United States Government Fiscal Policies Quiz

The legislative branch, comprising Congress, holds the authority to create and pass fiscal policies, including budgetary decisions and taxation.

The Congressional Budget Office provides non-partisan economic analysis to assist Congress in making informed decisions regarding budgetary and economic issues.

The Office of Management and Budget plays a central role in developing the federal budget and ensuring regulatory compliance, helping coordinate the executive branch's fiscal policies.

The Internal Revenue Service (IRS) is the federal agency tasked with collecting taxes and enforcing tax regulations in the United States.

The Department of the Treasury is responsible for implementing fiscal policy in the United States, overseeing financial matters and advising the President.

Expansionary fiscal policy aims to boost economic activity by raising government spending, typically used during recessions to stimulate growth.

Contractionary fiscal policy involves measures like raising interest rates to curb inflation and cool down an overheated economy.

Infrastructure spending, a deliberate government choice to invest in public projects, exemplifies discretionary fiscal policy, allowing for targeted economic stimulus.

Increased government spending during a recession is designed to stimulate economic activity, offsetting the downturn and supporting growth.

Unemployment insurance benefits act as an automatic stabilizer by providing financial support to individuals who lose their jobs during economic downturns, stabilizing income and consumption.

A balanced budget amendment aims to mandate fiscal responsibility by preventing government spending from surpassing revenue, ensuring a balanced budget.

Keynesian Economics posits that increased government spending can boost aggregate demand, leading to economic growth, especially during downturns.

Interest rates are a tool of monetary policy, controlled by central banks, and not directly within the purview of fiscal policy, which focuses on government spending and taxation.

Unemployment insurance acts as an automatic stabilizer, providing financial support to individuals during economic downturns and reducing the severity of recessions.

Crowding out occurs when increased government borrowing leads to higher interest rates, discouraging private investment and potentially offsetting the intended economic stimulus.

Increasing government spending during a recession is a classic example of expansionary fiscal policy, aimed at boosting economic activity.

The multiplier effect refers to the magnified impact of government spending on overall demand and income, as the initial spending sets off a chain reaction of economic activity.