Topic Questions (EASY): Government Macroeconomic Intervention

What type of policy is an increase in interest rates?

expansionary monetary policy

contractionary monetary policy

restrictive supply-side policy

contractionary fiscal policy

Which option is an example of fiscal policy designed to boost aggregate demand in an economy?

increasing spending by firms to train unskilled workers to enhance their skills

increasing lending power for commercial banks

decreasing the income tax rate for all income groups

lowering the interest rate on loans to manufacturing businesses

Suppose a government wants to reduce its high unemployment rate. What combination of policies could be effective for this purpose?

A

B

C

D

Which of the following policies is an example of expansionary supply-side policy?

Increased government spending on education

Increased sales tax

Decreased money supply

Increased exchange rate (revaluation)

Which of the following is not an action within an expansionary economic policy?

increasing budget deficit

increasing government spending

increasing money supply

raising interest rate