This quiz works best with JavaScript enabled. Home > Economics > Fiscal > Policy > Fiscal Policy – Quiz 6 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Fiscal Policy Quiz 6 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Taxes that have the same percentage regardless of income level A) Progressive. B) Regressive. C) Proportional. D) All of the above. Show Answer Correct Answer: C) Proportional. 2. A political problem with fiscal policy is A) The implementation lag is immediate. B) The impact lag is too short. C) Poiltically increasing taxes can cause government loss of votes. D) None of above. Show Answer Correct Answer: C) Poiltically increasing taxes can cause government loss of votes. 3. Franklin D. Roosevelt's New Deal would be an example of A) Contractionary fiscal policy. B) Expansionary monetary policy. C) Contractionary monetary policy. D) Expansionary fiscal policy. Show Answer Correct Answer: D) Expansionary fiscal policy. 4. Your parents pay a tax each year of $ 3500 that is based off the value of your home. Which type of tax do your parents pay each year? A) Property Tax. B) Sales Tax. C) Income Tax. D) Payroll Tax. Show Answer Correct Answer: A) Property Tax. 5. The institution responsible for managing a nation's money supply is the ..... A) Central Bank. B) Trade Commission. C) National Security. D) Government Regulator. Show Answer Correct Answer: A) Central Bank. 6. Keynesian economics differs from Classical economic theory in that A) Equilibrium can only be achieved at full employment. B) Full employment equilibrium is not automatically attained. C) Full employment is unobtainable in the long run. D) None of above. Show Answer Correct Answer: B) Full employment equilibrium is not automatically attained. 7. Which of the following will most likely create a "contraction" to occur in the economy. A) Lowering the discount rate. B) Expansionary fiscal policy. C) The Federal Reserve buying bonds. D) Cutting government spending. Show Answer Correct Answer: D) Cutting government spending. 8. Keynesian followers believe this entity should increase demand during contractions A) Individual Producers. B) Federal Reserve. C) Federal Government. D) State Governments. Show Answer Correct Answer: C) Federal Government. 9. Which of the following best defines "excise tax" ? A) Tax on people's earnings. B) Tax on donation of money or wealth. C) Tax on the transfer of property when someone dies. D) Tax on the manufacture or sale of certain items. Show Answer Correct Answer: D) Tax on the manufacture or sale of certain items. 10. What is national debt? A) All of the years of deficits combinded together. B) More taxes collected than spent. C) How much the government spends. D) What the president spends money on. Show Answer Correct Answer: A) All of the years of deficits combinded together. 11. Too much money in the economy results in ..... A) Inflation. B) Recessions. C) Price reductions. D) Deflation. Show Answer Correct Answer: A) Inflation. 12. Which of the following is not likely to happen when the money supply is increased A) Lowering of GDP. B) Increased spending. C) Decrease in interest rates. D) Economic growth. Show Answer Correct Answer: A) Lowering of GDP. 13. Keynesian theory suggests that government should A) Spend more than it taxes when saving exceeds investment. B) Maintain a balanced budget in order to stabilise the economy. C) Spend more than it taxes in order to improve welfare and social equity. D) None of above. Show Answer Correct Answer: A) Spend more than it taxes when saving exceeds investment. 14. Which type of unemployment is due to changes in the business cycle? A) Structural. B) Seasonal. C) Cyclical. D) Frictional. Show Answer Correct Answer: C) Cyclical. 15. The current chairman of the Federal Reserve is A) Barack Obama. B) Alan Greenspan. C) Ben Bernanke. D) Janet Yellen. Show Answer Correct Answer: D) Janet Yellen. 16. More revenue than expenditures. A) Surplus. B) Stagflation. C) Demand-pull. D) Deficit. Show Answer Correct Answer: A) Surplus. 17. Which of the these is a contractionary fiscal policy? A) Cutting production of consumer good. B) Raising the discount rate. C) Raising taxes. D) Increasing government spending. Show Answer Correct Answer: C) Raising taxes. 18. Expansionary Fiscal Policy usually creates government A) Deficit. B) Surplus. C) Degrees. D) Calories. Show Answer Correct Answer: A) Deficit. 19. Which of the following is not a tool of fiscal policy? A) Taxing. B) Spending. C) Interest Rates. D) All of these options are tools of fiscal policy. Show Answer Correct Answer: C) Interest Rates. 20. The main duty of the FOMC is ..... A) Setting monetary policy. B) Informing the president about the economy. C) Informing Congress about the economy. D) None of these. Show Answer Correct Answer: A) Setting monetary policy. 21. Subsidies are not used to ..... A) Encourage more sustainable business practices. B) Support innovative start-up businesses. C) Encourage business growth in deprived areas. D) Pay down government debt. Show Answer Correct Answer: D) Pay down government debt. 22. Increase in the national debt would be caused by A) Increasing govt. spending and increase taxes. B) Increasing govt. spending and decrease taxes. C) Decreasing govt. spending and increase taxes. D) Increase interest rates and decrease the money supply. Show Answer Correct Answer: B) Increasing govt. spending and decrease taxes. 23. Expansionary monetary policy does what? A) Increases the unemployment rates. B) Increases the number of jobs. C) Helps to bring inflation down. D) Slows down economic growth. Show Answer Correct Answer: B) Increases the number of jobs. 24. ..... is the accumulation of past budget deficits, minus past budget surpluses. A) Public Debt. B) Fiscal Year. C) Government Debt. D) Debt-GDP Ratio. Show Answer Correct Answer: C) Government Debt. 25. The Fed Board of Governors serve ..... terms. A) Lifetime terms. B) 4 year terms. C) 6 year terms. D) 14 year terms. Show Answer Correct Answer: D) 14 year terms. 26. When the business cycle is expanding too quickly, which of the following policies should be implemented by the Federal Government? A) Expansionary Monetary Policy. B) Contractionary Monetary Policy. C) Expansionary Fiscal Policy. D) Contractionary Fiscal Policy. Show Answer Correct Answer: D) Contractionary Fiscal Policy. 27. The interest rate the Fed charges other banks is known as the A) Mortgage rate. B) Discount rate. C) Operation rate. D) Prime rate. Show Answer Correct Answer: B) Discount rate. 28. Expansionary fiscal policies are laws aimed at reducing unemployment. How might Congress use expansionary fiscal policy? A) Decrease the discount rate. B) Increase taxes. C) Decrease government spending. D) Increase government spending and decrease taxes. Show Answer Correct Answer: D) Increase government spending and decrease taxes. 29. Which of the following is contractionary policy? A) Decreasing required reserves. B) Buying bonds. C) Increasing fed fund rate. D) Decreasing discount rate. Show Answer Correct Answer: C) Increasing fed fund rate. 30. Which is an example of representative money? A) Diamonds. B) Checks. C) A fur coat. D) A $ 50 bill. Show Answer Correct Answer: B) Checks. ← PreviousNext →Related QuizzesFiscal QuizzesEconomics QuizzesFiscal Policy Quiz 1Fiscal Policy Quiz 2Fiscal Policy Quiz 3Fiscal Policy Quiz 4Fiscal Policy Quiz 5Fiscal Policy Quiz 7Fiscal Policy Quiz 8Fiscal Policy Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books