7.1 Fiscal Policy D/S

7.1 Fiscal Policy D/S

Multiple Choice

What 2 tools does the government use to effect the economy?

• debt and taxes

• tax and spend

• credit and debit

Open Ended

What are the 2 types of economic instability?

2 PROBLEMS in economy

"Unemployment"

"Inflation"

are the 2 economic problems we are always trying to balance.

Multiple Choice

When the problem is INFLATION , the economy must be in the EXPANSION phase. What will the government use to balance inflation?

• Contraction

• Stagflation

• Lorenz Curve

Multiple Choice

When the problem is UNEMPLOYMENT, the economy must be in the CONTRACTION phase. What will the government use to balance inflation?

• taxes

• Stagflation

• Expansion

Multiple Choice

What major event changed the overall economic policy of the US (it used to be Laissez-Faire, but now the government is more invovled)

• World War I (1917)

• Great Depression (1930s)

• Great Stagflation (1970s)

Open Ended

This is a repetitive question- that must mean it is super important...

What 2 tools does the government use to impact the economy?

Multiple Choice

According to the graphic on the previous slide, which of these following is true?

• When the government decreases taxes, they increase their spending

• When the government increase taxes, they increase their spending

• It is unpredictable whether the government increases or decreases spending.

Multiple Choice

When the government uses EXPANSIONARY policy, what problem are they trying to correct?

• unemployment

• stagflation

Multiple Choice

When the government uses CONTRACTIONARY policy, what problem are they trying to correct?

• Unemployment

• Inflation

Multiple Choice

Keynesian economics guides much of the US economic policy. Does it focus on demand (consumers) or supply (business)

• Keynesian economics focuses on SUPPLY side

• Keynesian economics focuses on DEMAND side

Multiple Choice

A big limitation of Demand Side policy is that "People are unpredictable and may not react the way we think they will"

• True

• False