#1
Which of the following is a tool used by central banks to control the money supply?
Fiscal policy
Monetary policy
Trade policy
Industrial policy
#2
What is the primary objective of expansionary fiscal policy?
To reduce inflation
To decrease government spending
To stimulate economic growth
To increase taxes
#3
What is the primary goal of contractionary fiscal policy?
To reduce government debt
To decrease taxes
To control inflation
To increase consumer spending
#4
Which of the following is NOT a component of aggregate demand?
Consumption
Government spending
Net exports
Foreign investment
#5
What is the primary tool used by central banks to implement monetary policy?
Regulating interest rates
Controlling government spending
Setting tax policies
Adjusting exchange rates
#6
What is the name of the policy that involves reducing government spending or increasing taxes to cool down an overheated economy?
Expansionary fiscal policy
Contractionary fiscal policy
Expansionary monetary policy
Contractionary monetary policy
#7
What is the purpose of using reserve requirements as a tool of monetary policy?
To control the money supply
To stabilize exchange rates
To regulate government spending
To influence consumer confidence
#8
Which of the following is NOT a tool of monetary policy?
Open market operations
Government spending
Reserve requirements
Discount rate
#9
In the context of macroeconomic policy, what is the Phillips curve used to illustrate?
The relationship between inflation and unemployment
The impact of fiscal policy on aggregate demand
The effects of monetary policy on interest rates
The relationship between exchange rates and trade balance
#10
What is the name of the policy that involves the government reducing taxes or increasing spending to stimulate the economy?
Expansionary monetary policy
Contractionary fiscal policy
Expansionary fiscal policy
Contractionary monetary policy
#11
Which of the following best describes the 'crowding out' effect in economics?
Increased private investment due to decreased government borrowing
Decreased private investment due to increased government borrowing
Increased government spending due to decreased private investment
Decreased government spending due to increased private investment
#12
Which of the following is a characteristic of a recessionary gap?
Actual output exceeds potential output
Potential output exceeds actual output
Inflationary pressures are high
Unemployment is low
#13
What is the primary goal of a central bank's open market operations?
To control inflation
To regulate interest rates
To manage exchange rates
To influence government spending
#14
What is the primary concern of policymakers during a period of stagflation?
Rising inflation and unemployment simultaneously
Declining inflation and unemployment simultaneously
Rising inflation with declining unemployment
Declining inflation with rising unemployment
#15
Which of the following is a potential consequence of contractionary monetary policy?
Increased investment
Higher inflation
Lower interest rates
Reduced consumer spending
#16
What is the name of the policy aimed at stabilizing the economy over the business cycle by increasing government spending during economic downturns?
Automatic stabilizers
Discretionary fiscal policy
Supply-side economics
Classical economics
#17
Which of the following is an example of an automatic stabilizer in fiscal policy?
Unemployment insurance
Discretionary spending
Infrastructure projects
Tax cuts during recessions
#18
What effect does an increase in the money supply typically have on interest rates?
Increases interest rates
Decreases interest rates
Has no effect on interest rates
It depends on other economic factors
#19
What is the primary purpose of counter-cyclical fiscal policy?
To exacerbate economic fluctuations
To reduce the effectiveness of monetary policy
To stabilize the economy over the business cycle
To promote hyperinflation