Podcast
Questions and Answers
What is the primary goal of expansionary fiscal policy?
What is the primary goal of expansionary fiscal policy?
- To increase unemployment rates
- To stabilize government expenses
- To increase aggregate demand (correct)
- To decrease government borrowing
Which of the following actions is NOT a component of fiscal policy?
Which of the following actions is NOT a component of fiscal policy?
- Modifying interest rates (correct)
- Increasing borrowing
- Changing tax rates
- Adjusting government spending
What are two strategies that can be used in expansionary fiscal policy?
What are two strategies that can be used in expansionary fiscal policy?
- Decreasing taxes and increasing government spending (correct)
- Decreasing borrowing and increasing interest rates
- Increasing taxes and reducing government spending
- Reducing government spending and increasing borrowing
How does the government primarily influence the economy through fiscal policy?
How does the government primarily influence the economy through fiscal policy?
In which situation would a government most likely implement expansionary fiscal policy?
In which situation would a government most likely implement expansionary fiscal policy?
Flashcards
Fiscal Policy
Fiscal Policy
Government's use of spending, taxation, and borrowing to influence the economy.
Expansionary Fiscal Policy
Expansionary Fiscal Policy
Government actions to increase economic activity, such as cutting taxes or increasing spending.
Business Cycle
Business Cycle
The ups and downs of economic activity over time.
Stabilization Policies
Stabilization Policies
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Aggregate Demand
Aggregate Demand
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Study Notes
Fiscal Policy
- Mixed economies experience business cycle fluctuations.
- Governments can intervene via fiscal and monetary stabilization policies.
- Stabilization policies aim to stabilize the economy.
- Fiscal policy involves government spending, taxation, and borrowing to stabilize the economy.
Expansionary Fiscal Policy
- Governments can increase aggregate demand with expansionary fiscal policy.
- Expansionary fiscal policy includes decreasing taxes and/or increasing government spending.
- These actions aim to boost economic growth and lower unemployment.
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Description
This quiz covers fundamental concepts of fiscal policy, including its role in mixed economies and how it helps stabilize economic fluctuations. It also delves into expansionary fiscal policy measures such as tax decreases and increased government spending to promote economic growth and reduce unemployment.
