#1
2. Which of the following is a tool of fiscal policy?
Open market operations
Discount rate
Government spending
Reserve requirements
#2
5. Which economic indicator is used to measure the overall health of an economy?
Consumer Price Index (CPI)
Gross Domestic Product (GDP)
Unemployment rate
Producer Price Index (PPI)
#3
14. Which economic concept is related to the idea that individuals have unlimited wants but resources are limited?
Scarcity
Utility
Demand elasticity
Opportunity cost
#4
1. What is the primary goal of monetary policy?
Maximize government revenue
Stabilize prices and control inflation
Increase government spending
Promote international trade
#5
4. In government budgeting, what is a budget deficit?
Excess of government revenue over expenditures
Excess of government expenditures over revenue
Balance between revenue and expenditures
No deficit or surplus
#6
7. What is the purpose of automatic stabilizers in fiscal policy?
To destabilize the economy
To automatically increase government spending during a recession
To eliminate budget deficits
To control inflation
#7
8. Which of the following is a characteristic of expansionary fiscal policy?
Decreased government spending
Higher taxes
Reduced money supply
Increased government spending
#8
10. What is the purpose of the government's use of contractionary monetary policy?
To reduce inflation
To increase government spending
To promote international trade
To stabilize prices
#9
12. What is the role of the central bank in monetary policy?
Controlling fiscal policy
Issuing currency
Regulating international trade
Controlling the money supply and interest rates
#10
3. What does the term 'crowding out' refer to in economics?
Increase in public investment
Decrease in private investment due to government borrowing
Expansionary monetary policy
Stabilization of prices
#11
6. What is the Phillips Curve in macroeconomics used to illustrate?
The relationship between inflation and unemployment
The impact of interest rates on investment
Government spending patterns
International trade balances
#12
9. What is the Laffer Curve in economics often used to represent?
The relationship between inflation and unemployment
The impact of interest rates on investment
The relationship between tax rates and government revenue
The Phillips Curve
#13
11. In macroeconomics, what does the term 'stagflation' refer to?
High inflation combined with high unemployment
A period of economic growth and low inflation
A situation where the economy is stagnant
Deflation combined with high employment
#14
13. What is the purpose of a countercyclical fiscal policy?
To exacerbate economic cycles
To amplify the effects of economic downturns
To offset the effects of economic cycles
To maintain a consistent level of economic growth
#15
16. What is the concept of the 'Multiplier Effect' in fiscal policy?
The idea that government spending has a larger impact on aggregate demand than the initial spending amount
The reduction in government spending due to crowding out
The inverse relationship between taxes and government revenue
The impact of interest rates on investment