1) Fiscal policy refers to government ___ and ___ policies. a economic and defen

Question

1) Fiscal policy refers to government ___ and ___ policies.

a

economic and defense

b

spending and taxation

c

spending and social

d

defense and foreign

2) Contractionary fiscal policy is used to ___ aggregate demand while expansionary fiscal policy is used to ____ aggregate demand.

a

full employment and recession

b

depression and political turmoil

c

recession and depression

d

recession and full employment

3) Most economists agree that a government budget should be in ___ during recession and in ___ during expansion.

a deficit and surplus

b

surplus and deficit

c

deficit and balance

d balance and balance

4) ___ is (are) any asset that may easily be used to purchase goods and services while the ____ consists of the total value of financial assets in an economy that are considered money.

a

Bank deposits and money supply

b

Money supply and money

c

Money and money supply

d

Near money and money supply

5) In the United States, currency held in a bank vault or on deposit with the U.S. Federal Reserve is called ____ while ___ primarily consists of cash and checkable deposits.

a

bank reserves and M1

b

securities and M1

c

bank reserves and M2

d

money supply and M1

economic and defense

Explanation / Answer

Ans

1 Govt spending and taxation

2 full employment and recession. During full employment contractionary policy is used to curb inflation. During recession expansionary policy is used to increase demand

3 A is right. Deficit to increase demand and surplus to control inflation

4 near money and money supply

5 A is right

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