Tackle the Test: Multiple-Choice Questions

1. Question

   Which of the following contributes to the lag in implementing fiscal policy?

   
   

   
   

   1. It takes time for Congress and the president to pass spending and tax changes.

      
      
   
   

   2. Current economic data take time to collect and analyze.

      
      
   
   

   3. It takes time to realize an output gap exists.

      
      
   
   

   A.

   I only

   B.

   II only

   C.

   III only

   D.

   I and III only

   E.

   I, II, and III

   Which of the following contributes to the lag in implementing fiscal policy?

2. Question

   Which of the following is a government transfer program?

   A.

   Social Security

   B.

   Medicare/Medicaid

   C.

   unemployment insurance

   D.

   food stamps

   E.

   all of the above

   Which of the following is a government transfer program?

3. Question

   Which of the following is an example of expansionary fiscal policy?

   A.

   increasing taxes

   B.

   increasing government spending

   C.

   decreasing government transfers

   D.

   decreasing interest rates

   E.

   increasing the money supply

   Which of the following is an example of expansionary fiscal policy?

4. Question

   Which of the following is a fiscal policy that is appropriate to combat inflation?

   A.

   decreasing taxes

   B.

   decreasing government spending

   C.

   increasing government transfers

   D.

   increasing interest rates

   E.

   expansionary fiscal policy

   Which of the following is a fiscal policy that is appropriate to combat inflation?

5. Question

   A cut in income taxes is an example of

   A.

   an expansionary fiscal policy.

   B.

   a contractionary fiscal policy.

   C.

   an expansionary monetary policy.

   D.

   a contractionary monetary policy.

   E.

   none of the above.

   A cut in income taxes is an example of