Fiscal Policy Air Test

Which of the following statements is true?

• Contractionary monetary policy would increase government revenue & slow down the economy.

• Contractionary fiscal policy would decrease the money supply & slow down the economy.

• Contractionary fiscal policy would lead to a decrease in national debt.

• Contractionary monetary policy leads to a budget deficit.

Which fiscal policy tool would be used if the economy were in a trough?

• increase the money supply

• increase individual tax rate

• decrease the money supply

• increase government spending

Which of the following fiscal policy tools would decrease the national debt?

• increase income taxes

• decrease income taxes

• increase money supply

• decrease money supply

Which of the following are fiscal policy tools (select 2)?

• adjusting the reserve requirement

• adjusting the discount rate

• changing government spending

• changing income taxes

• buying/selling bonds via open market operations

Which is true of a surplus? Select 2.

• a surplus is extra

• a surplus is not enough

• a surplus decreases the national debt

• a surplus increases the national debt

Choose the fiscal policy tools that would increase economic activity. (SELECT 2.)

• increase taxes

• decrease taxes

• increase government spending

• decrease government spending

• decrease discount rate to increase the money supply

The President is directly involved with which of the following?

• fiscal policy

• monetary policy

• setting interest rates

• changing the money supply

What is the primary goal of fiscal policy in a country's economy?

• A) To control inflation

• B) To regulate interest rates

• C) To manage government spending and taxation

• D) To increase exports

Which of the following is an example of expansionary fiscal policy?

• A) Increasing taxes

• B) Reducing government spending

• C) Increasing government spending

• D) Reducing the money supply

How does a government typically finance a budget deficit?

• A) By printing more money

• B) By borrowing money through issuing bonds

• C) By increasing exports

• D) By reducing public services