Fiscal Policy Quiz

Which of the following is a component of Fiscal Policy?

• Monetary Supply

• Taxation and government spending

• Interest Rates

• Exchange Rates

What is fiscal policy?

• A policy related to government spending and taxation

• A policy related to environmental regulations

• A policy related to international trade agreements

• A policy related to educational reforms

Which of the following is an example of direct taxation?

• Income tax

• Sales tax

• Value-added tax

• Import duty

What are indirect taxes?

• Taxes levied on income earned by firms and individuals

• Taxes levied on spending, such as VAT

• Taxes on property ownership

• Taxes on corporate profits

What is a valued-added tax (VAT)?

• A tax on income

• A tax on property

• VAT is an indirect tax charged on the purchase of some goods and services

• A tax on exports

What is one potential impact of increased government spending on economic objectives?

• Decrease in aggregate demand

• Increase in aggregate demand

• Decrease in inflation

• Increase in unemployment

What type of fiscal policy is reducing direct taxation considered to be?

• Expansionary

• Contractionary

• Neutral

• Inflationary

What type of fiscal policy is characterized by an increase in government spending?

• Expansionary

• Contractionary

• Neutral

• Deflationary

In the context of fiscal policy, what is the primary goal of increasing government spending?

• To decrease inflation

• To increase economic growth

• To reduce government debt

• To lower interest rates

What type of fiscal policy is characterized by reducing government spending?

• Expansionary

• Contractionary

• Neutral

• Inflationary