Economic Policies and Austerity Measures Quiz

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What is the primary aim of austerity policies?

To reduce government debt through decreased spending (correct)

To stimulate investment without tax increases

To increase government spending for economic growth

To enhance social welfare programs

Which of the following is NOT a goal of austerity policies?

Restoring market confidence

Improving government finances

Increasing public service funding (correct)

Preventing further debt crises

What is a side effect of implementing austerity measures?

Rise in demand and economic growth

Enhanced labor market flexibility

Weakened demand and growth during crises (correct)

Increased government investment

What does wage rigidity lead to in the context of underemployment equilibrium?

Continued underperformance and high unemployment Signup and view all the answers

How does liquidity fall impact the economy?

Results in decreased demand and employment Signup and view all the answers

What is a primary consequence of increased individual savings across the population?

Decreased demand leading to fewer goods and services produced. Signup and view all the answers

How does deficit spending by the government function during periods of low demand?

It incurs additional debt to maintain demand. Signup and view all the answers

Which of the following is a negative aspect of government debt?

Higher taxes imposed on future generations. Signup and view all the answers

What outcome does the comparison to a movie theater scenario illustrate about savings?

Universal savings can create a paradox of reduced overall demand. Signup and view all the answers

During economic booms, how should the government ideally manage its debt?

Begin repaying existing debts. Signup and view all the answers

What was a key characteristic of the Growth Phase from 1960 to 1970?

Expansion of infrastructure Signup and view all the answers

During which phase did government intervention primarily aim to stimulate the economy?

Recession Phase Signup and view all the answers

Which phase marks the beginning of economic adaptation to international markets?

Globalization Phase Signup and view all the answers

What occurs during the Boom (Peak) phase of the economic cycle?

High economic activity Signup and view all the answers

Which statement accurately describes the Upswing (Expansion) phase of the economic cycle?

Business activity and investment increase Signup and view all the answers

What is the primary aim of a social market economy?

To achieve economic prosperity and social justice Signup and view all the answers

Which principle emphasizes the role of the state in stabilizing the economy during fluctuations?

Conjunctural Principle Signup and view all the answers

How does the social principle function within a social market economy?

By complementing the market mechanism with social security systems Signup and view all the answers

What does the principle of subsidiarity advocate for?

Ensuring that tasks are handled at the lowest feasible level Signup and view all the answers

Which of the following does not relate to the social market economy's measures and laws?

Limited Market Competition Act Signup and view all the answers

What is the primary goal of fiscal policy?

To influence economic activity through tax rate adjustments Signup and view all the answers

What does a decrease in interest rates typically encourage?

Increased investment and borrowing Signup and view all the answers

Which of the following is not a measure of stabilization?

Monitoring global trade agreements Signup and view all the answers

Which type of economic indicator reflects the current state of the economy?

Coincident Indicators Signup and view all the answers

What is the effect of deficit spending by the government?

Stimulated demand and investment Signup and view all the answers

The Stabilization and Growth Act (1967) aimed primarily at achieving what?

Stabilizing the economy Signup and view all the answers

Which economic indicator would typically suggest trends from the past?

Lagging Indicators Signup and view all the answers

What is one of the key goals of economic policy?

To ensure high employment levels Signup and view all the answers