Title: QUIZ: Fiscal Policy -- Economic Lowdown Audio Series
Course: Andria Testing FRE2 > Section: Fiscal Policy -- Economic Lowdown Audio Series

Q: The government may use _________________ in hopes of ending a recession.
- expansionary fiscal policy
- contractionary fiscal policy
A: expansionary fiscal policy

Q: Which of the following is one of the key components of a recession?
- Rising standard of living
- Rising real income
- Rising spending
- Rising unemployment
A: Rising unemployment

Q: How do higher income taxes typically affect the economy?
- Higher income taxes result in household and business having less income, which encourages more spending.
- Higher income taxes result in household and business having less income, which discourages spending.
- Higher income taxes result in household and business having more income, which encourages more spending.
- Higher income taxes result in household and business having more income, which discourages more spending.
A: Higher income taxes result in household and business having less income, which discourages spending.

Q: An increase in government spending may ________ incomes, which in turn may ________ spending and ________ unemployment.
- decrease; decrease; increase
- increase; increase; decrease
- increase; increase; increase
- decrease; decrease; decrease
A: increase; increase; decrease

Q: Which of the following is a potential problem with using expansionary fiscal policy to fight a recession?
- It may reduce the Federal deficit and the debt.
- It may increase unemployment.
- Too little spending can cause inflation.
- It is subject to policy lags.
A: It is subject to policy lags.

Q: Which of the following is an example of an automatic stabilizer?
- Government spending
- Unemployment insurance
- The multiplier effect
- A stimulus package
A: Unemployment insurance

Q: Many economists believe the best approach to fighting inflation is having the ______ use ______.
- Federal Reserve; monetary policy
- federal government; fiscal policy
- Federal Reserve; fiscal policy
- federal government; monetary policy
A: Federal Reserve; monetary policy

Q: Which of the following would be the best fiscal policy to use during a recession?
- Increase income tax rates
- Raise interest rates
- Decrease income tax rates
- Cut government spending
A: Decrease income tax rates