FS22 Demand-side policies

What is fiscal policy used for?

• To control the weather

• To influence a nation's economic growth

• To manage wildlife

• To design clothing

Who manages fiscal policy?

• The central bank

• The government

• Private companies

• Schools

What is one type of fiscal policy?

• Expansionary Fiscal Policy

• Monetary Fiscal Policy

• Environmental Fiscal Policy

• Educational Fiscal Policy

What does expansionary fiscal policy aim to do?

• Decrease aggregate demand

• Increase aggregate demand

• Stop all spending

• Close all schools

What is one action of expansionary fiscal policy?

• Decreasing government spending

• Increasing taxes

• Increasing government spending

• Reducing infrastructure

What happens when the government increases spending on hospitals?

• Decreases jobs in construction

• Increases demand for construction materials

• Reduces income for workers

• Stops all economic activity

What is one action of contractionary fiscal policy?

• Increasing government spending

• Decreasing taxes

• Decreasing government spending

• Building more roads

Australia's current cash rate target is

• 2.9%

• 3.1%

• 2.4%

• 4.1%

Expansionary monetary policy

• is increased government spending

• is reduced income taxes

• is an increase in the cash rate

• is a decrease in the cash rate

If inflation is likely to be too high for too long, the RBA would typically

• tighten monetary policy

• lower the cash rate

• loosen monetary policy

• increase government spending