Economics Quiz Unit 4

Which of the following best describes an expansionary budgetary policy stance?

• A budget surplus used to reduce debt

• A deliberate reduction in government expenditure

• A budget deficit designed to stimulate AD

• A rise in tax receipts relative to spending

When the RBA lowers the cash rate target, the likely effect is to:

• Decrease consumer spending and investment

• Increase aggregate demand through cheaper credit

• Reduce inflationary pressures

• Decrease economic growth

Automatic stabilisers reduce fluctuations in the business cycle by:

• Changing interest rates

• Adjusting fiscal policy targets

• Varying tax and welfare flows automatically with GDP

• Controlling the money supply

A government policy that promotes immigration of skilled workers primarily aims to:

• Boost aggregate demand

• Increase aggregate supply

• Reduce imports

• Lower the exchange rate

Improving labour productivity is most likely to:

• Shift AD to the right

• Shift AS to the right

• Reduce potential GDP

• Increase inflationary pressure

An increase in Australia’s terms of trade means:

• Export prices have risen relative to import prices

• Export volumes have increased

• Imports are cheaper in real terms

• The exchange rate has depreciated

If the Australian dollar appreciates, which is most likely?

• Exports become cheaper for foreigners

• Imports become more expensive for Australians

• Net exports decrease, reducing AD

• Inflationary pressure rises

A structural budget surplus combined with a cyclical deficit suggests:

• Expansionary fiscal stance

• Contractionary fiscal stance with weak economy

• Balanced fiscal policy

• Neutral fiscal effect

During a strong economic expansion, an appropriate mix would be:

• Expansionary fiscal and expansionary monetary policy

• Contractionary fiscal and contractionary monetary policy

• Expansionary fiscal and contractionary monetary policy

• Neutral fiscal and expansionary monetary policy

A key trade-off faced when pursuing low unemployment is:

• Lower economic growth

• Higher inflationary pressure

• Reduced participation rate

• Decreased terms of trade