Question 1
Expansionary fiscal policy:
A.
Eliminates imports B.
Increases AD C.
Shifts LRAS left only D.
Reduces AD always
Question 2
What is meant by budget deficit?
A.
Government spending exceeds tax revenue. B.
Raise G and/or cut taxes → AD right. C.
Accumulation of past deficits. D.
Use of G and taxation to influence AD.
Question 3
What is meant by fiscal policy?
A.
Cut G and/or raise taxes → AD left. B.
Use of G and taxation to influence AD. C.
Benefits and pensions — not in GDP directly. D.
Infrastructure, new hospitals, equipment.
Question 4
What is meant by expansionary fiscal policy?
A.
Raise G and/or cut taxes → AD right. B.
Cut G and/or raise taxes → AD left. C.
Government spending exceeds tax revenue. D.
Accumulation of past deficits.
Question 5
A budget deficit occurs when:
A.
Spending exceeds tax revenue B.
Unemployment is zero C.
Inflation is 0% D.
Exports exceed imports
Question 6
What is meant by automatic stabilisers?
A.
Use of G and taxation to influence AD. B.
Raise G and/or cut taxes → AD right. C.
Cut G and/or raise taxes → AD left. D.
Taxes and benefits that stabilise AD without new policy.
Question 7
What is meant by contractionary fiscal policy?
A.
Wages, drugs, day-to-day services. B.
Cut G and/or raise taxes → AD left. C.
Use of G and taxation to influence AD. D.
Infrastructure, new hospitals, equipment.
Question 8
Automatic stabilisers include:
A.
Only monetary policy B.
Fixed per-capita taxes only C.
Progressive taxes and unemployment benefits D.
Trade quotas
Question 9
What is meant by government spending (g)?
A.
Raise G and/or cut taxes → AD right. B.
Public sector spending on goods and services. C.
Government spending exceeds tax revenue. D.
Infrastructure, new hospitals, equipment.
Question 10
Transfer payments are:
A.
Not included directly in GDP B.
Only capital spending C.
Exports D.
The largest part of AD always
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