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Fiscal Policy: Spending Answers

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A flow chart shows an aspect of fiscal policy. Money goes from the government, to household, and to firms.

Question illustration
A
the way in which a government creates a budget
B
a budget that is severely unbalanced
C
government spending to strengthen the economy
D
ways in which governments spend money
2
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Spending that is required by law is known as

d
discretionary spending.
d
deficit spending.
m
mandatory spending.
e
expansionary spending.
3

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.
4

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.
5

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.
6

Revenue and expenditures are sitting on a balance. Expenditures are lower than revenue.

Question illustration
A
a budget surplus
B
a budget deficit
C
a balanced budget
D
a plan to balance the budget
7

What is the main goal in creating the federal budget?

A
managing businesses and increasing spending on all programs
B
deciding how to manage the government’s tax revenue and expenditures
C
finding a way to allow the economy to run on its own
D
finding a way to slow down rapid economic growth
8

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.
9

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
h
half of GDP.
1
100 percent of GDP.
o
one quarter of GDP.
o
one tenth of GDP.
10

What does deficit spending require a government to do?

l
lay off workers
c
cut taxes
t
take on debt
h
hire more workers
11

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
12

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.
13

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.
14

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

A
Millions of Americans work for the federal government.
B
The federal government is not allowed to hire employees.
C
The majority of Americans are employed by the federal government.
D
The number of federal employees is too small to affect government spending.
15

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.
16

A plan for spending money that balances income with spending and shows how money will be spent is

a
a surplus.
a
an expenditure.
a
a budget.
a
a deficit.
17

Spending that is required by law is known as

A
discretionary spending.
B
deficit spending.
C
mandatory spending.
D
expansionary spending.
18

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
1980 to 1990
B
1980 to 2000
C
1990 to 2000
D
2000 to 2010
19

What does deficit spending require a government to do?

A
lay off workers
B
cut taxes
C
take on debt
D
hire more workers

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