Fiscal Policy

Fiscal Policy is determined by two government actions: Collecting _________.

• Collecting taxes.

• Borrowing funds.

• Issuing debt.

• Reducing spending.

Who controls the actions of collecting revenue and authorizing expenditures in fiscal policy?

• The President

• The US Congress

• The Supreme Court

• The Federal Reserve

Which of the following is the best example of a decision involving revenue?

• the EPA passing new limitations on pollution.

• Congress' decision to raise marginal tax rates to 36%.

• the President’s support for a new highway-construction bill.

• a new law that limits the importation of Ecuadoran bananas.

Which of the following is the best example of a decision involving government expenditures?

• the institution of a "payroll tax holiday" that temporarily cancels social security deductions.

• the institution of a permanent ban on all US trade with Russia.

• the elimination of the so-called "death tax" for families with a net worth of less than $1 million.

• the development of a high-speed rail line between California and Texas.

What is the purpose of using expansionary policy by Congress?

• To cause a contraction

• To cause an expansion

• To maintain the current state

• To reduce inflation

What are the two methods Congress might use if the economy is contracting?

• Increase expenditures and cut taxes

• Decrease expenditures and increase taxes

• Increase interest rates and cut spending

• Cut taxes and increase interest rates

Fill in the blank: If the economy is in horrible shape, Congress might do _______.

• BOTH

• NEITHER

• ONLY ONE

• ALL

Which of the following is a method used in contractionary fiscal policy?

• Increase expenditures

• Cut expenditures

• Lower taxes

• Increase subsidies

In terms of fiscal policy, tax cuts are thought to be...

• expansionary

• contractionary

In terms of fiscal policy, increases in expenditures are thought to be...

• expansionary

• contractionary