Macroeconomics Practice Question Preview (ID: 49752)
This Practice Covers Macroeconomics Concepts.
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What does contractionary fiscal policy do to economic growth?
a) it depends
b) increases it
c) decreases it
d) does not affect it
With regards to economic growth, what is the goal of an expansionary fiscal policy?
a) to increase trade deficits
b) to increase economic growth
c) to decrease economic growth
d) to maintain current economic levels
Which item is NOT a means to finance government spending?
a) money creation
b) capital gains taxes
c) government subsidies
d) personal income taxes
What is one way the government CANNOT influence income redistribution?
a) Personal Income Taxes
b) Public Pensions
c) Earned Income Tax Credit
d) Open Market Policy
How will a contractionary fiscal policy affect a budget deficit?
a) not affect it
b) grow the deficit
c) shrink the deficit
d) change monetary policy
Discretionary fiscal policy is defined as
a) the arbitrary fluctuation in tax laws and budget requirements.
b) the automatic change in certain fiscal instruments when real GDP changes.
c) the deliberate manipulation of the money supply to expand the total economy.
d) a deliberate change in tax laws and government spending to change equilibrium income.
Fiscal policy affects which two parts of aggregate demand directly?
a) Taxes and consumption
b) Consumption and investment
c) Investment and net exports
d) Government spending and consumption
One of the primary goals of stabilizing the economy is to
a) increase income levels.
b) maintain low unemployment.
c) raise the standard of living.
d) increase profits and spending.
Federal program that provides monthly payments (entitlements) to people who are retired or unable to work is called
a) Welfare.
b) Medicare.
c) Social Security.
d) Senior Citizen's program
Which pairs of operations BEST fit with fiscal policy?
a) government spending and taxation
b) taxation and open market operations
c) discount rate and government spending
d) open market operations and discount rate
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