Quiz: Test Your Economics Knowledge!

1. Adjustments to tax and spending policies serve as primary elements of

Discretionary fiscal policy

Nondiscretionary fiscal policy

Monetary policy

Exchange rate policy

2. Discretionary fiscal policy is the purview of

Congress only

The president only

Congress and the president collectively through law

The federal reserve

3. The existence of the federal income tax and the welfare system serve as the primary elements of

Discretionary fiscal policy

Nondiscretionary fiscal policy

Monetary policy

Exchange rate policy

4. Discretionary fiscal policy as a tool for making things better is

Universally applauded as being helpful

Universally derided for never being effective

Considered by many to be effective but subject to serval concerns over timing and motive

Inconsistent with the aggregate demand aggregate supply model

5. One typical response to an overheated economy for those interested in discretionary fiscal is to

Raise taxes and cut spending

Lower taxes and cut spending

Raise taxes and increase spending

Lower taxes and increase spending

6. Nondiscretionary fiscal policy has its impact by

Magnifying the economic ups and downs already occurring

Purposefully adjusting interest rates

Congress focusing its constant attention

Dampening the economic ups and downs already occurring

7. One typical response to a recession for those interested in discretionary fiscal policy is to

Raise taxes and cut spending

Lower taxes and cut spending

Raise taxes and increase spending

Lower taxes and increase spending

8. The aggregate demand aggregate supply model examines the impact of discretionary fiscal policy and nondiscretionary fiscal by focusing on movements of

Interest rates

Aggregate supply

Aggregate demand

Regulatory policies

9. The oil price increases of 2002-2005 are an example of a

Positive aggregate demand shock

Negative aggregate demand shock

Positive aggregate supply shock

Negative aggregate supply shock