Fiscal Policy in Economics MCQs
Fiscal Policy in Economics MCQs
Answer these Fiscal Policy in Economics MCQs and assess your grip on the subject of Fiscal Policy in Economics.
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1: Automatic stabilizers changes in government transfer payments or tax collections that automatically help counter business cycle fluctuations
A. True
B. False
2: The discretionary, or deliberate, use of government purchases and taxes to alter equilibrium output and prices to stabilize the economy is fiscal policy
A. True
B. False
3: A chain reaction of additional income and purchases that results in total purchases that are greater than the initial increase in purchases is called
A. Single effect
B. Multiplier effect
C. Positive effect
D. Negative effect
4: The term “fiscal policy” is used to describe actions of ______.
A. The federal government
B. State governments
C. Local governments
D. Foreign governments
5: The largest fiscal stimulus policy in U.S. history was enacted in ______.
A. 1933
B. 1991
C. 2009
D. 2017
6: Expansionary policy can be used to ______.
A. Close an inflationary gap
B. Close a recessionary gap
C. Close both inflationary and recessionary gaps
D. Shift aggregate demand leftward
7: Contractionary policy can be used to ______.
A. Close an inflationary gap
B. Close a recessionary gap
C. Close both inflationary and recessionary gaps
D. Shift aggregate demand rightward
8: The multiplier effect refers to ______.
A. A decrease in consumption and investment spending as a result of an increase in government purchases
B. The discretionary, or deliberate, use of government purchases and taxes to alter equilibrium output and prices to stabilize the economy
C. Changes in government transfer payments or tax collections that automatically help counter business cycle fluctuations
D. A chain reaction of additional income and purchases that results in total purchases that are greater than the initial increase in purchases
9: What percentage of their 2008 rebates did consumers actually spend?
A. 5%
B. 20%
C. 35%
D. 75%
10: The government has used demand-side policies ______.
A. Mainly since 2008
B. Only in times of expansion
C. Only in times of recession
D. Since the 1930s
11: Economist Arthur Laffer is ______.
A. The creator of rational expectations theory
B. The former chairman of the Fed
C. A demand-side economist
D. A supply-side economist
12: The Kennedy tax cuts of 1964 led to ______.
A. Economic growth
B. A recession
C. A depression
D. Economic stagnation
13: The time between the start of an economic downturn and the gathering of data that reflect the downturn is known as the ______.
A. Propensity to consume
B. Laffer curve
C. Recognition lag
D. Implementation lag
14: The time between the realization there is an economic downturn and the enactment of fiscal policy to address it is known as the ______.
A. Propensity to consume
B. Laffer curve
C. Recognition lag
D. Implementation lag
15: The most important automatic stabilizer is the ______.
A. Social security system
B. Tax system
C. Stock market
D. Bond market
16: During normal economic times, automatic stabilizers are ______.
A. Replaced by discretionary fiscal policy
B. More effective than expansionary policy
C. Less effective than expansionary policy
D. Less effective than contractionary policy
17: In 1980, Ronald Reagan campaigned to ______.
A. Decrease the size of the military
B. Increase the size of the government
C. Lower taxes
D. Raise interest rates
18: Nearly 70% of U.S. government securities are owned by ______.
A. Foreign governments
B. U.S. citizens and institutions
C. One investment firm
D. Foreign citizens
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Fiscal Policy in Economics MCQs
