Q1: 1. What is the primary objective of a government budget?

• A) A. Maximizing inflation
• B) B. Minimizing unemployment
• C) C. Achieving economic growth
• D) D. Increasing income inequality

Q2: 3. How does an increase in government spending affect the economy?

• A) A. Slows down economic growth
• B) B. Reduces inflation
• C) C. Boosts aggregate demand
• D) D. Decreases consumer spending

Q3: 4. What is the purpose of a budget deficit?

• A) A. Stimulating economic growth
• B) B. Controlling inflation
• C) C. Reducing public debt
• D) D. Achieving budget surplus

Q4: 5. Which of the following is a consequence of a budget surplus?

• A) A. Increased government borrowing
• B) B. Higher tax rates
• C) C. Reduced public debt
• D) D. Lower interest rates

Q5: 6. How does a decrease in income tax rates impact consumer spending?

• A) A. Decreases consumer spending
• B) B. Increases consumer saving
• C) C. Boosts consumer spending
• D) D. Reduces government revenue

Q6: 7. What is the role of automatic stabilizers in government budgets?

• A) A. Increase government spending during recessions
• B) B. Decrease government spending during recessions
• C) C. Stabilize tax rates
• D) D. Adjust interest rates

Q7: 8. How does an increase in government borrowing affect interest rates?

• A) A. Lowers interest rates
• B) B. Raises interest rates
• C) C. No impact on interest rates
• D) D. Decreases government spending

Q8: 9. Which of the following is an example of expansionary fiscal policy?

• A) A. Decreasing government spending
• B) B. Raising interest rates
• C) C. Cutting taxes
• D) D. Decreasing money supply

Q9: 10. What is the relationship between government budget deficits and public debt?

• A) A. Budget deficits reduce public debt
• B) B. Budget deficits increase public debt
• C) C. Budget surpluses increase public debt
• D) D. Budget surpluses decrease public debt

Q10: 11. How does an increase in government spending affect the aggregate demand in the economy?

• A) A. Decreases aggregate demand
• B) B. Has no impact on aggregate demand
• C) C. Increases aggregate demand
• D) D. Stabilizes aggregate demand

Q11: 13. Which of the following is a tool of contractionary fiscal policy?

• A) A. Increasing government spending
• B) B. Lowering taxes
• C) C. Raising interest rates
• D) D. Expanding public services

Q12: 14. How does government budget transparency impact economic stability?

• A) A. Increases uncertainty in the market
• B) B. Boosts investor confidence
• C) C. Reduces government accountability
• D) D. Leads to higher inflation

Q13: 15. What is the significance of a government budget surplus in a growing economy?

• A) A. Indicates inefficient fiscal management
• B) B. Reduces public debt burden
• C) C. Slows down economic growth
• D) D. Increases interest rates

Q14: 16. How does an increase in government revenue impact public services?

• A) A. Reduces public services
• B) B. Expands public services
• C) C. No impact on public services
• D) D. Increases income inequality

Q15: 17. What is the purpose of countercyclical fiscal policy?

• A) A. Maintain stable economic growth
• B) B. Increase income inequality
• C) C. Boost inflation
• D) D. Promote government budget deficits

Q16: 18. How does a decrease in government spending affect aggregate demand?

• A) A. Reduces aggregate demand
• B) B. Increases aggregate demand
• C) C. Has no impact on aggregate demand
• D) D. Boosts private investment

Q17: 19. Which of the following is a long-term consequence of persistent government budget deficits?

• A) A. Lower interest rates
• B) B. Higher inflation
• C) C. Decline in public services
• D) D. Economic stability

Q18: 20. How does government borrowing impact the availability of funds for private investment?

• A) A. Increases funds available for private investment
• B) B. Decreases funds available for private investment
• C) C. No impact on private investment
• D) D. Boosts government revenue

Q19: 21. What is the role of fiscal policy in addressing economic recessions?

• A) A. Increasing unemployment rates
• B) B. Stabilizing prices
• C) C. Boosting aggregate demand
• D) D. Decreasing government intervention

Q20: 22. How does a decrease in government expenditure affect economic growth?

• A) A. Accelerates economic growth
• B) B. Slows down economic growth
• C) C. Reduces income inequality
• D) D. Increases government revenue

Q21: 24. How does a decrease in corporate taxes impact business investment?

• A) A. Reduces business investment
• B) B. Increases business investment
• C) C. No impact on business investment
• D) D. Boosts consumer spending

Q22: 25. What is the significance of a government budget surplus during an economic downturn?

• A) A. Indicates effective fiscal policy
• B) B. Leads to higher inflation
• C) C. Decreases government borrowing
• D) D. Slows down economic recovery