Fiscal Policy 12 Economics

What is fiscal policy primarily concerned with?

• Regulating the money supply

• Government spending and taxation

• Controlling inflation

• Managing interest rates

Which of the following is a key component of fiscal policy?

• Exchange rates

• Government budgets

• Monetary policy

• Trade tariffs

How can expansionary fiscal policy impact the economy?

• Increase unemployment

• Decrease inflation

• Stimulate economic growth

• Reduce government debt

What is the likely effect of contractionary fiscal policy?

• Increase in consumer spending

• Decrease in government revenue

• Reduction in inflation

• Increase in public sector employment

Which of the following is an example of a fiscal policy tool?

• Setting interest rates

• Open market operations

• Government subsidies

• Foreign exchange interventions

What is the primary goal of fiscal policy during a recession?

• Increase taxes

• Reduce government spending

• Stimulate economic activity

• Increase interest rates

Which of the following best describes a budget deficit?

• Government revenue exceeds expenditure

• Government expenditure exceeds revenue

• Balanced government budget

• Government debt is zero

How does an increase in government spending typically affect aggregate demand?

• Decreases aggregate demand

• Has no effect on aggregate demand

• Increases aggregate demand

• Reduces consumer confidence

What is the term for the total amount of money that a government owes?

• Budget surplus

• National debt

• Fiscal balance

• Trade deficit

What is a possible consequence of a country having a high level of public debt?

• Increased economic growth

• Lower inflation rates

• Higher interest payments

• Greater financial stability