This quiz works best with JavaScript enabled. Home > Fiscal > Policy > Fiscal Policy – Quiz 21 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Fiscal Policy Quiz 21 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. 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. 2. 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. 3. What is one tool that measures the rate of inflation? A) GDP. B) Federal Reserve. C) Unemployment. D) Consumer price index. Show Answer Correct Answer: D) Consumer price index. 4. The government's overall approach to spending and taxes is called A) Physical Policy. B) Fiscal Policy. C) Money. D) Monetary Policy. Show Answer Correct Answer: B) Fiscal Policy. 5. If the Federal Reserve raises interest rates to combat rapid inflation, what might be a negative outcome? A) Unemployment rates would rise. B) Taxes will rise. C) The government would put a freeze on prices. D) International trade would stop. Show Answer Correct Answer: A) Unemployment rates would rise. 6. The federal government collects the most revenue from A) Income tax. B) Property tax. C) Sales tax. D) Excise tax. Show Answer Correct Answer: A) Income tax. 7. Which of the following tools of fiscal policy would decrease unemployment? A) Decrease the discount rate. B) Increase government Spending. C) Increase tax rates. D) Increase the reserve requirement. Show Answer Correct Answer: B) Increase government Spending. 8. When the government raises taxes, how does that affect the business cycle? A) It slows down the economy. B) It speeds the economy. C) It has no effect on the economy. D) It adds more jobs to the economy. Show Answer Correct Answer: A) It slows down the economy. 9. Influencing the economy by changing the reserve requirement is called: A) Fiscal policy. B) Monetary policy. C) Tight Money. D) Easy Money. Show Answer Correct Answer: B) Monetary policy. 10. 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. 11. 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. 12. 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. 13. 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. 14. 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. 15. A plan to reduce the amount of money in circulation is called A) Expansionary monetary policy. B) Expansionary fiscal policy. C) Contractionary monetary policy. D) Contractionary fiscal policy. Show Answer Correct Answer: C) Contractionary monetary policy. 16. What type of tax does the tax rate increase as income increases A) Flat tax. B) Progressive tax. C) Proportional tax. D) Regressive tax. Show Answer Correct Answer: B) Progressive tax. 17. 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. 18. 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. 19. 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. 20. 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. ← PreviousNext →Related QuizzesFiscal QuizzesFiscal Policy Quiz 1Fiscal Policy Quiz 2Fiscal Policy Quiz 3Fiscal Policy Quiz 4Fiscal Policy Quiz 5Fiscal Policy Quiz 6Fiscal Policy Quiz 7Fiscal Policy Quiz 8Fiscal Policy Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books