Budgetary Policy Quiz 2

Which of the following budgetary policy measures is least likely to contribute to a reduction in structural unemployment?

• Increased expenditure on training and education

• Subsidies to businesses to take on long term unemployed persons

• Lower income taxes

• A work for the dole scheme

Which of the following is least likely to be a budgetary policy initiative that is designed to increase the size of the labour force?

• Changes in superannuation laws that allow older workers to access their superannuation whilst still in the workforce

• Increased family tax benefits for families using child care services

• Increased funding for aid to less developed economies

• Lower rates of tax for individual income earners

Which of the following fiscal policy supply side measures is least likely to benefit the economy on the supply side?

• Education and training expenditure

• Child care support

• One off tax bonus to taxpayers to stimulate the economy during a downturn

• Research and development taxation concessions for businesses

Which of the following is least likely to assist in the achievement of Full Employment in the longer term?

• A work scheme requiring unemployed persons to undertake training in order to receive unemployment benefits

• Funding for the unemployed to start businesses

• Measures designed to encourage people off welfare dependency

• Cash handouts

Which of the following policies is most likely to lead to more competition for jobs and increased unemployment?

• The government lowers company taxes

• Lowering income taxes

• Increasing the pension age so older workers work longer

• They are all equally likely to cause more unemployment

Budgetary policy is not overtly used to achieve low inflation because the problem of high inflation is primarily tackled by the RBA. Which of the following budgetary policy measures is least likely to assist the RBA in its efforts to achieve low inflation?

• An increase in the size of the surplus relative to the previous year

• Increased expenditure on welfare

• Spending initiatives designed to boost training

• Higher tax rates or lower government spending

Which one of the following policy actions could the federal government implement to reduce aggregate demand pressures?

• a decrease marginal income tax rates

• an increase in government infrastructure spending

• a decrease in interest rates

• discretionary changes in fiscal/budgetary policy to increase the size of the government budget surplus

An example of a fiscal/budgetary policy weapon that could be used to try to reduce demand inflation is:

• an increase in interest rates.

• a reduction in the budget surplus.

• an increase in personal income tax rates.

• an increase in government investment expenditure (G2).

Which one of the following events is likely to have a different effect on cyclical unemployment than the other events listed?

• increasing infrastructure expenditure

• increasing marginal income tax rates

• increasing interest rates on home and motor vehicle loans

• reduced consumer spending as a consequence of ongoing international terrorism

Which of the following measures is least likely to assist with the achievement of Economic Growth over the shorter term?

• Lower personal income tax rates

• A bigger budget deficit

• Tax concessions for savings

• Tax concessions for businesses that export