Government Policies

Government intervention in the economy has as its main objective to...

• Reduce inflation

• Increase inflation

• Reduce unemployment

• Increase unemployment

• Reduce inflation and reduce unemployment

The Central bank controls the reference rate. Why is this rate so important?

• It is the base of inflation

• It is the base of all loans

• It is the base of the exchange rate

• It is the base of unemployment rate

• All of the above

The reduction of money supply can be attain by...

• Government selling assets

• Government buying more products locally

• Central bank buying back government bonds

• Central bank selling government bonds

• Central bank creating new jobs

The change in the reference rate of the Central bank usually has which of the following effects directly...

• Increases interest rates in banks

• Reduces interest rate in banks

• It can cause the exchange rate to increase or decrease inveresely to the change in the rate.

• Reducing unemployment.

• All of the above

When the government needs to sell more debt, it will cause...

• a) Increase in the number of bonds in the bond market

• b) Decrease in the price of bonds

• c) Increase in the exchange rate

• a) and b)

• all of the above

Some of the incovenieces with changes in the public spending is that...

• It is too small relative to the economy

• It is a one time event

• At the local level it can be too big and it distorts the economy

• All of the above

The best way to conduct large government projects (public spending) is when...

• The projects are announce in advance

• The inputs are acquired in advance to avoid hurting local economies

• The projects don´t interfere or substitute private projects

• The projects take place in areas usually with low economic activity

• All of the above

Fiscal policy is related to ...

• changes in the exchange rate

• changes in the money supply

• changes in government budget

• changes in the tax rates

• all of the above

Taxes can be used to encourage economic activity by...

• Reducing taxes increases the consumption of individuals and investment by private companies

• Increasing taxes increases the consumption of individuals and investment by private companies

• Reducing taxes increases the consumption of government and investment by private companies

• Increasing taxes increases the consumption of government and investment by private companies

• None of the above

Fiscal policy affects consumption by...

• changing the amount of disposable income available

• changing the rate of their loans

• changing inflation rates in the economy

• changing unemployment

• none of the above