Chapter 26: Government Economic Policies

Which of these is not a major macroeconomic objective of governments?

• Low and stable inflation
• Increasing pofitability of companies
• Full employment
• High and sustainable growth

The four government objectives are low inflation, low unemployment, balance of payments and

• Safe defence spending
• Economic growth
• High interest rates
• Low tax revenue

Which one of the following is not part of the business cycle?

• Growth
• Slump
• Recession
• Maturity

What type of policy is the use of interest rates to control the economy?

• demand side policy
• fiscal policy
• insurance policy
• monetary policy

What should the government do to the value of £ to increase exports and economic growth?

• Increase the value of the pound (appreciation)
• Decrease the value of the pound (depreciation)
• Revaluation of the pound
• None of the above

Which of the following would be an expansionary fiscal policy (increasing economic growth)?

• lowering income tax
• raising the value of £
• printing money
• lowering government expenditure (spending)

Which of the following would be an expansionary monetary policy (increase in economic growth)?

• raising wages of prison staff
• raising interest rates
• lowering interest rates
• lowering government spending

Income tax is a

• direct tax
• voluntary tax
• indirect tax
• sales tax

Which of the following products will be most likely affected by an increase in income tax?

• Petrol
• Salt
• Jewellery
• Bread

Which of the following is a Direct Tax?

• Excise Duty
• Import Tariff
• Value Added Tax
• Council Tax