Fiscal Policy Quiz by Shubhrata Shrestha | May 28, 2025 | 0 comments Fiscal Policy Quiz 1. What is a budget deficit? A) When revenue exceeds expenditure B) When government borrows from central bank C) When expenditure exceeds revenue D) When the economy is in recession None 2. Which of the following is a regressive tax? A) Income tax B) Corporate tax C) Value Added Tax (VAT) D) Capital gains tax None 3. A contractionary fiscal policy is most suitable during: A) High unemployment B) High inflation C) Recession D) Budget deficit None 4. Which tax structure imposes a higher rate on higher income levels? A) Regressive B) Flat C) Proportional D) Progressive None 5. The marginal rate of tax refers to: A) Total tax paid B) Tax as a percentage of GDP C) Tax on the last unit of income earned D) Difference between direct and indirect tax None 6. Which of the following is a component of capital spending? A) Public sector salaries B) Health insurance payouts C) Infrastructure projects D) Transfer payments None 7. Expansionary fiscal policy shifts the AD curve: A) Upward B) Leftward C) Rightward D) Downward None 8. A progressive tax system: A) Reduces the average tax rate as income rises B) Applies the same rate to everyone C) Charges a higher rate as income increases D) Is based on indirect taxes only None 9. What happens when contractionary fiscal policy is applied? A) AD increases, inflation rises B) AD falls, output increases C) AD falls, inflation decreases D) Output rises, unemployment falls None 10. Which of the following is considered indirect taxation? A) Corporation tax B) Income tax C) Excise duty D) Wealth tax None Time's up Submit a Comment Cancel replyYour email address will not be published. Required fields are marked *Comment * Name * Email * Website Save my name, email, and website in this browser for the next time I comment. Δ
