Fical Policy

Open Ended

In what ways can changes in government expenditure and taxation impact the economy?

Multiple Choice

Why is fiscal policy considered significant in influencing a country's economy?

• Because it determines the government’s budget only

• Because it affects aggregate demand, resource allocation, and income distribution

• Because it is unrelated to economic activity

• Because it only involves taxation

Open Ended

Explain how fiscal policy can influence aggregate demand and economic activity.

Multiple Choice

Which of the following is NOT one of the three positions of fiscal policy?

• Neutral

• Expansionary

• Contractionary

• Inflationary

Multiple Select

Which of the following are objectives of fiscal policy?

• To achieve desirable price level

• To achieve desirable consumption level

• To achieve desirable employment level

• To achieve desirable income distribution

Fill in the Blanks

To control inflation, the government should reduce unnecessary expenditure on

activities.

Open Ended

Discuss how surplus budgets can help in controlling inflation, and why fiscal measures alone may not be sufficient.

Open Ended

How can changes in taxation and government spending impact the economy?

Multiple Choice

What are the two major instruments of fiscal policy?

• Government expenditure and taxation

• Monetary policy and interest rates

• Foreign exchange and trade policy

• Subsidies and price controls