Contractionary Fiscal Policy: Definition and Objectives Online Test

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Contractionary Fiscal Policy: Definition and Objectives

Description: Contractionary Fiscal Policy: Definition and Objectives
Number of Questions: 15
Created by: Aliensbrain Bot
Tags: fiscal policy contractionary policy economic objectives

What is the primary objective of contractionary fiscal policy?

To stimulate economic growth
To reduce inflation
To increase government spending
To expand the budget deficit

What is the impact of contractionary fiscal policy on government spending?

It increases government spending
It decreases government spending
It has no impact on government spending
It depends on the specific policy measures implemented

What is the impact of contractionary fiscal policy on taxation?

It reduces taxes
It increases taxes
It has no impact on taxes
It depends on the specific policy measures implemented

What is the impact of contractionary fiscal policy on economic growth?

It stimulates economic growth
It reduces economic growth
It has no impact on economic growth
It depends on the specific policy measures implemented

What is the impact of contractionary fiscal policy on unemployment?

It reduces unemployment
It increases unemployment
It has no impact on unemployment
It depends on the specific policy measures implemented

What is the impact of contractionary fiscal policy on the budget deficit?

It increases the budget deficit
It decreases the budget deficit
It has no impact on the budget deficit
It depends on the specific policy measures implemented

What is the impact of contractionary fiscal policy on interest rates?

It increases interest rates
It decreases interest rates
It has no impact on interest rates
It depends on the specific policy measures implemented

What is the impact of contractionary fiscal policy on the exchange rate?

It strengthens the exchange rate
It weakens the exchange rate
It has no impact on the exchange rate
It depends on the specific policy measures implemented

What are some examples of contractionary fiscal policy measures?

Increasing government spending
Reducing government spending
Cutting taxes
Raising taxes

When is contractionary fiscal policy typically implemented?

During periods of high economic growth
During periods of low economic growth
During periods of high inflation
During periods of low inflation

What are some of the potential drawbacks of contractionary fiscal policy?

It can lead to a recession
It can increase unemployment
It can reduce economic growth
All of the above

What are some of the alternative policy measures that can be used to address economic problems?

Monetary policy
Supply-side policies
Structural reforms
All of the above

What is the role of central banks in implementing contractionary fiscal policy?

Central banks have no role in implementing fiscal policy
Central banks can influence fiscal policy through monetary policy
Central banks can directly implement fiscal policy measures
Central banks can advise governments on fiscal policy

How does contractionary fiscal policy affect the private sector?

It increases private investment
It decreases private investment
It has no impact on private investment
It depends on the specific policy measures implemented

What are some of the key considerations for policymakers when implementing contractionary fiscal policy?

The level of inflation
The level of unemployment
The size of the budget deficit
All of the above

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