Fiscal Policy Quiz 15 (20 MCQs)

Quiz Instructions

Select an option to see the correct answer instantly.

1. A period of time when recovering from a recession?

Correct Answer: C) Expansion.

2. Taxes that increase as income increases.

Correct Answer: A) Progressive.

3. This is the branch of economic theory focused on the economy as a whole and decision making by large units, sudh as governments and unions.

Correct Answer: B) Macroeconomics.

4. Macroeconomics

Correct Answer: B) The branch of economics that studies the behavior and performance of an economy as a whole.

5. The amount of money (based on a percentage) that is repaid on money borrowed.

Correct Answer: C) Interest rates.

6. FOMC, the policy making body of the Fed, stands for-

Correct Answer: D) Federal Open Market Committee.

7. Which is NOT a characteristic of expansionary fiscal policy?

Correct Answer: D) Buying bonds.

8. Which of the following will most likely create an "expansion" to occur in the economy.

Correct Answer: A) Cutting taxes.

9. This group is responsible for implementing fiscal policy

Correct Answer: D) U.S. Congress.

10. Which is an example of contractionary fiscal policy?

Correct Answer: A) The government increasing taxes on all goods and services by 5%.

11. Spending required by law

Correct Answer: B) Mandatory spending.

12. The theory of the Laffer curve was used to argue for .....

Correct Answer: B) Cutting income tax rates.

13. Providing incentives to producers to increase aggregate supply is the main focus of

Correct Answer: D) Supply-side fiscal policy.

14. What is it called when the government takes in more in revenue than it appropriates?

Correct Answer: A) Surplus.

15. When Alison, a college math professor, leaves her job at a small rural college and starts looking for a job at large urban university, she is

Correct Answer: D) Frictional unemployed.

16. One drawback of using Fiscal Policy to close a recessionary gap is that

Correct Answer: C) Equilibrium price wil rise.

17. The Tools of Fiscal Policy

Correct Answer: D) G and T.

18. Higher direct taxes can .....

Correct Answer: A) Reduce the incentive to work.

19. To solve recession gap implement ..... discretionary fiscal policy and to solve inflation gap implement ..... discretionary fiscal policy.

Correct Answer: B) Expansionary ; contractionary.

20. When the Federal Reserve increases the reserve requirement, what type of policy are they practicing?

Correct Answer: B) Contractionary Monetary Policy.