Question 1
What is meant by time lags?
A.
Income tax, corporation tax — affect disposable income. B.
Government use of spending and taxation to influence AD. C.
Recognition, decision, implementation, impact lags. D.
Amplified effect of ΔG on national income.
Question 2
Expansionary fiscal policy:
A.
Increases aggregate demand B.
Shifts LRAS left only C.
Reduces AD always D.
Fixes exchange rate
Question 3
What is meant by expansionary fiscal?
A.
Offsetting changes — no net AD effect. B.
Amplified effect of ΔG on national income. C.
↑G and/or ↓T → AD right. D.
↓G and/or ↑T → AD left.
Question 4
A budget deficit is:
A.
Trade deficit B.
Full employment C.
Spending exceeding tax revenue D.
Zero debt
Question 5
Crowding out suggests higher G may:
A.
Eliminate tax B.
Cause deflation always C.
Always increase I D.
Reduce private investment
Question 6
What is meant by fiscal neutrality?
A.
Recognition, decision, implementation, impact lags. B.
Stock of government borrowing. C.
Offsetting changes — no net AD effect. D.
Income tax, corporation tax — affect disposable income.
Question 7
What is meant by fiscal multiplier?
A.
Income tax, corporation tax — affect disposable income. B.
Higher G → higher interest rates → lower I. C.
↑G and/or ↓T → AD right. D.
Amplified effect of ΔG on national income.
Question 8
Indirect taxes mainly affect:
A.
Only LRAS in LR B.
Only BoP financial account C.
Prices and short-run costs D.
Only exports
Question 9
What is meant by crowding out?
A.
↑G and/or ↓T → AD right. B.
Higher G → higher interest rates → lower I. C.
Amplified effect of ΔG on national income. D.
↓G and/or ↑T → AD left.
Question 10
What is meant by fiscal policy?
A.
VAT — affect prices and SRAS. B.
Offsetting changes — no net AD effect. C.
Government use of spending and taxation to influence AD. D.
↑G and/or ↓T → AD right.
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