy tool?
Taxation
ExplanationFiscal policy involves government taxation and spending to influence the economy.
#2
What is the main purpose of the Food Stamp Program (Supplemental Nutrition Assistance Program - SNAP) in the United States?
To assist low-income individuals and families in purchasing food
ExplanationSNAP aims to provide nutritional support to low-income households.
#3
What is the primary goal of a trade embargo?
To restrict or prohibit trade with a particular country
ExplanationTrade embargoes are imposed to restrict or ban trade with specific countries.
#4
Which of the following is an example of expansionary fiscal policy?
Lowering taxes
ExplanationLowering taxes is a tool of expansionary fiscal policy to stimulate economic activity.
#5
What is the primary objective of a price support program?
To maintain stable prices for agricultural products
ExplanationPrice support programs aim to stabilize agricultural prices to benefit producers.
#6
Which of the following is an example of a demand-side policy to combat unemployment?
Increasing government spending
ExplanationDemand-side policies involve boosting aggregate demand through increased government spending.
#7
What is the primary purpose of a trade barrier?
To restrict international trade
ExplanationTrade barriers are used to limit imports or exports to protect domestic industries.
#8
What is the purpose of the Affordable Care Act (ACA) in the United States?
To provide affordable health insurance
ExplanationThe ACA aims to increase access to health insurance and reduce healthcare costs.
#9
Which of the following is NOT a characteristic of expansionary monetary policy?
Increasing government spending
ExplanationExpansionary monetary policy involves increasing the money supply, not government spending.
#10
Which of the following is a characteristic of contractionary fiscal policy?
Decreasing government spending
ExplanationContractionary fiscal policy involves reducing government spending to slow economic growth.
#11
What does the term 'quantitative easing' refer to in monetary policy?
Increasing money supply through asset purchases
ExplanationQuantitative easing involves central banks buying financial assets to increase the money supply.
#12
Which of the following is NOT a tool of monetary policy?
Income tax rates
ExplanationIncome tax rates are a component of fiscal policy, not monetary policy.
#13
What is the main purpose of the Earned Income Tax Credit (EITC) in the United States?
To provide financial assistance to low-income working individuals and families
ExplanationThe EITC is designed to supplement the earnings of low-income individuals.
#14
Which of the following is a characteristic of a regressive tax?
The tax burden falls more heavily on lower-income individuals
ExplanationRegressive taxes impose a greater burden on lower-income earners relative to their income.
#15
What is the primary objective of a subsidy?
To encourage production or consumption of a good
ExplanationSubsidies are used to stimulate the production or consumption of certain goods.
#16
In the context of economics, what does 'Laffer curve' represent?
Relationship between tax rates and government revenue
ExplanationThe Laffer curve shows the theoretical relationship between tax rates and tax revenue.
#17
Which of the following is a goal of supply-side economics?
Reducing government regulation
ExplanationSupply-side economics focuses on reducing barriers to production and economic growth.
#18
What is the main objective of antitrust laws?
To prevent or control monopolies and promote fair competition
ExplanationAntitrust laws aim to maintain competitive markets and prevent monopolistic behavior.
#19
Which of the following is NOT a factor affecting the effectiveness of monetary policy?
Government regulations
ExplanationGovernment regulations primarily affect fiscal policy, not monetary policy.
#20
What is the main purpose of a development subsidy?
To encourage investment in emerging industries
ExplanationDevelopment subsidies are provided to foster growth in specific industries or regions.