6. Policy and Assessment

Fiscal Policy — Quiz

Test your understanding of fiscal policy with 5 practice questions.

Practice Questions

Question 1

Which of the following best describes an automatic stabilizer in fiscal policy?

Question 2

Which term describes the delay between recognizing the need for fiscal policy change and the passage of enabling legislation?

Question 3

If the marginal propensity to consume is 0.75, the marginal tax rate is 0.1, and the marginal propensity to import is 0.05, what is the government spending multiplier in an open economy?

Question 4

Under which condition will a government debt-to-GDP ratio decrease over time without requiring a primary surplus?

Question 5

If the real interest rate on government debt is 2% and the real GDP growth rate is 5%, what is the maximum primary deficit (as a percentage of GDP) that keeps the debt-to-GDP ratio stable?