3.4 Fiscal Policy

• Match the tax type with its description:

  Income taxes ↔️ Levied on personal and corporate earnings

  Sales taxes ↔️ Charged on goods and services

  Property taxes ↔️ Assessed on real estate ownership
• Match the type of fiscal policy with its effect on the economy:

  Expansionary ↔️ Increases aggregate demand, boosts growth

  Contractionary ↔️ Decreases aggregate demand, curbs inflation
• Steps involved in using fiscal policy to manage economic fluctuations:

  1️⃣ Assess the current economic conditions

  2️⃣ Determine the economic objectives

  3️⃣ Choose the appropriate fiscal policy type

  4️⃣ Implement the policy

  5️⃣ Monitor the economic effects
• Government spending increases aggregate demand, which in turn stimulates economic growth
• Government spending increases aggregate demand.
• Contractionary fiscal policy aims to curb inflation.
• Time lags in fiscal policy implementation can reduce its effectiveness.
• Government spending on infrastructure projects stimulates economic growth.


  True
• Taxation involves collecting revenue from individuals and businesses through various forms of taxes
• Taxation reduces disposable income and may slow spending.


  True
• Expansionary fiscal policy increases government spending or reduces taxes.


  True
• Expansionary fiscal policy leads to higher aggregate demand
• Expansionary fiscal policy can boost economic growth and employment.

  True
• Fiscal policy can control inflation through its influence on aggregate demand
• Fiscal policy works alongside monetary policy to manage liquidity and control inflation
• Increasing government spending on infrastructure is an example of expansionary fiscal policy.


  True
• Introducing a carbon tax is an example of contractionary fiscal policy.


  True
• Fiscal policy is rooted in Keynesian economics, which advocates for active government intervention.


  True
• Taxation reduces disposable income, which may slow consumer spending.


  True
• Contractionary fiscal policy reduces government spending or raises taxes to slow inflation.

  True
• Fiscal policy is primarily used to stabilize the economy, promote growth, and reduce unemployment.


  True
• What is the effect of taxation on disposable income?

  Reduces disposable income
• What is the primary effect of expansionary fiscal policy on aggregate demand?

  Increases aggregate demand
• Expansionary fiscal policy can lead to higher employment.


  True
• What does contractionary fiscal policy reduce to lower inflation?

  Disposable income
• Order the steps involved in fiscal policy implementation:

  1️⃣ Define economic objectives

  2️⃣ Choose fiscal policy tools

  3️⃣ Implement policy changes

  4️⃣ Monitor economic effects
• Match the type of government spending with an example:

  Infrastructure projects ↔️ Building roads and bridges

  Social programs ↔️ Funding healthcare and education

  Defense spending ↔️ Allocating resources to national security
• Government spending increases aggregate demand and stimulates economic growth.


  True
• Government spending on infrastructure projects increases aggregate demand
• Order the steps of implementing fiscal policy:

  1️⃣ Identify economic objectives

  2️⃣ Choose expansionary or contractionary policy

  3️⃣ Implement policy changes

  4️⃣ Monitor economic effects
• Contractionary fiscal policy can slow down the economy and lower employment.


  True
• Expansionary fiscal policy can increase inflation if demand rises too quickly.


  True
• Order the limitations of fiscal policy from most to least immediate impact on the economy:

  1️⃣ Political influences

  2️⃣ Time lags

  3️⃣ Crowding out

  4️⃣ Government effectiveness
• Decreasing funding for social welfare programs is an example of contractionary fiscal policy
• Fiscal policy is the use of government spending and tax policies to influence economic conditions.stabilize
• Government spending increases aggregate demand, which in turn stimulates economic growth
• Expansionary fiscal policy aims to stimulate the economy by increasing government spending or reducing taxes
• Taxation reduces disposable income, which may slow consumer spending.


  True
• Taxation may slow consumer spending.


  True
• Order the effects of expansionary fiscal policy on the economy:

  1️⃣ Increases government spending or reduces taxes

  2️⃣ Higher aggregate demand

  3️⃣ Boosts economic growth

  4️⃣ Reduces unemployment