A-Level - Fiscal Policy

Which of the following is NOT a government macroeconomic objective?

• A. economic growth

• B. employment stability

• C. low inflation

• D. price stability

Which combination of changes is likely to increase a budget surplus?

• A

• B

• C

• D

What is an advantage of a fall in the size of a country’s national debt?

• A. an increase in the budget deficit

• B. a decrease in the budget deficit

• C. an increase in tax revenue

• D. a decrease in tax revenue

Which statement applies only to a progressive tax?

• A. It is a tax on products that harms those who consume them.

• B. It is a tax where the burden of payment is passed on to someone else.

• C. It is tax which takes a higher proportion of the income of the rich than of the poor.

• D. It is a tax which requires high-income earners to pay more tax than low-income earners.

A person earning $15,000 pays $5,000 in income tax.

Another person earning $40,000 pays $10,000 in income tax.

A third person earning $100,000 pays £20,000 in income tax.

Which type of tax is this?

• A. flat rate

• B. progressive

• C. proportional

• D. regressive

Which form of government spending is an example of capital spending?

• A. spending on food for soldiers

• B. spending on hospital medical image scanners

• C. spending on the wages of public sector workers

• D. spending on unemployment benefits

A country experiences a high rate of economic growth.

What effect is this likely to have on government spending on transfer payments and on tax revenue?

• A

• B

• C

• D

What is an example of a contractionary fiscal policy measure?

• A. a decrease in government spending on healthcare

• B. a decrease in the tax on imports

• C. an increase in the money supply

• D. an increase in a structural budget deficit

In which circumstances might a reduction in tax rates increase tax revenue?

• A

• B

• C

• D

If an economy is operating close to full capacity, what effect is an expansionary fiscal policy likely to have on the price level and unemployment?

• A

• B

• C

• D