#1
What is the primary goal of fiscal policy?
Maximizing government revenue
Minimizing government spending
Stabilizing the economy
Encouraging inflation
#2
What is the term for the situation when actual output is less than potential output?
Recessionary gap
Inflationary gap
Stagflation
Deflation
#3
Which of the following best describes fiscal policy?
The use of government spending and taxation to influence the economy
The control of the money supply to achieve economic goals
The regulation of international trade to promote economic growth
The management of interest rates to control inflation
#4
What is the term for the situation when actual output exceeds potential output?
Recessionary gap
Inflationary gap
Stagflation
Deflation
#5
What is the term for a situation where the government's total expenditures exceed its total revenues in a given fiscal year?
Fiscal deficit
Budget surplus
National debt
Fiscal equilibrium
#6
What effect does an increase in government spending have on aggregate demand?
Decreases aggregate demand
Increases aggregate demand
No effect on aggregate demand
It depends on the multiplier effect
#7
In the context of macroeconomic equilibrium, what happens if aggregate demand exceeds aggregate supply?
Inflation occurs
Deflation occurs
Equilibrium is maintained
No impact on the economy
#8
Which of the following would likely be an expansionary fiscal policy measure during a recession?
Decreasing government spending and increasing taxes
Increasing government spending and decreasing taxes
Decreasing government spending and decreasing taxes
Increasing government spending and increasing taxes
#9
What is the relationship between the government budget deficit and national debt?
They are the same thing
The deficit is the amount added to the debt each year
The debt is the amount added to the deficit each year
There is no relationship between them
#10
Which of the following is an automatic stabilizer in fiscal policy?
Unemployment benefits
Corporate tax cuts
Infrastructure spending
Bailout programs
#11
Which of the following represents an expansionary monetary policy action?
Decreasing the reserve requirement
Increasing the discount rate
Selling government securities
Raising taxes
#12
If the government aims to reduce inflation, what type of fiscal policy might it implement?
Expansionary fiscal policy
Contractionary fiscal policy
Supply-side fiscal policy
Monetary policy
#13
What is the role of the central bank in fiscal policy?
Implementing government spending programs
Setting interest rates and controlling the money supply
Approving the national budget
Collecting taxes
#14
What is the formula for the fiscal multiplier?
1 / (1 - MPC)
1 + MPC
1 - MPC
1 / MPS
#15
During an economic expansion, what type of fiscal policy might the government implement to prevent overheating?
Expansionary fiscal policy
Contractionary fiscal policy
Neutral fiscal policy
Supply-side fiscal policy
#16
What is the crowding out effect in fiscal policy?
When government spending crowds out private investment by raising interest rates
When government spending leads to increased private investment
When government spending has no effect on private investment
When government spending leads to decreased taxation
#17
What is the difference between discretionary fiscal policy and automatic stabilizers?
Discretionary fiscal policy is enacted by the government while automatic stabilizers are built-in features of the economy
Automatic stabilizers are enacted by the government while discretionary fiscal policy is a natural feature of the economy
Discretionary fiscal policy adjusts automatically while automatic stabilizers require government intervention
There is no difference between them