What is Fiscal Policy?

What is the definition of fiscal policy?

• Managing the economy through tax policy and government spending

• Printing more money

• Setting interest rates

• Regulating imports and exports

Who controls fiscal policy?

• The Supreme Court

• The President and Congress

• The Federal Reserve

• State Governors

The primary goal of fiscal policy is to achieve ______ and low inflation.

• full employment

• budget deficit

• trade surplus

• currency devaluation

The primary goal of fiscal policy is the same as the goal of the Federal Reserve's monetary policy.

• True

• False

According to the diagram, what happens to government spending under Expansionary Fiscal Policy?

• It increases

• It decreases

• It stays the same

• It is eliminated

According to the diagram, what happens to taxes under Contractionary Fiscal Policy?

• They increase

• They decrease

• They stay the same

• They are eliminated

Fill in the blank: Under Expansionary Fiscal Policy, government spending ______ and taxes ______.

• increase, decrease

• decrease, increase

• decrease, decrease

• increase, increase

What is the main purpose of Expansionary Fiscal Policy?

• To fight inflation

• To fight recessions (Economic Downturns)

• To increase unemployment

• To reduce government spending

Which of the following is NOT a strategy of Expansionary Fiscal Policy?

• Increasing government spending

• Reducing taxes

• Both increasing spending and reducing taxes simultaneously

• Increasing taxes

Fill in the blank: The goal of Expansionary Fiscal Policy is to stimulate economic activity and reduce _________

• unemployment

• inflation

• taxes

• government spending