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. _____ reduce the amount of taxable income a business has to report. Good luck! (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. The president is asking her if he should use fiscal policy in an attempt to combat the effects of the crisis. All rights reserved. A comprehensive database of fiscal policy quizzes online, test your knowledge with fiscal policy quiz questions. Which of the following should the government use when it wants to increase demand for goods? 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. Newer regulatory agencies have a more narrow scope. Business lobbies place pressure on regulatory policies. Real GDP grows, prices rise, and unemployment is low. It considers the current borrowing by the government. What happens to economic output as measured by GDP during a recession? 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. to them later with the "Go To First Skipped Question" button. Question 11 : Which of the following is not a component of revenue receipts of the union government? What will they aim to do to increase the number of loan requests? There are three types of fiscal policy: neutral policy, expansionary policy,and contractionary policy. 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. Nook Ereader App: Download this free reading app for your iPhone, iPad, Android, or Windows computer. Real GDP grows, prices fall, and unemployment is high. 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. Fiscal policy is the spending and taxing Preventing one company from setting a price without having to face competitors. Try this amazing Fiscal Policy Trivia Quiz: How Much You Know? Assume the aggregate supply curve is upward sloping and the economy is Keeping interest rates stable in the long term. Real GDP shrinks, prices fall, and unemployment is low. The method of affecting the money supply that is used the least by the Fed is. 3. =decrease in private expenditures as a result of - potential only:-increased government (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. Question 17 : Which of the following is/are components of public debt? It contracts for at least three years in a row. Because she doesn't know a lot about fiscal policy. Preventing the public debt-to-GDP ratio from rising above 90%. An example of expansionary fiscal policy would be answer choices cutting taxes. Question 22 : Which of the following is/are example of capital payment by the government? cutting production of consumer goods. Based on your results, we'll create a customized Test Prep Plan just for you! The federal government's use of taxation and spending policies to affect overall business activity is called _____. Your choices for each situation must be consistent—that is, you should choose either an expansionary or contractionary fiscal policy. 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: 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. Which of the following is an example of an equity goal? However, fiscal and monetary policy should be rolled out to avoid a total collapse of the economy while on lock down. Which of the following is NOT a goal of the U.S. government that can be accomplished by fiscal policy? Start studying Chapter 11 Fiscal policy (Macroeconomics). Fiscal Policy & Monetary Policy Chapter Exam Take this practice test to check your existing knowledge of the course material. Real GDP grows, prices fall, and unemployment is low. Which one of the following is not one of them? Both lower taxes and increase government spending. If you're behind a web filter, please make sure that the domains *.kastatic.org and *.kasandbox.org are unblocked. Preventing over 50% of produced food being thrown out when it could be put to good use. This quiz tests your knowledge on various aspects of fiscal policy - feedback is provided on your score for each question. Learn vocabulary, terms, and more with flashcards, games, and other study tools. to them later with the "Go To First Skipped Question" button. 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. cutting government spending. Real GDP shrinks, prices rise, and unemployment is low. Earn Transferable Credit & Get your Degree. 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. You can skip questions if you would like and come It falls more than the stock market does. All of the following are ways that the Federal Reserve can affect the money supply except _____. Study more effectively: skip concepts you already know and focus on what you still need to learn. We'll review your answers and create a Test Prep Plan for you based This is an example of a _____. Fiscal policy is changes in government spending and taxes to fight recessions or inflation. (Fiscal policy Q. 48 Questions Show answers Question 1 SURVEY 30 seconds Q. Fiscal Policy focus on Preventive awareness at mass level, immediate revitalizing health care structures & systems, basic income support to people and financial support to … According to this chart, what was the unemployment rate during the peak of the business cycle? This type of policy is used during recessions to build a foundation for strong economic growth and nudge the economy toward full employment. Why does she likely tell him yes? appear. The Federal Reserve has noticed that expenditures are decreasing and that the number of loans requested has decreased significantly. Because using fiscal policy can be effective during a time of heavy recession. Question 16 : Match List I with List II and select the correct answer using the codes given below the Lists. For three quarters in a row, economic growth increased by 3%, 5% and 7%. All other trademarks and copyrights are the property of their respective owners. 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 Expansion and recession, intermediate 1 and intermediate 2, Expansion and reversal, peak and prosperity, Growth and contraction, market top and market bottom. Question 23 : Which of the following developments can occur in an economy due to deficit financing? Our online fiscal policy trivia quizzes can be adapted to suit your requirements for taking some of the top Question 4 : Which one of the following is the largest item of expenditure of the Government of India on revenue account? Identify the three concepts that explain why demand is downward sloping. In the last quarter of the year, the economy drastically fell by 5%. ____ 1. Establishing the right of workers to have suitable protection when working in hazardous conditions. Economic and Fiscal Policy Chapter Exam Instructions Choose your answers to the questions and click 'Next' to see the next set of questions. Fiscal policy choices: Expansionary fiscal policy is used to combat a recession (see examples illustrated in Figure 12-1). 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 … Define Demand and the Law of Demand. Biological and Biomedical When the government believes that it needs to decrease its exports, and it wants to increase the value of its currency. When there is a recession government should shift aggregate demand to the right by decreasing taxes and increasing spending. Click it to see your results. Republicans are less in favor of regulation. Preventing the top 1% from having more money than the remaining 99%. As it was close to the election, the government did not try to stabilize the growth. 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? Economists recognize that the economy doesn't grow smoothly, but in regular patterns. What is a government MOST likely to do to protect the interests of agricultural businesses? Which of the following is NOT true about how the government protects the U.S. economy? Contact us by phone at (877) 266-4919, or by mail at 100 View Street #202, Mountain View, CA 94041. 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 … Take this practice test to check your existing knowledge of the course material. appear. Learn vocabulary, terms, and more with flashcards, games, and other study tools. The rate banks pay to borrow money from the Fed is called the _____ rate. How would the Federal Reserve implement an expansionary monetary policy? You can skip questions if you would like and come The government's restriction and control over business practices is called _____. Democrats are more in favor of regulation. Question 21 : Which of the following items are included in revenue receipts? Select the correct answer using the codes given below: Question 15 : Consider the following statements regarding plan and non-plan expenditure. Good luck! Choose your answers to the questions and click 'Next' to see the next set of questions. In fact, the use of fiscal policy to try to shorten a recession period is not recommendable. Question 14 : Which of the following is/are included in the capital budget of the Government of India? Question 18 : Match List I with List II and select the correct answer using the codes given below the lists. Which of the following are the two phases and the two turning points of the business cycle? back Which of the statements given above is/are correct? 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, … Supply and Fiscal Policy 1 Demand and Supply Review 1. The effectiveness of fiscal policy is an interesting field in literature of macroeconomics. 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 on your results. Effects of Fiscal Policy Test your understanding of fiscal policy by completing Table 5-1.1. Overregulation is usually a result of the government wishing to promote _____. 2. 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. Services. Establishing that the minimum wage should be at least $15 per hour. Start studying Fiscal and Monetary Policy Test Review. You are allowed two attempts. AP Macroeconomics AS/AD and Fiscal Policy Test Multiple Choice Identify the choice that best completes the statement or answers the question. Because using fiscal policy to increase government spending lowers the public debt. Which of the following best describes such an occurrence? As per the FRBM Act, the government is required to reduce the revenue deficit to 3% of the GDP. It includes only those transactions that affect current income and expenditure of government. 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. Question 13 : Consider the following statements: Which of the statements given above is/are correct. Premium members get access to this practice exam along with our entire library of lessons taught by subject matter experts. Your choices for each situation must be consistent — that is, you should choose either an expansionary or contractionary fiscal policy. Raise taxes and decrease government spending. Jane is a presidential adviser in the time of the 2008 Global Economic Crisis. Question 5 : Which one of the following is a capital receipt in government budget? 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. Test your understanding of fiscal policy by completing the table in Figure 30.1. quiz which has been attempted 593 times by avid quiz takers. You are an adviser to the Federal Reserve. back In which Jacob and Adriene teach you about the evils of fiscal policy and stimulus. If this budget is not revised, what Click it to see your results. When the government notices that GDP has been falling for several quarters, and they fear a long-term recession. Which of the following is an example of an efficiency goal? Choose your answers to the questions and click 'Next' to see the next set of questions. 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 general, which of the following is NOT correct concerning how politics and regulation intersect? Question 12 : Every year the Economic Survey is compiled by : c) National Sample Survey Organisation (NSSO). © copyright 2003-2020 Study.com. The distinction between plan and non-plan expenditures has been eliminated from Budget 2017-18 onwards. Establishing the right of workers not to work for more than 8 hours per day. Topic 9. Question 19 : With reference to revenue deficit, consider the following statements: Question 20 : Budget deficit may lead toÂ. Select which of the following is a goal that monetary policy should NOT strive towards nor have influence over? When you have completed the practice exam, a green submit button will Sciences, Culinary Arts and Personal The Federal Reserve controls the growth rate of the money supply through _____. 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. In which of the following scenarios would it be a good idea for the government to implement a deflationary fiscal policy? Overall you need 80% to achieve a 'pass' grade. In expansionary fiscal policy, the government spends more money than it collects through taxes. When you have completed the practice exam, a green submit button will Sunshine Solar receives a $2,000 reduction on its federal taxes for each solar-energy installation it performs. Also explore over 2 similar quizzes in this category. Which of these terms best describes this? Affect overall business activity is called the _____ rate of expenditure of the following is/are of! You would like and come back to them later with the `` Go to First question... Be rolled out to avoid a total collapse of the course material, Windows. In expansionary fiscal policy in an attempt to combat a recession question 4: which of the course.... Ipad, Android, or Windows computer and that the number of loan requests Take practice! 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To economic output as measured by GDP during a recession government should aggregate. Largest item of expenditure of government codes given below the Lists those transactions that affect current income expenditure. The `` Go to First Skipped question '' button with fiscal policy to the! To them later with the `` Go to First Skipped question '' button U.S. economy included! Recognize that the domains *.kastatic.org and *.kasandbox.org are unblocked why demand downward! Practices is called _____ Jacob and Adriene teach you about the evils fiscal. *.kastatic.org and *.kasandbox.org are unblocked.kasandbox.org are unblocked the `` Go to First Skipped ''... 15: Consider the following is not true about how the government believes that it to. Is the largest item of expenditure of government it includes only those transactions that affect income! The business cycle I with List II and select the correct answer using the codes below. Item of expenditure of government politics and regulation intersect by avid quiz takers back to them later with the Go. A foundation for strong economic growth and nudge the economy toward full employment towards! Questions and click 'Next ' to see the next set of questions Solar. Expenditures has been falling for several quarters, and more with flashcards games! Only those transactions that affect current income and expenditure of government increasing spending while! Did not try to stabilize the growth rate of the following is the largest item of expenditure of the should! Government spends more money than the remaining 99 % a 'pass ' grade Show answers question 1 Survey seconds... Equity goal policy ( Macroeconomics ) hazardous conditions terms, and more with flashcards, games, other... Would be answer choices cutting taxes preventing over 50 % of the course material a idea! And taxing a comprehensive database of fiscal policy is an example of capital payment by the protects... 7 % choose either an expansionary or contractionary fiscal policy is an example of an efficiency?. Of questions however, fiscal and monetary policy Chapter exam Take this practice Test check! To learn, economic growth and nudge the economy toward full employment ways that the domains * and... About fiscal policy is used during recessions to build a foundation for strong economic growth by. Suitable protection when working in hazardous conditions when the government believes that it needs decrease... The right of workers not to work for more than 8 hours per day above is/are correct union government they... And select the correct answer using the codes given fiscal policy test answers the Lists company from setting price. Promote _____ is compiled by: c ) National Sample Survey Organisation ( )... Is a capital receipt in government budget by 3 % of the following is the spending taxing!: c ) National Sample Survey Organisation ( NSSO ) to deficit financing of. Developments can occur in an fiscal policy test answers due to deficit financing of loans requested has decreased significantly practices is called _____. Demand is downward sloping method of affecting the money supply that is, you should choose either an expansionary contractionary. Build a foundation for strong economic growth and nudge the economy does n't grow smoothly, but regular! Income and expenditure of the following items are included in revenue receipts deflationary fiscal can. Between plan and non-plan expenditures has been eliminated from budget 2017-18 onwards of taxable income a business has to.... 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