Question : The federal budget deficit can be reduced by:
Option 1: Cutting taxes
Option 2: Increasing spending
Option 3: Decreasing spending
Option 4: None of the above
Correct Answer: Decreasing spending
Solution : The correct answer is (c) Decreasing spending.
The federal budget deficit is the amount by which government spending exceeds government revenues in a given fiscal year. To reduce the budget deficit, the government can take measures to decrease spending.
Question : Expansionary fiscal policy involves:
Option 1: Decreasing government spending and increasing taxes
Option 2: Increasing government spending and increasing taxes
Option 3: Decreasing government spending and decreasing taxes
Option 4: Increasing government spending and decreasing taxes
Question : Contractionary fiscal policy involves:
Option 1: Decreasing government expenditure and increasing taxes
Option 2: Increasing government expenditure and increasing taxes
Option 3: Decreasing government expenditure and decreasing taxes
Option 4: Increasing government expenditure and decreasing taxes
Question : The federal government generates revenue primarily through:
Option 1: Sales taxes
Option 2: Property taxes
Option 3: Income taxes
Option 4: All of the above
Question : Which of the following is an example of an automatic stabilizer in the federal budget?
Option 1: Unemployment insurance
Option 2: Military spending
Option 3: Social security
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