Government policies：練習問題

Which of the following is a primary tool used by a government when implementing fiscal policy?

If a government wishes to reduce income inequality, which fiscal policy measure would be the most effective?

Identify two main areas of government expenditure that a government might focus on when implementing its fiscal policy.

Explain the mechanism by which an increase in interest rates is likely to reduce the level of investment by businesses in an economy.

Identify one example of an indirect tax that a government might use as part of its fiscal policy to raise revenue.

Fiscal policy involves the management of government revenue and expenditure to achieve macroeconomic objectives.

(a) Define the term fiscal policy.
(b) Identify two examples of direct taxes used by a government to collect revenue.
(c) Explain what is meant by a fiscal surplus.
(d) Identify one main area of focus for government expenditure.

A government is seeking to manage its economy to achieve multiple macroeconomic objectives simultaneously. It is currently reviewing its toolkit of policy measures.

(a) Explain how the central bank uses monetary policy to reduce demand-pull inflation. (2 points)
(b) Analyze the likely impact of privatisation on an economy’s productive potential. (2 points)
(c) Evaluate whether pollution permits are a more effective government control than legislation for a government aiming to balance economic growth with environmental protection. (4 points)