AnswersIL-EconomicsFiscal Policy: Spending

Fiscal Policy: Spending Answers

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1
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What does deficit spending require a government to do?

A
lay off workers
B
cut taxes
C
take on debt
D
hire more workers
2
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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
3

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.
4

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.
5

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

A
higher employment
B
higher inflation
C
growth in production
D
growth in consumer spending
6

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.
7

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

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.
9

When governments inject money into the economy, which of the following are their goals? Check all that apply.

A
reducing unemployment
B
improving economic stability
C
encouraging competition
D
laying off striking workers
E
improving production
10

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

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

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