#1
1. What is the primary goal of U.S. fiscal policy?
Minimize unemployment
ExplanationFiscal policy aims to reduce unemployment by influencing government spending and taxation.
#2
7. Which government agency is responsible for preparing the federal budget in the United States?
Office of Management and Budget (OMB)
ExplanationOMB oversees budget development and implementation, ensuring alignment with presidential priorities.
#3
13. What is the purpose of the Office of Management and Budget (OMB) in the U.S.?
To prepare the federal budget and oversee the implementation of it
ExplanationOMB plays a key role in crafting the federal budget and ensuring its effective execution.
#4
2. How does the government use expansionary fiscal policy to stimulate the economy?
Increasing government spending
ExplanationExpansionary fiscal policy involves boosting the economy through higher government expenditures.
#5
3. What is the national debt ceiling?
The maximum amount of debt the government is allowed to have
ExplanationIt is the legal limit on the total amount of debt the U.S. government can incur.
#6
6. What is the Laffer curve used to illustrate in fiscal policy?
The relationship between tax rates and tax revenue
ExplanationIt depicts the potential effects of tax rates on government revenue, showing an optimal tax rate.
#7
8. What is the difference between monetary policy and fiscal policy?
Monetary policy involves the regulation of money supply and interest rates, while fiscal policy involves government spending and taxation
ExplanationMonetary policy deals with money supply and interest rates, while fiscal policy focuses on government's revenue and spending.
#8
11. What is the purpose of the Congressional Budget Office (CBO) in the U.S.?
To conduct economic research
ExplanationCBO provides economic analyses and budgetary information to support congressional decision-making.
#9
4. How does the Federal Reserve influence fiscal policy?
By adjusting interest rates
ExplanationThe Federal Reserve impacts fiscal policy by controlling interest rates, influencing borrowing and spending.
#10
5. What is the crowding-out effect in the context of fiscal policy?
Increased government spending leading to higher interest rates
ExplanationIt occurs when government spending raises interest rates, reducing private investment.
#11
9. What is the debt-to-GDP ratio used for in analyzing national debt?
To assess the ability of a country to meet its debt obligations
ExplanationIt measures the proportion of a country's debt relative to its economic output, gauging its capacity to repay debts.
#12
10. In the context of fiscal policy, what is a 'counter-cyclical' approach?
Increasing government spending during economic downturns and reducing it during expansions
ExplanationCounter-cyclical measures involve adjusting fiscal policy opposite to economic cycles, aiming to stabilize the economy.
#13
14. What is the fiscal multiplier effect?
The impact of changes in fiscal policy on overall economic activity
ExplanationIt measures how changes in government spending or taxation influence economic output and employment.