AnswersIL-EconomicsFiscal Policy: Spending

5.3 Fiscal Policy: Spending Answers

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21
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Gino is writing a paper about the effects of fiscal policies on the economy. Gino is describing a fiscal policy that aims to improve inflation.How does the policy that Gino is describing most likely affect interest rates and unemployment?

A
The policy would most likely increase interest rates and unemployment.
B
The policy would most likely decrease interest rates and unemployment.
C
The policy would most likely increase unemployment but decrease interest rates.
D
The policy would most likely increase interest rates but decrease unemployment.
22
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A graph shows the U S Government and Expenditures from 1980 to 2010. The money spent and money received generally follow the same trend, but around 2008, the amount of money spent increased and money received decreased.

Question illustration
A
Federal law requires the budget to be balanced.
B
Politicians do a good job in balancing the budget.
C
In most years, the federal budget shows a surplus.
D
Lines seldom overlap showing a mostly unbalanced budget.
23

When revenues are higher than expenditures in a budget, that budget

A
shows a deficit.
B
is in balance.
C
must be discarded.
D
shows a surplus.
24

A graph shows the Total Public Debt of the U S Government from 1993 to 2013 with Year on the x-axis and Total public debt in trillions of U S dollars on the y-axis, from 0 to 20 in increments of 5. The debt stays constant from 1993 to 2001 and then steadily increases.

Question illustration
A
It is increasing.
B
It has leveled off.
C
It is decreasing.
D
It has not changed.
25

Which statement best describes the likely effects of an expansionary fiscal policy?

A
It can increase unemployment and reduce inflation.
B
It can increase unemployment and inflation.
C
It can reduce unemployment but lower inflation.
D
It can reduce unemployment but increase inflation.
26

"Meeting the spending targets in this budget meant some very difficult choices."President Barack Obama,2012 Budget Message of the President

d
deciding which country to borrow from to finance spending
d
deciding what would be funded and what would be cut
d
deciding how to keep interest rates low on the national debt
d
deciding how much to increase tax rates
27

A graph titled Total U S Government Spending as Percentage of G D P from 1990-2012 has year on the x-axis and percentage of G D P on the y-axis, from 15 to 30 percent in increments of 5. The percentage of G D P is lowest at 18 percent in 2001 and highest at 25 percent in 2009.

Question illustration
A
half of GDP.
B
100 percent of GDP.
C
one quarter of GDP.
D
one tenth of GDP.
28

When a government creates a budget, it is seeking a way to

A
spend as much revenue as possible.
B
cut spending to a bare minimum.
C
return as much money to taxpayers as possible.
D
allocate money to programs and projects.
29

A diagram shows that taxes go into the government, which then go into spending.

Question illustration
A
Government Spending
B
The National Economy
C
The Federal Debt
D
Fiscal Policy

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