Fiscal Policy Quiz

<p>Tax rates decrease as income increases (D)</p> Signup and view all the answers

<p>It automatically reduces the severity of fluctuations in the business cycle. (C)</p> Signup and view all the answers

<p>The deficit increases (C)</p> Signup and view all the answers

<p>Reduce aggregate demand and control inflation (D)</p> Signup and view all the answers

<p>Increase aggregate demand (B)</p> Signup and view all the answers

<p>Increases aggregate demand (D)</p> Signup and view all the answers

<p>Control demand-pull inflation (B)</p> Signup and view all the answers

<p>Increasing interest rates (C)</p> Signup and view all the answers

<p>Expansionary fiscal policy can lead to budget deficits, but not always (B)</p> Signup and view all the answers

<p>Decrease (D)</p> Signup and view all the answers

<p>Fiscal policy can have unintended consequences (C)</p> Signup and view all the answers

<p>Expansionary fiscal policy aims to increase aggregate demand, while contractionary fiscal policy aims to decrease aggregate demand. (D)</p> Signup and view all the answers

<p>The interest charges on the debt (D)</p> Signup and view all the answers

<p>43% (D)</p> Signup and view all the answers

<p>1.3% (D)</p> Signup and view all the answers

<p>Greece (C)</p> Signup and view all the answers

<p>Canada (A)</p> Signup and view all the answers

<p>2009 (A)</p> Signup and view all the answers

<p>2007 (B)</p> Signup and view all the answers

<p>The deficit generally increased throughout the period. (A)</p> Signup and view all the answers

<p>The actual deficit is the deficit without adjustments for the business cycle, while the cyclically adjusted deficit takes into account the effects of the cycle. (B)</p> Signup and view all the answers

<p>The government spent more money than it took in. (D)</p> Signup and view all the answers

<p>A credit market freeze caused by financial market problems. (D)</p> Signup and view all the answers

<p>All of the above. (D)</p> Signup and view all the answers

<p>Tax cuts can be used to increase investment, work effort, and innovation. (A)</p> Signup and view all the answers

<p>When government spending decreases private investment. (B)</p> Signup and view all the answers

<p>Transfer payments, government procurement, and infrastructure spending. (B)</p> Signup and view all the answers

<p>The administrative lag refers to the time it takes to implement a policy, while the recognition lag refers to the time it takes to identify the need for a policy. (D)</p> Signup and view all the answers

<p>The total amount of money that the U.S. government owes to holders of U.S. securities. (C)</p> Signup and view all the answers

<p>Fiscal policy should be used primarily to address long-term issues in the economy, while monetary policy should be used to address short-term fluctuations. (D)</p> Signup and view all the answers

Increasing government spending or decreasing taxes to boost economic activity during a recession.

Decreasing government spending or increasing taxes to reduce inflation and cool down an overheating economy.

Economic policies that automatically adjust taxes and transfers with GDP changes to stabilize the economy.

The structure of a tax system where tax rates increase as income increases, affecting government revenue.

Analyzing whether fiscal policy is expansionary, neutral, or contractionary based on its effects on the economy.

A budget that accounts for economic fluctuations to assess fiscal policy.

Total spending by the government on goods and services.

Income generated from taxes collected by the government.

The total value of goods and services produced in a country, adjusted for inflation.

Variations in economic activity, often reflected in GDP changes.

Government adjustments in spending and taxes to influence the economy.

A financial situation where expenditures exceed revenue.

A financial situation where revenue exceeds expenditures.

Deficit adjusted for the economic cycle to reflect true fiscal position.

Measure of fiscal health expressed as a percentage of Gross Domestic Product.

The total amount of money that a government owes to external creditors.

The portion of public debt that is owned by the US federal government and the Federal Reserve.

Payments made to creditors for borrowing money, representing the cost of public debt.

A measure indicating the size of a country's public debt in relation to its gross domestic product.

Misconceptions regarding the risks of public debt, like bankruptcy or burdening future generations.

The total demand for goods and services within an economy at a given overall price level.

Inflation that occurs when demand for goods and services exceeds supply.

The measure of a country's economic output adjusted for price changes or inflation.

An economic downturn that officially began in December 2007 and lasted 18 months due to financial market problems.

The shortfall when government spending exceeds revenue, leading to increased debt.

The time taken to recognize the need for a fiscal policy change after economic fluctuations.

The delay between enacting a fiscal policy and its actual effects on the economy.

The theory that politicians may influence the economy to win elections, leading to economic instability.

When government spending reduces private sector investment due to higher interest rates.

Evaluation of fiscal policy focused on its lasting effects rather than short-term fluctuations.

Total amount owed by the U.S. government, which was $11.9 trillion in 2009 from years of deficits.