Fiscal Policy and Its Impact on the Economy Online Test

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Fiscal Policy and Its Impact on the Economy

Description: This quiz assesses your understanding of fiscal policy and its impact on the economy. Fiscal policy refers to the use of government spending and taxation to influence economic activity. It is a key tool for governments to manage the economy and achieve specific economic goals.
Number of Questions: 15
Created by: Aliensbrain Bot
Tags: fiscal policy government spending taxation economic growth inflation

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What is the primary objective of fiscal policy?

To control inflation
To stabilize economic growth
To reduce unemployment
To promote international trade

Which of the following is an example of expansionary fiscal policy?

Increasing government spending
Decreasing taxes
Raising interest rates
Reducing government borrowing

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

It increases economic growth
It decreases economic growth
It has no impact on economic growth
It leads to a balanced budget

Which of the following is an example of contractionary fiscal policy?

Cutting government spending
Raising taxes
Lowering interest rates
Increasing government borrowing

What is the impact of contractionary fiscal policy on inflation?

It increases inflation
It decreases inflation
It has no impact on inflation
It leads to a budget surplus

How does fiscal policy affect the government budget?

It always leads to a budget deficit
It always leads to a budget surplus
It can lead to either a deficit or a surplus
It has no impact on the budget

What is the relationship between fiscal policy and monetary policy?

They are independent of each other
They work in opposite directions
They work in the same direction
They have no relationship

Which of the following is a potential risk associated with expansionary fiscal policy?

It can lead to inflation
It can increase the national debt
It can reduce economic growth
It can lead to a trade surplus

Which of the following is a potential risk associated with contractionary fiscal policy?

It can lead to recession
It can increase unemployment
It can reduce economic growth
It can lead to a trade deficit

How does fiscal policy affect the distribution of income?

It always leads to a more equal distribution of income
It always leads to a less equal distribution of income
It can lead to either a more or less equal distribution of income
It has no impact on the distribution of income

What is the role of automatic stabilizers in fiscal policy?

They are government programs that automatically adjust to economic conditions
They are government programs that are manually adjusted by policymakers
They are taxes that are automatically adjusted to economic conditions
They are taxes that are manually adjusted by policymakers

Which of the following is an example of a discretionary fiscal policy tool?

Social Security benefits
Medicare payments
Government purchases of goods and services
Unemployment insurance benefits

What is the impact of fiscal policy on international trade?

It always leads to an increase in exports
It always leads to a decrease in imports
It can lead to either an increase or decrease in trade
It has no impact on international trade

How does fiscal policy affect the financial markets?

It always leads to higher interest rates
It always leads to lower interest rates
It can lead to either higher or lower interest rates
It has no impact on interest rates

What is the long-run impact of fiscal policy on economic growth?

It always leads to higher economic growth
It always leads to lower economic growth
It can lead to either higher or lower economic growth
It has no impact on economic growth

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