#1
Which of the following is an example of expansionary fiscal policy?
Increasing government spending
Decreasing taxes
Selling government securities
Raising interest rates
#2
What is the primary goal of countercyclical monetary policy?
To reduce inflation
To stabilize fluctuations in economic activity
To promote economic growth
To increase consumer spending
#3
What is the primary tool used by central banks to implement monetary policy?
Government spending
Taxation
Open market operations
Fiscal policy
#4
During an economic boom, what fiscal policy action might be taken to prevent overheating?
Decreasing government spending
Increasing government spending
Raising taxes
Lowering interest rates
#5
Which of the following is a tool of expansionary monetary policy?
Raising interest rates
Selling government securities
Decreasing the money supply
Lowering interest rates
#6
During a recession, what action might a central bank take to implement a countercyclical monetary policy?
Lowering interest rates
Increasing interest rates
Selling government securities
Decreasing the money supply
#7
What is a potential drawback of expansionary fiscal policy during an economic expansion?
Increased government debt
Higher unemployment
Decreased consumer spending
Deflation
#8
In which phase of the business cycle would countercyclical policies typically be most effective?
Recession
Expansion
Peak
Trough
#9
What is the term for the difference between actual output and potential output in an economy?
Fiscal gap
Monetary gap
Output gap
Inflation gap
#10
What is the name for the period of declining economic activity between a peak and a trough?
Expansion
Trough
Recession
Boom
#11
How does the use of automatic stabilizers contribute to countercyclical fiscal policy?
They increase government spending during recessions
They decrease government spending during recessions
They automatically adjust tax revenues and transfer payments in response to economic conditions
They regulate interest rates to stabilize economic fluctuations
#12
What is the primary objective of a countercyclical policy?
To amplify economic fluctuations
To stabilize economic fluctuations
To increase government debt
To induce hyperinflation
#13
What is the term for a situation where the inflation rate is too high?
Hyperinflation
Deflation
Stagflation
Disinflation
#14
In which phase of the business cycle would contractionary fiscal policy typically be most appropriate?
Recession
Expansion
Peak
Trough
#15
During an economic expansion, what fiscal policy action might be taken to prevent overheating?
Decreasing government spending
Increasing government spending
Lowering interest rates
Raising taxes