Question 1
What is meant by indirect taxes?
A.
VAT — affect prices and SRAS. B.
Income tax, corporation tax — affect disposable income. C.
Government use of spending and taxation to influence AD. D.
Offsetting changes — no net AD effect.
Question 2
A budget deficit is:
A.
Trade deficit B.
Full employment C.
Zero debt D.
Spending exceeding tax revenue
Question 3
What is meant by crowding out?
A.
↑G and/or ↓T → AD right. B.
Recognition, decision, implementation, impact lags. C.
Higher G → higher interest rates → lower I. D.
Offsetting changes — no net AD effect.
Question 4
What is meant by fiscal policy?
A.
Government use of spending and taxation to influence AD. B.
Income tax, corporation tax — affect disposable income. C.
Higher G → higher interest rates → lower I. D.
↓G and/or ↑T → AD left.
Question 5
Indirect taxes mainly affect:
A.
Only exports B.
Prices and short-run costs C.
Only BoP financial account D.
Only LRAS in LR
Question 6
What is meant by fiscal neutrality?
A.
Higher G → higher interest rates → lower I. B.
Income tax, corporation tax — affect disposable income. C.
Amplified effect of ΔG on national income. D.
Offsetting changes — no net AD effect.
Question 7
What is meant by expansionary fiscal?
A.
VAT — affect prices and SRAS. B.
↑G and/or ↓T → AD right. C.
Amplified effect of ΔG on national income. D.
Stock of government borrowing.
Question 8
Expansionary fiscal policy:
A.
Increases aggregate demand B.
Reduces AD always C.
Fixes exchange rate D.
Shifts LRAS left only
Question 9
What is meant by fiscal multiplier?
A.
Amplified effect of ΔG on national income. B.
Recognition, decision, implementation, impact lags. C.
Offsetting changes — no net AD effect. D.
VAT — affect prices and SRAS.
Question 10
Crowding out suggests higher G may:
A.
Eliminate tax B.
Always increase I C.
Cause deflation always D.
Reduce private investment
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