Macroeconomic Principles and Fiscal Policy Quiz

Test your knowledge on GDP components, fiscal policy goals, Phillips Curve, debt-to-GDP ratio, and more in this macroeconomics quiz!

Practice Learn Test

Which of the following is a component of GDP?

Government spending

Imports

Net exports

All of the above

What does GDP stand for?

Gross Domestic Price

Gross Domestic Product

General Domestic Policy

Global Demand and Production

What is a budget deficit?

When government spending exceeds government revenue in a given period

When government revenue exceeds government spending in a given period

When government debt is reduced to zero

When government revenue equals government spending in a given period

Which of the following is a contractionary fiscal policy measure?

Increasing government spending

Decreasing taxes

Decreasing government spending

Increasing taxes

What is the role of the government in fiscal policy?

To regulate the stock market

To control the money supply

To manage inflation

To adjust government spending and taxation

What is the primary goal of fiscal policy?

To stabilize prices

To promote economic growth

To control inflation

To maintain balance of payments

Which of the following is a tool of expansionary fiscal policy?

Decreasing government spending

Increasing taxes

Decreasing taxes

Decreasing money supply

What is the Phillips Curve?

A curve illustrating the relationship between inflation and unemployment

A curve illustrating the relationship between GDP and inflation

A curve illustrating the relationship between interest rates and investment

A curve illustrating the relationship between fiscal policy and monetary policy

What is the difference between fiscal policy and monetary policy?

Fiscal policy involves government spending and taxation, while monetary policy involves controlling the money supply and interest rates

Monetary policy involves government spending and taxation, while fiscal policy involves controlling the money supply and interest rates

Fiscal policy involves controlling the money supply and interest rates, while monetary policy involves government spending and taxation

There is no difference between fiscal policy and monetary policy

#10

What is automatic stabilizer?

A fiscal policy tool used to adjust government spending automatically in response to economic conditions

A monetary policy tool used to adjust interest rates automatically in response to economic conditions

A government program that automatically stabilizes prices in the economy

A policy that stabilizes exchange rates automatically

#11

What is the national debt?

The total value of all goods and services produced within a country's borders

The total amount owed by the government to its creditors

The difference between exports and imports

The total amount of money in circulation within an economy

#12

What is crowding out?

A situation where government borrowing leads to increased interest rates, reducing private investment

A situation where government spending leads to increased economic growth

A situation where government surplus leads to decreased inflation

A situation where government deficit leads to increased exports

#13

What is the Laffer Curve?

A curve illustrating the relationship between tax rates and government revenue

A curve illustrating the relationship between inflation and unemployment

A curve illustrating the relationship between interest rates and investment

A curve illustrating the relationship between fiscal policy and monetary policy

#14

What does the term 'stagflation' refer to?

A situation of high inflation and low unemployment

A situation of high inflation and high unemployment

A situation of low inflation and low unemployment

A situation of low inflation and high unemployment