If the government implements contractionary fiscal policy, it will likely lead to:
Lower inflation and lower economic growth
Higher inflation and higher economic growth
Higher inflation and lower economic growth
Lower inflation and higher economic growth
Correct Answer :
A. Lower inflation and lower economic growth
Related Questions
The term money multiplier refers to:
The ratio of the change in the money supply to the change in the monetary base
The ratio of government spending to the level of GDP
The ratio of taxes to disposable income
The ratio of investment to savings in an economy
The term stagflation refers to a situation where:
There is high inflation and high unemployment simultaneously
There is low inflation and low unemployment simultaneously
There is high inflation and low unemployment simultaneously
There is low inflation and high unemployment simultaneously
The term supply-side economics focuses on:
Policies that aim to increase aggregate demand in the economy
Policies that aim to increase the productive capacity of the economy
Policies that aim to control inflation through monetary policy
Policies that aim to control inflation through fiscal policy
If the government decreases taxes and increases government spending, it is implementing:
Expansionary fiscal policy
Contractionary fiscal policy
Expansionary monetary policy
Contractionary monetary policy
Which of the following is considered a leading economic indicator?
Consumer Price Index (CPI)
Gross Domestic Product (GDP)
Stock Market Index
Unemployment Rate
The term externalities refers to:
The uncompensated impact of one person's actions on the well-being of a bystander
The difference between the private cost and the social cost of producing a good
The total cost incurred in producing a good or service
The total cost of producing all units of a good or service
The term sticky prices refers to:
Prices that do not change quickly in response to changes in supply and demand
Prices that are set by the government and cannot be changed by firms
Prices that are adjusted continuously in response to changes in the economy
Prices that are set by monopolies to maximize profit
Which of the following is an example of a regressive tax?
Sales tax
Progressive income tax
Property tax
Corporate income tax
Which of the following is a component of aggregate supply?
Consumption
Government spending
Investment
Wages and salaries
The term marginal cost refers to:
The additional cost of producing one more unit of a good or service
The total cost of producing a given quantity of a good or service
The average cost of producing all units of a good or service
The fixed cost of producing a given quantity of a good or service
The term regressive tax refers to a tax:
That takes a larger percentage of income from low-income individuals than from high-income individuals
That takes a larger percentage of income from high-income individuals than from low-income individuals
That is the same for all individuals regardless of income level
That is only imposed on corporations
The term Phillips curve depicts the relationship between:
Inflation and unemployment
Government spending and taxes
Savings and investment
Consumption and income
The term opportunity cost refers to:
The value of the next best alternative that must be forgone when a decision is made to allocate resources to a particular use
The total cost incurred in producing a good or service
The cost incurred when a firm decides to shut down operations
The cost of goods and services in an open economy
The term monetary base refers to:
The total amount of money in circulation in an economy
The total amount of money held by banks as reserves
The total amount of money held by households and businesses
The total amount of money created by the central bank
The term fiscal policy refers to:
Government policies related to taxation and spending to influence the economy
Central bank policies related to interest rates and money supply
Policies aimed at regulating international trade
Policies related to the regulation of financial markets
The term commodity money refers to:
Money that has intrinsic value, such as gold or silver
Money that is backed by the government's promise to exchange it for a commodity
Money that is used for international trade
Money that is created by the central bank
If the government increases taxes and decreases government spending, it is implementing:
Contractionary fiscal policy
Expansionary fiscal policy
Contractionary monetary policy
Expansionary monetary policy
The term automatic stabilizers refers to:
Government policies that automatically adjust to stabilize the economy during economic fluctuations
The tools used by the central bank to stabilize the money supply
The policies implemented by the government to control inflation
The policies implemented by the government to control unemployment
The money supply is primarily determined by:
The Federal Reserve
Commercial banks
The Treasury Department
The President of the United States
The Federal Reserve's main tool for controlling the money supply is:
Open market operations
Reserve requirements
Discount rates
Government spending
If the government implements a policy of increasing the money supply to stimulate economic activity, it is employing:
Expansionary monetary policy
Contractionary monetary policy
Expansionary fiscal policy
Contractionary fiscal policy
The multiplier effect refers to:
The impact of an initial change in spending on aggregate demand and, consequently, on real GDP
The tendency of consumers to save a large portion of their income
The effect of an increase in the money supply on interest rates
The impact of inflation on purchasing power
If the government implements contractionary fiscal policy, it will likely lead to:
Lower inflation and lower economic growth
Higher inflation and higher economic growth
Higher inflation and lower economic growth
Lower inflation and higher economic growth
The term capital stock in economics refers to:
The total amount of money in an economy
The total value of physical and human capital in an economy
The total amount of money held by households
The total amount of money held by businesses
The term complementary goods refers to goods that are:
Used together to satisfy a particular want or need
Used interchangeably to satisfy a particular want or need
Unrelated to each other in satisfying wants or needs
Completely unrelated in any way
The Phillips curve depicts the relationship between:
Inflation and unemployment
Government spending and taxes
Savings and investment
Consumption and income
The term Laffer curve is used to illustrate the relationship between:
Tax rates and tax revenue
Government spending and economic growth
Inflation and unemployment
Interest rates and investment
The term tax multiplier refers to:
The change in output resulting from a change in government spending
The change in output resulting from a change in taxes
The change in consumption resulting from a change in disposable income
The change in investment resulting from a change in interest rates
The term frictional unemployment refers to unemployment that occurs due to:
Temporary transitions between jobs or careers
Mismatch between the skills of workers and the skills required by employers
Changes in aggregate demand
Fluctuations in the business cycle
The term commodity money refers to:
Money that has intrinsic value, such as gold or silver
Money that is backed by the government's promise to exchange it for a commodity
Money that is used for international trade
Money that is created by the central bank