Budgetary Policy test 1 economicstutor.com.au

Budgetary/fiscal policy's ultimate objective is to achieve
1. Price Stability/low inflation
2. Full Employment
3. Equity in the distribution of income
4. The most efficient allocation of resources
Which of the following is least likely to be a target of budgetary policy
1. Price stability/low inflation
2. Full Employment
3. Equity in the distribution of income
4. Economic Growth
Which of the following is least likely to be a target of budgetary policy
1. Economic Growth
2. Improvements in living standards
3. A lower level of net foreign debt
4. Full Employment
When the economy is experiencing a severe downturn (e.g. a recession such as that in 2020), the automatic stabilisers) will help to:
1. Decrease the budget deficit and increase the rate of economic growth
2. Decrease the budget deficit and slow the rate of decline in economic growth
3. Increase the budget deficit and slow the rate of decline in economic growth
4. Increase the budget deficit and increase economic growth
Which of the following provides the best definition of fiscal policy?
1. The government's manipulation of interest and exchange rates in order achieve certain economic and social objectives
2. The government's manipulation of receipts and payments in order achieve certain economic and social objectives
3. The government's manipulation of taxes and welfare payments in order achieve certain economic and social objectives
4. The government's manipulation of G1 and G2 in order achieve certain economic and social objectives
Which of the following measures is least likely to be considered an example of a fiscal policy initiative?
1. A reduction in tax rates
2. A reduction in government welfare payments
3. A reduction in tariffs
4. A reduction in interest rates
Which type of budget would be considered to be most 'expansionary' in terms of the impact on AD in the economy?
1. A reduction in the size of the surplus
2. An increase in the size of the surplus
3. An increase in the size of the deficit
4. A decrease in the size of the deficit
Which of the following best characterises a budget deficit
1. Income greater than expenditure
2. Outlays greater than expenditure
3. Expenditure greater than Income
4. Revenue greater than outlays
If the Budget outcome for a country moves from a $20B surplus to a $20B deficit over the course of one year, it is still likely to be considered a contractionary budget stance if the budget included an:
1. increase in foreign aid spending in the order of $45B
2. increase in defence spending in the order of $45B
3. increase in infrastructure spending in the order of $45B
4. increase in education spending in the order of $45B
Which of the following best describes the movement in the budget outcome that would be expected to occur following a rising Terms of Trade?
1. Increased expenditure and rising surplus
2. Increased expenditure and falling surplus
3. Increased income and rising surplus
4. Increased income and falling surplus

Budgetary Policy test 1 economicstutor.com.au

Multiple choice