Test Your Knowledge on Fiscal Policy (1)

Take this quiz to see how well you understand fiscal policy and its impact on the economy.

published on August 06
1/11

What is fiscal policy?

What is fiscal policy?
Government's use of taxing and spending to influence the economy
Private sector's regulation of financial markets
International trade agreements
Monetary policy implemented by central banks
2/11

What is the goal of expansionary fiscal policy?

What is the goal of expansionary fiscal policy?
Stimulate economic growth and reduce unemployment
Control inflation
Increase interest rates
Promote currency devaluation
3/11

Which of the following is an example of expansionary fiscal policy?

Which of the following is an example of expansionary fiscal policy?
Increasing government spending on public projects
Raising taxes on consumers
Reducing government subsidies
Decreasing public sector employment
4/11

What is the opposite of expansionary fiscal policy?

Contractionary fiscal policy
Monetary policy
Free trade agreement
Inflation targeting
5/11

What does a budget deficit indicate?

What does a budget deficit indicate?
Government spending exceeding revenue
Government running a surplus
Balanced budget
Lower taxes
6/11

Which of the following can be a tool of fiscal policy?

Tax cuts
Quantitative easing
Asset purchases by central banks
Interest rate adjustments
7/11

What is the purpose of automatic stabilizers in fiscal policy?

What is the purpose of automatic stabilizers in fiscal policy?
To offset fluctuations in economic activity without policy changes
To intervene in international trade disputes
To regulate the stock market
To discourage savings
8/11

During a recession, which fiscal policy is typically used?

Expansionary fiscal policy
Contractionary fiscal policy
Neutral fiscal policy
Isolationist fiscal policy
9/11

What impact can fiscal policy have on income distribution?

What impact can fiscal policy have on income distribution?
Redistribute income through tax and spending policies
Increase income inequality
Decrease overall GDP
Stimulate consumer spending
10/11

Which government body is responsible for fiscal policy implementation?

Which government body is responsible for fiscal policy implementation?
Treasury department or finance ministry
Central bank
World Bank
International Monetary Fund
11/11

What is the importance of fiscal policy in managing economic cycles?

Stabilizing the economy during boom and bust periods
Influencing exchange rates
Regulating corporate mergers
Encouraging foreign direct investment