12 ECO Fiscal Policy

Front

Which of the following is an example of an automatic stabiliser when the economy contracts? Taxation revenue would rise, cutting household spending., Welfare payments would rise, increasing household spending., Taxation revenue would fall, causing reduced government spending., Discretionary government spending would be expected to rise.

Back

Welfare payments would rise, increasing household spending.

Front

Which of the following is the preferred option for the Australian government to finance a budget deficit? Selling government bonds. Selling government assets. Borrowing from the Reserve Bank of Australia. Borrowing from overseas sources.

Back

Selling government bonds.

Front

Imagine the Australian Government’s budget is in surplus. If the rate of economic growth were to slow, this may result in a

Back

smaller surplus budget, as receipts fall and outlays rise.

Front

Which one of the following policy initiatives is least likely to increase aggregate supply?
An increase in the skilled migration program
Increased government expenditure on education
The construction of a new freeway in Perth
A 10% increase in the Newstart Allowance (unemployment benefit).

Back

A 10% increase in the Newstart Allowance (unemployment benefit).

Front

If a government budgets for a surplus and there is an unexpected increase in the level of economic activity, which of the following is likely to occur? There will be an increase in tax revenue and an increase in the budget surplus.

Back

There will be an increase in tax revenue and an increase in the budget surplus.

Front

Which of the following is most likely to promote the Government’s objective of a more equitable distribution of income?
Options: An increase in the minimum wage, A decrease in unemployment benefits, A decrease in the company tax rate, Lower government funding for education and training

Back

An increase in the minimum wage

Front

Which of the following is most likely to occur if the Australian government finances a budget deficit by borrowing funds in the domestic money market? Depreciation of the Australian dollar, Increased domestic money supply, Upward pressure on interest rates, A rise in the Australian government’s share of foreign debt

Back

Upward pressure on interest rates

Front

Which one of the following is an example of discretionary budgetary policy? A decrease in the cash interest rate target, A decrease in the company tax rate from 30 per cent to 28 per cent, An increase in welfare payments due to a rise in cyclical unemployment, Lower revenue from a minerals resource rent tax (MRRT) due to falling commodity prices

Back

A decrease in the company tax rate from 30 per cent to 28 per cent

Front

Which one of the following is not an example of an automatic stabiliser? Unemployment benefits, Social welfare payments, Progressive income taxes, Salaries paid to public servants

Back

Salaries paid to public servants

Front

If the actual budget surplus is greater than the forecast budget surplus, this would suggest that:

Back

the actual level of economic activity is higher than that forecast at budget time.