#1
What is fiscal policy?
Policy related to government spending and taxation
ExplanationFiscal policy concerns government spending and taxation.
#2
Which of the following is NOT a tool of fiscal policy?
Interest rates
ExplanationInterest rates are a tool of monetary policy.
#3
What is the difference between fiscal policy and monetary policy?
Fiscal policy involves changes in government spending and taxation, while monetary policy involves changes in interest rates and money supply.
ExplanationFiscal policy deals with government spending and taxes, while monetary policy involves interest rates and money supply.
#4
What is the difference between a budget deficit and a budget surplus?
A budget deficit occurs when government spending exceeds government revenue, while a budget surplus occurs when government revenue exceeds government spending.
ExplanationBudget deficit: spending exceeds revenue; Budget surplus: revenue exceeds spending.
#5
Which of the following is true about expansionary fiscal policy?
It is used during periods of recession.
ExplanationExpansionary fiscal policy is used in economic downturns to stimulate growth.
#6
What is the primary objective of expansionary fiscal policy?
To stimulate economic growth
ExplanationExpansionary fiscal policy aims to boost economic growth.
#7
What is the national debt?
The total amount owed by the government
ExplanationNational debt represents the government's total liabilities.
#8
Which of the following is a discretionary fiscal policy?
A one-time infrastructure spending bill
ExplanationDiscretionary fiscal policy involves deliberate changes in spending or taxation.
#9
What is the purpose of automatic stabilizers in fiscal policy?
To stabilize the economy without requiring new legislative action
ExplanationAutomatic stabilizers help stabilize the economy without new laws.
#10
Which of the following is an example of contractionary fiscal policy?
Decreasing government spending on social programs
ExplanationContractionary fiscal policy involves reducing government spending.
#11
What is crowding out in the context of fiscal policy?
A situation where increased government spending leads to lower private sector investment
ExplanationCrowding out occurs when government spending displaces private investment.
#12
What is the Laffer Curve in economics?
A curve representing the relationship between tax rates and government revenue
ExplanationThe Laffer Curve illustrates the relationship between tax rates and revenue.
#13
Which of the following is an example of an automatic stabilizer in fiscal policy?
Unemployment benefits
ExplanationUnemployment benefits are an example of automatic stabilizers.
#14
What is the Phillips curve in macroeconomics?
A curve illustrating the relationship between inflation and unemployment.
ExplanationThe Phillips curve shows the inverse relationship between inflation and unemployment.
#15
What is the difference between discretionary fiscal policy and automatic stabilizers?
Discretionary fiscal policy refers to changes in government spending and taxation enacted by policymakers, while automatic stabilizers are built-in features of the tax and transfer system that automatically stabilize the economy.
ExplanationDiscretionary policy involves deliberate actions, while automatic stabilizers work automatically.