The Government and Fiscal Policy Sample Questions
Chapter 9 The Government and Fiscal Policy
Principles of Macroeconomics, Case/Fair, 8e
9.1 Government in the Economy
Multiple Choice 1)
Fiscal policy refers to A) the techniques used by a business firm to reduce its tax liability. B) the behavior of the nation's central bank, the Federal Reserve, regarding the nation's money supply. C) the spending and taxing policies used by the government to influence the economy. D) the government's ability to regulate a firm's behavior in the financial markets. Answer:
C
Diff: 1 Skill: D
2)
Which of the following is NOT a category of fiscal policy? A)
Government policies regarding the purchase of goods and services B)
Government policies regarding taxation C)
Government policies regarding money supply in the economy D)
Government policies regarding transfer payments and welfare benefits Answer:
C
Diff: 1 Skill: F
3)
What determines tax revenues? A)
The income tax rate B)
The income of households C)
The money supply in the economy D)
Both A and B are correct. Answer:
D
Diff: 2 Skill: C
4)
Which of the following is INCORRECT regarding tax revenues? A)
They increase during recessions. B)
They change with changes in the tax rate. C)
They are a revenue source in the government's budget. D)
None of the above. Answer:
A
Diff: 2 Skill: C
5)
During recessions, government spending usually A) decreases because unemployment payments decrease. B) increases because unemployment payments increase. C) decrease because unemployment payments increase. D) increases because unemployment payments decrease. Answer:
B
Diff: 1 Skill: C
6)
Disposable income A) increases when net
Principles of Macroeconomics, Case/Fair, 8e
9.1 Government in the Economy
Multiple Choice 1)
Fiscal policy refers to A) the techniques used by a business firm to reduce its tax liability. B) the behavior of the nation's central bank, the Federal Reserve, regarding the nation's money supply. C) the spending and taxing policies used by the government to influence the economy. D) the government's ability to regulate a firm's behavior in the financial markets. Answer:
C
Diff: 1 Skill: D
2)
Which of the following is NOT a category of fiscal policy? A)
Government policies regarding the purchase of goods and services B)
Government policies regarding taxation C)
Government policies regarding money supply in the economy D)
Government policies regarding transfer payments and welfare benefits Answer:
C
Diff: 1 Skill: F
3)
What determines tax revenues? A)
The income tax rate B)
The income of households C)
The money supply in the economy D)
Both A and B are correct. Answer:
D
Diff: 2 Skill: C
4)
Which of the following is INCORRECT regarding tax revenues? A)
They increase during recessions. B)
They change with changes in the tax rate. C)
They are a revenue source in the government's budget. D)
None of the above. Answer:
A
Diff: 2 Skill: C
5)
During recessions, government spending usually A) decreases because unemployment payments decrease. B) increases because unemployment payments increase. C) decrease because unemployment payments increase. D) increases because unemployment payments decrease. Answer:
B
Diff: 1 Skill: C
6)
Disposable income A) increases when net