This quiz works best with JavaScript enabled. Home > Economics > Fiscal > Policy > Fiscal Policy – Quiz 14 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Fiscal Policy Quiz 14 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Interest Rate is the fee that A) The member bank must pay the district bank for a loan. B) You and I must pay our bank for a loan. C) The district bank pays the national bank for a loan. D) The FED pays FOMC for services. Show Answer Correct Answer: B) You and I must pay our bank for a loan. 2. The largest and most stable component of aggregate demand is A) C. B) G. C) I. D) None of above. Show Answer Correct Answer: A) C. 3. A budget deficit is a A) Net leakage from the circular flow of income. B) An injection. C) A leakage. D) Net injection into the circular flow of income. Show Answer Correct Answer: D) Net injection into the circular flow of income. 4. A major benefit of fiscal policy is A) It can operate across the whole economy equally. B) It can be implemented immediately. C) It can be targetted at specific needs in the economy. D) None of above. Show Answer Correct Answer: C) It can be targetted at specific needs in the economy. 5. What is an example of a positive externality? A) Air pollution from factories. B) Eminent domain. C) Allowing people to smoke on school campuses. D) A student getting immunizations in order to go to school. Show Answer Correct Answer: D) A student getting immunizations in order to go to school. 6. What is one tool that measures the rate of inflation? A) Unemployment. B) Consumer price index. C) Federal Reserve. D) GDP. Show Answer Correct Answer: B) Consumer price index. 7. The government's overall approach to spending and taxes is called A) Fiscal Policy. B) Physical Policy. C) Money. D) Monetary Policy. Show Answer Correct Answer: A) Fiscal Policy. 8. If the Federal Reserve raises interest rates to combat rapid inflation, what might be a negative outcome? A) Taxes will rise. B) International trade would stop. C) The government would put a freeze on prices. D) Unemployment rates would rise. Show Answer Correct Answer: D) Unemployment rates would rise. 9. The federal government collects the most revenue from A) Income tax. B) Property tax. C) Excise tax. D) Sales tax. Show Answer Correct Answer: A) Income tax. 10. Which of the following tools of fiscal policy would decrease unemployment? A) Decrease the discount rate. B) Increase the reserve requirement. C) Increase tax rates. D) Increase government Spending. Show Answer Correct Answer: D) Increase government Spending. 11. When the government raises taxes, how does that affect the business cycle? A) It has no effect on the economy. B) It speeds the economy. C) It slows down the economy. D) It adds more jobs to the economy. Show Answer Correct Answer: C) It slows down the economy. 12. Influencing the economy by changing the reserve requirement is called: A) Tight Money. B) Fiscal policy. C) Easy Money. D) Monetary policy. Show Answer Correct Answer: D) Monetary policy. 13. Proportional taxes A) A tax with a constant % paid regardless of income. B) A tax where the % paid in taxes increases as income increases. C) The lower your income the higher % you pay in taxes. D) None of above. Show Answer Correct Answer: A) A tax with a constant % paid regardless of income. 14. Specific type of interest rate placed on loans from the Federal Reserve to financial institutions A) Inflation. B) Discount rates. C) Reserve requirements. D) Government securities (bonds). Show Answer Correct Answer: B) Discount rates. 15. Goal of fiscal policy is A) Keep unemployment stable. B) Promote full employment. C) Keep prices stable. D) Promote full employment and price stability. Show Answer Correct Answer: D) Promote full employment and price stability. 16. This is a sustained increase in prices for "stuff." It is measured as an annual percentage increase. A) Recession. B) Inflation. C) Aggregate Demand. D) Demand. Show Answer Correct Answer: B) Inflation. 17. Fiscal policy can be used to achieve low unemployment by: A) Increasing government spending and increasing tax. B) Increasing government spending and decreasing tax. C) Decreasing government spending and increasing tax. D) Decreasing government spending and decreasing tax. Show Answer Correct Answer: B) Increasing government spending and decreasing tax. 18. A plan to reduce the amount of money in circulation is called A) Expansionary fiscal policy. B) Contractionary monetary policy. C) Contractionary fiscal policy. D) Expansionary monetary policy. Show Answer Correct Answer: B) Contractionary monetary policy. 19. What type of tax does the tax rate increase as income increases A) Flat tax. B) Regressive tax. C) Proportional tax. D) Progressive tax. Show Answer Correct Answer: D) Progressive tax. 20. Increase gov spending A) R GDP goes down. B) Unemployment goes down. C) Inflation goes up. D) None of above. Show Answer Correct Answer: C) Inflation goes up. 21. If the Treasury increases government spending by the same amount that it increases taxes, aggregate demand will A) Remain the same. B) Decrease, these are both contractionary. C) Increase. D) Shift down. Show Answer Correct Answer: C) Increase. 22. If Congress increases government spending by the same amount it increases taxes aggregate demand will A) Remain the same. B) Decrease, these are both contractionary. C) Increase. D) Shift down. Show Answer Correct Answer: C) Increase. 23. When you buy a government bond, you ..... A) Loan money to the government. B) Borrow money from a savings and loan. C) Donate money for special government projects. D) Pay for your child's education. Show Answer Correct Answer: A) Loan money to the government. 24. Which of the following is a cost of government regulations? A) Consumers protected from harm. B) Decreased profits for corporations. C) More rainbows, unicorns, and narwhals. D) More money in consumer's pockets. Show Answer Correct Answer: B) Decreased profits for corporations. 25. What area, according to Keynesian economists, can be managed rationally? A) Government taxation and spending. B) Investment. C) Consumer spending. D) Net Exports. Show Answer Correct Answer: A) Government taxation and spending. 26. Which of the following is an automatic stabilizer? A) Unemployment compensation for those who have lost their jobs. B) An increase in the personal income tax rates. C) Open Market Operations. D) A government stimulus package. Show Answer Correct Answer: A) Unemployment compensation for those who have lost their jobs. 27. Higher discount rate, higher interest rates, higher reserve requirement A) Contractionary Fiscal Policy. B) Expansionary Monetary Policy. C) Expansionary Fiscal Policy. D) Contractionary Monetary Policy. Show Answer Correct Answer: D) Contractionary Monetary Policy. 28. Percentage of deposits that the Fed requires banks to hold back and not lend out A) Discount Rate. B) Reserve Requirement Rate. C) I.O.U Rate. D) Fed Fund Rate. Show Answer Correct Answer: B) Reserve Requirement Rate. 29. This is the roads, bridges, power lines, tunnels, railways, and airports of a country that allow for the conduct and expansion of business opportunities and safety of the population A) Taxes. B) Spending. C) Discretionary spending. D) Infrastructure. Show Answer Correct Answer: D) Infrastructure. 30. Crowding In is connected to Contractionary Policy and A) Depreciates the dollar and increases Ig. B) Appreaciates the dollar and decreases Ig. C) Increases interest rates. D) AD moving to the right ONLY. Show Answer Correct Answer: A) Depreciates the dollar and increases Ig. ← PreviousNext →Related QuizzesFiscal QuizzesEconomics QuizzesFiscal Policy Quiz 1Fiscal Policy Quiz 2Fiscal Policy Quiz 3Fiscal Policy Quiz 4Fiscal Policy Quiz 5Fiscal Policy Quiz 6Fiscal Policy Quiz 7Fiscal Policy Quiz 8 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books