In fact, the use of fiscal policy to try to shorten a recession period is not recommendable. Assume the aggregate supply curve is upward sloping and the economy is Which of the following best describes such an occurrence? Expansionary Fiscal Policy Restrictive Fiscal Policy Easy Money Policy Tight Money Policy If a nation currently has a budget deficit, their income is not covering the cost of running their country. You can skip questions if you would like and come 1 Fiscal and Monetary Policy Infographic Classroom Activity (Answer Key) By Amy Hennessy, director of economic education, Federal Reserve Bank of Atlanta Key for questions 1–10 1. to them later with the "Go To First Skipped Question" button. Your choices for each situation must be consistent—that is, you should choose either an expansionary or contractionary fiscal policy. Biological and Biomedical Real GDP shrinks, prices fall, and unemployment is low. If the government wants to pull the country out of a period of heavy recession they should do all of the following EXCEPT: What happens to real GDP, prices and unemployment at the peak of a business cycle? quiz which has been attempted 593 times by avid quiz takers. Because using fiscal policy to increase government spending lowers the public debt. Start studying Fiscal and Monetary Policy Test Review. Have you heard the term fiscal policy?Perhaps you’ve heard people talking about unemployment, inflation, recessions, or even gross domestic product (GDP).The meaning of these terms might be fuzzy now, but by the end of this course, you will not only know … Because she knows that it will take time for the Congress to discuss a new version of the budget, but that doesn't matter because the quality of the reaction is more important regardless of how long it may take Congress to reach a decision. Identify the three concepts that explain why demand is downward sloping. We'll review your answers and create a Test Prep Plan for you based A comprehensive database of fiscal policy quizzes online, test your knowledge with fiscal policy quiz questions. The rate banks pay to borrow money from the Fed is called the _____ rate. Question 14 : Which of the following is/are included in the capital budget of the Government of India? Based on your results, we'll create a customized Test Prep Plan just for you! ECONOMIC POLICY 9.1 Demand policies: fiscal policy and monetary policy BASIC CONCEPTS Public Sector Government Spending: purchase of goods and services, transferences and public debt interests Tax revenue This macroeconomics test part 2 fiscal policy wirksheet answers, as one of the most committed sellers here will extremely be in the middle of the best options to review. In this exercise, practice what you've learned about how taxes and government spending can be used as fiscal policy tools to close output gaps. In which Jacob and Adriene teach you about the evils of fiscal policy and stimulus. 48 Questions Show answers Question 1 SURVEY 30 seconds Q. on your results. Learn vocabulary, terms, and more with flashcards, games, and other study tools. cutting production of consumer goods. When the government notices that GDP has been falling for several quarters, and they fear a long-term recession. An example of expansionary fiscal policy would be answer choices cutting taxes. a) Interest receipts on loans given by the government to other parties, b) Dividends and profits from public sector undertakings, c) Borrowing of the government from public, Question 6 : Equality in a country can be best brought through, Question 7 : Fiscal deficit in the union budget is equal toÂ, a) Net increase in internal and external borrowings, b) The difference between current expenditure and current revenue, c) The sum of monetized deficit and budgetary deficit, d) Net increase in the union government’s borrowing from the Reserve Bank of India, a) Total expenditure – (Revenue receipts + Recovery of loans + Receipts from disinvestment), b) Total expenditure – Total receipts from all sources ,including borrowings, c) Total expenditure – (Revenue receipts + Fresh loans), d) Total expenditure – Disinvestment receipts, Question 9 : Fiscal Responsibility and Budget Management Act (FRBMA) was passed to keep check on, c) Both fiscal deficit and revenue deficit, d) Neither fiscal deficit nor revenue deficit. The Federal Reserve controls the growth rate of the money supply through _____. Republicans are less in favor of regulation. Supply and Fiscal Policy 1 Demand and Supply Review 1. Economic and Fiscal Policy Chapter Exam Instructions Choose your answers to the questions and click 'Next' to see the next set of questions. Good luck! Newer regulatory agencies have a more narrow scope. It includes only those transactions that affect current income and expenditure of government. Multiple Choice Questions and Answers (MCQ) on Fiscal Policy for Civil Services Question 1 : Economic Survey in India is published by the a) Reserve Bank of India b) NITI Aayog c) Ministry of Finance, Government of India d) Ministry of Industries, Government of India Answer : c Question 2 : Fiscal policy in India is formulated by a) Reserve Bank of India b) Planning Commission … As per the FRBM Act, the government is required to reduce the revenue deficit to 3% of the GDP. Try this amazing Fiscal Policy Trivia Quiz: How Much You Know? Which one of the following is not one of them? Learn vocabulary, terms, and more with flashcards, games, and other study tools. How would the Federal Reserve implement an expansionary monetary policy? 3. 2. Real GDP grows, prices rise, and unemployment is low. Good luck! When the government believes that the value of the dollar is far too low, and they want to make it easier for the people to purchase goods and services in order to increase private expenditure. Preventing over 50% of produced food being thrown out when it could be put to good use. Business lobbies place pressure on regulatory policies. Preventing boom and bust periods in the economy, Stabilizing the economy in a period of recession, Providing moderate long-term interest rates, It wants to ensure long-term economic growth for everyone, It primarily uses monetary policy to avoid boom and bust cycles, It uses fiscal policy to combat recession, Lower tariffs on imported agricultural goods, Abolish price floors on agricultural products, Cut out all government subsidies and regulations. In general, which of the following is NOT correct concerning how politics and regulation intersect? In which of the following scenarios would it be a good idea for the government to implement a deflationary fiscal policy? © copyright 2003-2020 Study.com. Preventing the public debt-to-GDP ratio from rising above 90%. Also explore over 2 similar quizzes in this category. Our online fiscal policy trivia quizzes can be adapted to suit your requirements for taking some of the top Question 12 : Every year the Economic Survey is compiled by : c) National Sample Survey Organisation (NSSO). There are three types of fiscal policy: neutral policy, expansionary policy,and contractionary policy. If this budget is not revised, what This quiz tests your knowledge on various aspects of fiscal policy - feedback is provided on your score for each question. Question 17 : Which of the following is/are components of public debt? When you have completed the practice exam, a green submit button will Because she doesn't know a lot about fiscal policy. All of the following are ways that the Federal Reserve can affect the money supply except _____. What Fiscal Policy Is and What It Isn t I Fiscal policy (FP): Changes in federal taxes and purchases that are intended to achieve macroeconomic policy objectives: high employment, price stability, and high rates of economic growth. You are allowed two attempts. According to this chart, what was the unemployment rate during the peak of the business cycle? Choose your answers to the questions and click 'Next' to see the next set of questions. Sciences, Culinary Arts and Personal appear. Click it to see your results. Multiple Choice Questions and Answers (MCQ) on Monetary Policy for Civil Services Question 1 : Bank rate is the rate at which the Reserve Bank of India provides loans to a) Public sector undertakings b) Commercial banks c) Private corporate sector d) Non-banking financial institutions Answer : b Question 2 : When the supply for money increases and the demand for money reduces, … You can skip questions if you would like and come appear. The distinction between plan and non-plan expenditures has been eliminated from Budget 2017-18 onwards. What happens to economic output as measured by GDP during a recession? back (adsbygoogle = window.adsbygoogle || []).push({}); Question 1 : Economic Survey in India is published by theÂ, c) Ministry of Finance, Government of India, d) Ministry of Industries, Government of India, Question 2 : Fiscal policy in India is formulated by, d) Securities and Exchange Board of India, Question 3 : If we deduct grants to states for the creation of capital assets from revenue deficit, we arrive at. Establishing the right of workers to have suitable protection when working in hazardous conditions. cutting government spending. to them later with the "Go To First Skipped Question" button. The Federal Reserve has noticed that expenditures are decreasing and that the number of loans requested has decreased significantly. Establishing the right of workers not to work for more than 8 hours per day. Which of the following is an example of an equity goal? All other trademarks and copyrights are the property of their respective owners. Why does she likely tell him yes? Overall you need 80% to achieve a 'pass' grade. Question 4 : Which one of the following is the largest item of expenditure of the Government of India on revenue account? The effectiveness of fiscal policy is an interesting field in literature of macroeconomics. All of the following are ways that the U.S. government promotes the economic interests of businesses, EXCEPT: All of the following laws were meant to protect workers except. All rights reserved. Which of the statements given above is/are correct? Your choices for each situation must be consistent — that is, you should choose either an expansionary or contractionary fiscal policy. When you have completed the practice exam, a green submit button will Study more effectively: skip concepts you already know and focus on what you still need to learn. Question 23 : Which of the following developments can occur in an economy due to deficit financing? When the government believes that it needs to decrease its exports, and it wants to increase the value of its currency. Premium members get access to this practice exam along with our entire library of lessons taught by subject matter experts. The government's restriction and control over business practices is called _____. Sunshine Solar receives a $2,000 reduction on its federal taxes for each solar-energy installation it performs. Which of these terms best describes this? Effects of Fiscal Policy Test your understanding of fiscal policy by completing Table 5-1.1. Which of the following are the two phases and the two turning points of the business cycle? When the government believes that the drastic rise in the economy is not realistic or sustainable, and they fear a boom and bust scenario in the near future. This is an example of a _____. AP Macroeconomics AS/AD and Fiscal Policy Test Multiple Choice Identify the choice that best completes the statement or answers the question. Preventing the top 1% from having more money than the remaining 99%. Services. Define Demand and the Law of Demand. Question 19 : With reference to revenue deficit, consider the following statements: Question 20 : Budget deficit may lead toÂ. Decrease short-term interest rates and ensure they remain low, Increase short-term interest rates and ensure they remain high, Aim to decrease the number of available loans, Aim for the market to have moderate long-term interest rates. Test your understanding of fiscal policy by completing the table in Figure 30.1. Fiscal policy choices: Expansionary fiscal policy is used to combat a recession (see examples illustrated in Figure 12-1). (A) Excess of total expenditure over total receipts, (B) Excess of revenue expenditure over revenue receipts, (C) Excess of total expenditure over total receipts less borrowings, (D) Excess of total expenditure over total receipts less borrowings and interest payments, India spends more than 1% of its GDP on Research and Development (R&D), The expenditure on R&D as proportion of GDP has increased in the past few years, China incurs more than four times expenditure on R&D than that by India, Expenditure on acquisition of fighter aircraft, Financial assistance received from the World Bank, Grants given to states and union territories every year, Plan expenditure is believed to be under the discretion of the central government, whereas non-plan expenditure is not part of discretion of the central government. It contracts for at least three years in a row. _____ reduce the amount of taxable income a business has to report. What is a government MOST likely to do to protect the interests of agricultural businesses? Question 10 : According to the provisions of the Fiscal Responsibility and Budget Management (FRBM) Act, 2003 and FRBM Rules, 2004, the government is under obligation to present three statements before the Parliament along with the annual budget. Keeping interest rates stable in the long term. It falls more than the stock market does. Earn Transferable Credit & Get your Degree. Question 22 : Which of the following is/are example of capital payment by the government? For three quarters in a row, economic growth increased by 3%, 5% and 7%. Question 18 : Match List I with List II and select the correct answer using the codes given below the lists. The president is asking her if he should use fiscal policy in an attempt to combat the effects of the crisis. ____ 1. Question 16 : Match List I with List II and select the correct answer using the codes given below the Lists. When there is a recession government should shift aggregate demand to the right by decreasing taxes and increasing spending. Choose your answers to the questions and click 'Next' to see the next set of questions. Jane is a presidential adviser in the time of the 2008 Global Economic Crisis. In expansionary fiscal policy, the government spends more money than it collects through taxes. Select the correct answer using the codes given below: Question 15 : Consider the following statements regarding plan and non-plan expenditure. Contact us by phone at (877) 266-4919, or by mail at 100 View Street #202, Mountain View, CA 94041. Both lower taxes and increase government spending. The federal government's use of taxation and spending policies to affect overall business activity is called _____. Start studying Chapter 11 Fiscal policy (Macroeconomics). Which of the following is NOT a goal of the U.S. government that can be accomplished by fiscal policy? Preventing one company from setting a price without having to face competitors. It considers the current borrowing by the government. What will they aim to do to increase the number of loan requests? =decrease in private expenditures as a result of - potential only:-increased government Which of the following should the government use when it wants to increase demand for goods? Because using fiscal policy can be effective during a time of heavy recession. Expansionary Policy needed: In Figure 12-1, a decline in investment has decreased AD from AD 1 to AD 2 so real GDP has fallen and also employment declined.Possible fiscal policy solutions follow: Topic 9. Q. Real GDP grows, prices fall, and unemployment is high. Nook Ereader App: Download this free reading app for your iPhone, iPad, Android, or Windows computer. back Democrats are more in favor of regulation. Question 13 : Consider the following statements: Which of the statements given above is/are correct. As it was close to the election, the government did not try to stabilize the growth. Question 11 : Which of the following is not a component of revenue receipts of the union government? Which of the following is NOT true about how the government protects the U.S. economy? Question 21 : Which of the following items are included in revenue receipts? Fiscal policy is the spending and taxing Fiscal policy is changes in government spending and taxes to fight recessions or inflation. The method of affecting the money supply that is used the least by the Fed is. Establishing that the minimum wage should be at least $15 per hour. However, fiscal and monetary policy should be rolled out to avoid a total collapse of the economy while on lock down. This type of policy is used during recessions to build a foundation for strong economic growth and nudge the economy toward full employment. Fiscal Policy & Monetary Policy Chapter Exam Take this practice test to check your existing knowledge of the course material. Real GDP shrinks, prices rise, and unemployment is low. Economists recognize that the economy doesn't grow smoothly, but in regular patterns. Describe the discretionary and automatic fiscal policy actions that might occur Discretionary fiscal policy that might occur is Automatic fiscal policy that might occur is O A. an increase in transfer payments and a fall in taxes with Take this practice test to check your existing knowledge of the course material. Fiscal Policy focus on Preventive awareness at mass level, immediate revitalizing health care structures & systems, basic income support to people and financial support to … Question 5 : Which one of the following is a capital receipt in government budget? Raise taxes and decrease government spending. Expansion and recession, intermediate 1 and intermediate 2, Expansion and reversal, peak and prosperity, Growth and contraction, market top and market bottom. Select which of the following is a goal that monetary policy should NOT strive towards nor have influence over? You are an adviser to the Federal Reserve. If you're behind a web filter, please make sure that the domains *.kastatic.org and *.kasandbox.org are unblocked. Which of the following is an example of an efficiency goal? Click it to see your results. Real GDP grows, prices fall, and unemployment is low. In the last quarter of the year, the economy drastically fell by 5%. Overregulation is usually a result of the government wishing to promote _____. (Fiscal policy Of fiscal policy to increase government spending lowers the public debt-to-GDP ratio from rising above 90 % property! Correct concerning how politics and regulation intersect grows, prices fall, and is. 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