Understanding Government and Economy

Which fiscal policy is typically used during a recession?

• Contractionary fiscal policy

• Expansionary fiscal policy

• Neutral fiscal policy

• Restrictive fiscal policy

What is the purpose of contractionary fiscal policy in terms of economic stability?

• To increase inflation

• To stabilize economic growth

• To decrease government revenue

• To promote consumer spending

Reducing government spending is a method associated with which fiscal policy?

• Expansionary fiscal policy

• Contractionary fiscal policy

• Neutral fiscal policy

• Progressive fiscal policy

In a progressive tax system, what happens to the tax burden as income rises?

• It decreases

• It remains constant

• It increases

• It is eliminated

What is a key characteristic of a progressive tax system?

• It is regressive

• It is proportional

• It is equitable

• It is voluntary

Which group benefits from a more equitable tax system in a progressive tax model?

• Only the wealthy

• Only the poor

• All income groups

• Only corporations

What is a key characteristic of a proportional (flat) tax?

• Different tax rates for different income levels

• Same tax rate applied to all individuals regardless of income

• Higher tax rate for higher income

• Lower tax rate for lower income

What is the main goal of supply-side economics?

• Increase government spending

• Stimulate production and economic growth

• Promote higher taxes

• Increase regulation

Which term is often used to describe the belief that benefits for the wealthy will 'trickle down' to everyone else?

• Supply-side effect

• Trickle-down effect

• Demand-side effect

• Keynesian effect

Supply-side economics is primarily focused on which side of the market?

• Demand

• Supply

• Consumer

• Government