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Fiscal Policy (Part 4 Week 1)

Authored by Priyanka Harrichurran

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Fiscal Policy (Part 4 Week 1)
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10 questions

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1.

MULTIPLE CHOICE QUESTION

1 min • 5 pts

The Budget process includes the:

The Minister of Finance proposing the budget, then Parliament debating and amending the request where necessary and the President passing the budget act into law.

President passing the budget as proposed by governor of the Reserve Bank.

President proposing the budget and Parliament passing the budget.

Parliament proposing the budget and the Governor of the Reserve Bank passing the budget.

None of these are correct.

2.

MULTIPLE CHOICE QUESTION

2 mins • 10 pts

Suppose the only revenue taken in by the government is in the form of income tax, and the tax rate is 10 per cent. If aggregate income is R800 billion, and government outlays are R100 billion then the government budget has.

a surplus of R20 billion

a deficit of R80 billion

a surplus of R80 billion

a deficit of R20 billion

a deficit of R100 billion

3.

MULTIPLE CHOICE QUESTION

1 min • 5 pts

The main aim of fiscal policy is:

a deliberate attempt to move the economy to full employment and achieve sustainable economic growth.

a deliberate attempt to finance the activities of the President.

only the use of a government deficit or surplus to keep the economy at full employment.

a deliberate attempt to get the government involved in an economy as much as possible.

All of the answers are correct.

4.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

If tax revenues exactly equal government expenditures in a given year, we can say that:

the government has achieved a balanced budget.

government debt will equal zero

government debt is positive.

the budget deficit will equal zero.

A and D are correct

5.

MULTIPLE CHOICE QUESTION

1 min • 5 pts

An increase in taxes on labour income shifts the labour supply curve ________ and the ________.

leftward; after-tax wage rate falls.

rightward; before-tax wage rate rises

leftward; after-tax wage rate rises.

rightward; before-tax wage rate falls.

leftward; before and after tax wage rate rises.

6.

MULTIPLE CHOICE QUESTION

2 mins • 10 pts

According to the Laffer curve, a cut in tax rates


will always increase tax revenue

will always decrease tax revenues

will increase tax revenues if the economy is on the positively sloped portion of the Laffer curve, and reduce tax revenues if the economy is on the negatively sloped portion of the Laffer curve

will not affect tax revenue

will decrease tax revenues if the economy is on the positively sloped portion of the Laffer curve, and increase tax revenues if the economy is on the negatively sloped portion of the Laffer curve

7.

MULTIPLE CHOICE QUESTION

1 min • 5 pts

Taxes and government expenditures that change in response to changes in the level of economic activity, without the need for additional government action, are examples of:

discretionary fiscal variables.

automatic fiscal policy.

built-in monetary stabilizers.

cyclically balanced budgets.

government expenditure multiplier.

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