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Macroeconomics, 10e (Parkin)
Chapter 13 Fiscal Policy
1 The Federal Budget
1) Prior to the Great Depression, the purpose of the federal budget was to ________.
A) stabilize the economy
B) finance the activities of the government
C) maintain low interest rates
D) decrease unemployment
Answer: B
Topic: The Federal Budget
Skill: Recognition
Question history: Previous edition, Chapter 13
AACSB: Reflective Thinking
2) The use of the U.S. federal budget to help stabilize the economy grew in reaction to the ________ and is known as ________.
A) stagflation of the 1970s; fiscal policy
B) Great Depression of the 1930s; fiscal policy
C) stagflation of the 1970s; government policy
D) Great Depression of the 1930s; monetary policy
Answer: B
Topic: The Federal Budget
Skill: Recognition
Question history: Previous edition, Chapter 13
AACSB: Reflective Thinking
3) Fiscal policy includes
A) only decisions related to government expenditure on goods and services.
B) only decisions related to government expenditure on goods and services and the value of transfer payments.
C) only decisions related to the value of transfer payments and tax revenue.
D) decisions related to government expenditure on goods and services, the value of transfer payments, and tax revenue.
Answer: D
Topic: Fiscal Policy
Skill: Recognition
Question history: Previous edition, Chapter 13
AACSB: Reflective Thinking
4) Fiscal policy involves
A) the use of interest rates to influence the level of GDP.
B) the use of tax and spending policies by the government.
C) decreasing the role of the Federal Reserve in the everyday life of the economy.
D) the use of tax and money policies by government to influence the level of interest rates.
Answer: B
Topic: Fiscal Policy
Skill: Recognition
Question history: Previous edition, Chapter 13
AACSB: Reflective Thinking
5) Fiscal policy
A) is enacted by the Federal Reserve.
B) involves changing interest rates.
C) involves changing taxes and government
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