Question : The process of increasing taxes and/or decreasing government spending in order to slow down an overheating economy is known as:
Option 1: Fiscal austerity
Option 2: Fiscal stimulus
Option 3: Fiscal responsibility
Option 4: Fiscal consolidation
Correct Answer: Fiscal austerity
Solution : The correct answer is (a) Fiscal austerity.
Fiscal austerity refers to the deliberate reduction in government spending and/or an increase in taxes to control an overheating economy. This approach aims to reduce the budget deficit or achieve a budget surplus by limiting government expenditures and increasing revenue. The goal of fiscal austerity is to bring the economy back into balance by curbing inflation, reducing public debt, and promoting fiscal responsibility.
Question : The process of increasing government spending and/or decreasing taxes in order to stimulate economic growth is known as:
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 government's policy of reducing taxes to stimulate economic growth is known as ____________.
Option 1: Austerity measures
Option 2: Expansionary fiscal policy
Option 3: Contractionary fiscal policy
Option 4: Supply-side economics
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