Economic Policy Quiz

Fiscal policy is controlled by the government to determine levels of:

• Currency exchange rates

• Taxation and borrowing costs

• Consumer spending

• Employment rates

Which of the following is an example of supply-side policy?

• Increasing interest rates

• Lowering income tax to improve productivity

• Imposing higher tariffs on imports

• Introducing stricter borrowing limits

If the UK pound weakens against the US dollar, what is most likely to happen?

• Imported goods from the US become cheaper

• Exported goods from the UK become more expensive for US buyers

• Imported goods from the US become more expensive

• Fuel costs in the UK decrease

Which industry is most affected by fluctuating exchange rates?

• Retail stores

• Airlines and logistics

• Construction companies

• Local restaurants

The Bank of England influences monetary policy through:

• Deciding tax rates

• Adjusting interest rates

• Approving business loans

• Regulating consumer spending

Lowering corporation taxes can encourage businesses to invest in expansion.

• True

• False

Exchange rates do not impact businesses that only operate within the UK.

• True

• False

A strong UK pound makes imports cheaper for businesses.

• True

• False

Fiscal and monetary policies are the same and influence businesses in identical ways.

• True

• False

Explain one way a business might respond to rising costs caused by a weaker pound.