Free Printable Pearson 17 Fiscal policy

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Pearson 17 Fiscal policy

Total questions: 25

Worksheet time: 14mins

Name

Class

Date

The largest and most stable component of aggregate demand is

Keynesian economics differs from Classical economic theory in that

equilibrium can only be achieved at full employment

full employment equilibrium is not automatically attained

full employment is unobtainable in the long run

equilibrium is impossible to establish

which is most likeLy to increase during a downturn

government spending on health care

consumer spending on non-durable goods

firm's inventories or stocks

investment in capital equipment

this is

the business cycle acceleration

classical economic theory

the multiplier effect

the J curve

deflation

demand pull inflation

full employment equilibrium

cost push inflation

increased imports

increased savings

increased confidence

budget surplus

refers to government revenue, spending, and debt

micro economic reform

Legal Reserves

policy

Fiscal policy

Reserve system policy

Supporters of Keynesian economics believe that

government spending should be used as a tool to increase demand for goods.

demand for goods increases when prices rise.

taxes have a strong negative influence on economic output.

the government should have a limited role in regulating the economy.

increase in trade barriers overseas

higher costs of production

cuts in company tax

cuts in income tax

10.

y1 to y2

increased income tax

increased consumer confidence

automatic stabilisers

better education systems

11.

To solve recession gap implement ___________ discretionary fiscal policy and to solve inflation gap implement ___________ discretionary fiscal policy.

contractionary ; contractionary

expansionary ; contractionary

contractionary ; expansionary

expansionary; expansionary

12.

Occurs when the government takes in more revenue than it spends

budget surplus

treasury notes

trust funds

national debt

13.

Increased Taxing & decreased spending to slow the economy is referred to as

budget surplus

monetary policy

contractionary policy

budget deficit

14.

An example of expansionary fiscal policy would be

cutting taxes.

cutting government spending.

cutting production of consumer goods.

cutting prices of consumer goods.

15.

If the unemployment rate is rising and GDP is falling, the fiscal policy action that the federal government should MOST likely follow is

decreasing taxes.

decreasing spending.

decreasing the money supply.

decreasing the reserve requirement.

16.

Automatic or discretionary stabilizer? The government cuts personal income tax rates.

Discretionary

Automatic

17.

This is the branch of economic theory focused on the economy as a whole and decision making by large units, sudh as governments and unions.

microeconomics

macroeconomics

Keynesian economics

Reganonomics

18.

How does a budget deficit relate to the national debt?

They are the same thing.

Budget deficits are more than the national debt.

Budget deficits reduce the size of the national debt.

Budget deficits create the national debt.

19.

What would be the most likely reason for the government to enact contractionary fiscal policy -- to slow down economic growth?

to lower the unemployment rate

to slow down inflation (rising prices)

to increase imports

to decrease exports

20.

which is an example of an automatic stabilizer

change of cash rate each month

the budget outcome

balanced budget

progressive tax scheme

21.

a political problem with fiscal policy is

the implementation lag is immediate

the impact lag is too short

poiltically increasing taxes can cause government loss of votes

the high spending policiues can create a budget surplus

22.

a major benefit of fiscal policy is

it can operate across the whole economy equally

it can be implemented immediately

it can be targetted at specific needs in the economy

is it operates automatically to fix the economy

23.

a limitation of expansionary fiscal policy during times of deflation can be

the high cost of running a budget deficit and the needs to repay a debt that often increases due to currency depreciation

the accelerator effect which triggers a domino effect in loss of jobs, falling output and lower prices

that the public lose confidence win the government and no longer are prepared to accept spending increases which might cause inflation

the short implematation lag means that the policy has only one chance to work and when it doesn't the economy slips deeper into recession and deflation

24.

the objective of expansionary fiscal policy is to

increase the level of AD by encouraging imports to boost productivity

pump spending into the economy to generate an increase in employment and output

lower the level of economic debt and help the economy achieve external balance since debt is such a serious problem in the long run

the government creating major industries to get the epoch-my moving - i.e. nationalisation of coal industry or the banks

25.

crowding out is caused by

too many people chasing too few jobs

housing markets that demand exceeds supply

government borrowing forces out private borrowing in a recession

high interest rates crowd out borrowers who cant afford loans in a boom

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Pearson 17 Fiscal policy

Total questions: 25

Worksheet time: 14mins

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