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Fiscal Policy: Spending Answers

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Which of the following statements most accurately describes the federal government and its employees?

M
Millions of Americans work for the federal government.
T
The federal government is not allowed to hire employees.
T
The majority of Americans are employed by the federal government.
T
The number of federal employees is too small to affect government spending.
4

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.
5

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.
6

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.
8

"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
9

Which of these effects of expansionary spending would a government most want to avoid?

h
higher employment
h
higher inflation
g
growth in production
g
growth in consumer spending
10

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

I
It can increase interest rates and unemployment, but lower inflation.
I
It can increase interest rates, unemployment and inflation.
I
It can reduce interest rates and inflation, but increase unemployment.
I
It can reduce interest rates and unemployment, but increase inflation.

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