Fiscal Policy Review
This worksheet covers key concepts of fiscal policy, including its tools, objectives, and impact on the economy for Grade 12 Social Studies students.
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Fiscal Policy Review
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Read each question carefully and provide your best answer. For multiple-choice questions, circle the letter of the correct option. For fill-in-the-blank questions, complete the sentence with the appropriate term. For short answer questions, write your response in the space provided.
1. Which of the following is NOT a primary tool of fiscal policy?
Government spending
Taxation
Interest rates
Transfer payments
2. An increase in government spending designed to stimulate the economy is an example of:
Contractionary fiscal policy
Expansionary fiscal policy
Monetary policy
Supply-side economics
3. Fiscal policy is primarily conducted by the branch of government.
4. When government spending exceeds tax revenue, it results in a budget .
5. A progressive tax system means that individuals with higher incomes pay a percentage of their income in taxes.
6. Contractionary fiscal policy is typically used to combat inflation.
True
False
7. Automatic stabilizers, such as unemployment benefits, require explicit government action to be implemented.
True
False
8. Briefly explain the difference between discretionary fiscal policy and automatic stabilizers.
9. Describe one potential challenge or limitation of using fiscal policy to manage the economy.