#1
What is the primary goal of fiscal policy?
Maximize government revenue
Minimize government spending
Stabilize the economy
Control inflation
#2
In fiscal policy, what does the term 'budget surplus' indicate?
Government spending exceeds government revenue
Government revenue exceeds government spending
There is a balance between government spending and revenue
Government debt is increasing
#3
What is the impact of a contractionary fiscal policy on the economy?
Stimulates economic growth
Slows down economic activity
Increases inflation
Reduces government debt
#4
How does a tax rebate function in fiscal policy?
Increases taxes for certain individuals
Reduces taxes for certain individuals to stimulate spending
Has no impact on tax levels
Increases taxes for everyone
#5
What is the purpose of a 'tax rebate' in fiscal policy?
To increase taxes for certain individuals
To reduce taxes for certain individuals to stimulate spending
To have no impact on tax levels
To increase taxes for everyone
#6
Which of the following is an example of an expansionary fiscal policy tool?
Decreasing government spending
Increasing taxes
Decreasing interest rates
Increasing government spending
#7
What is the Laffer curve used to illustrate in taxation theory?
Relationship between tax rates and tax revenue
Income distribution in society
Government expenditure patterns
Inflationary pressures
#8
What is the crowding-out effect in fiscal policy?
Increased government spending leading to higher private investment
Increased government borrowing leading to reduced private investment
Decreased government spending leading to economic expansion
Decreased government borrowing leading to increased private investment
#9
Which of the following is a feature of a regressive tax?
Higher-income individuals pay a higher percentage of their income in taxes
Lower-income individuals pay a higher percentage of their income in taxes
Tax rates remain constant regardless of income level
Tax rates increase as income increases
#10
What is the 'tax multiplier' in fiscal policy?
The impact of changes in taxes on aggregate demand
The ratio of government spending to total GDP
The effect of changes in taxes on government revenue
The ratio of government debt to GDP
#11
Which of the following is an example of a progressive tax system?
Sales tax
Flat tax
Income tax with higher rates for higher income levels
Property tax
#12
What is the difference between fiscal policy and monetary policy?
Fiscal policy is controlled by central banks, while monetary policy is controlled by governments
Fiscal policy involves changes in interest rates, while monetary policy involves changes in government spending and taxation
Fiscal policy deals with government spending and taxation, while monetary policy deals with the money supply and interest rates
There is no difference; the terms are used interchangeably
#13
What is the purpose of a sin tax in fiscal policy?
To discourage undesirable behavior
To promote healthy habits
To fund education programs
To encourage savings
#14
In the context of taxation, what does the term 'tax incidence' refer to?
The impact of taxes on government revenue
The distribution of tax burden between buyers and sellers
The percentage of income taxed
The efficiency of tax collection
#15
What is the difference between a proportional tax and a progressive tax?
Proportional tax has a flat rate, while progressive tax rates increase with income
Proportional tax rates increase with income, while progressive tax has a flat rate
Both have flat rates, but proportional tax applies to individuals while progressive applies to corporations
There is no difference; the terms are used interchangeably
#16
What is the purpose of an automatic stabilizer in fiscal policy?
To cause fluctuations in the economy
To amplify economic downturns
To automatically adjust to stabilize the economy during economic fluctuations
To create artificial stability in the financial markets
#17
What is the purpose of a countercyclical fiscal policy?
To exacerbate economic cycles
To counteract the effects of economic cycles
To stabilize inflation rates
To increase government debt during economic expansions
#18
In fiscal policy, what is the difference between discretionary and automatic fiscal policy?
Discretionary policy is unplanned, while automatic policy is planned in advance
Discretionary policy is government-initiated, while automatic policy adjusts automatically with economic conditions
Discretionary policy is based on tax cuts, while automatic policy relies on government spending
There is no difference; the terms are interchangeable
#19
What is the impact of a budget deficit on government debt?
Decreases government debt
Increases government debt
Has no effect on government debt
Stabilizes government debt