Expansionary Fiscal Policy and Aggregate Demand

Instructions:

Choose an answer and hit 'next'. You will receive your score and answers at the end.

question 1 of 3

Suppose the President plans to cut taxes for consumers and also plans to increase defense spending. How will real GDP and the price level be affected?

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1. Which of the following reduces the effects of expansionary fiscal policy?

2. 'Crowding out' refers to which of the following?

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About This Quiz & Worksheet

Expansionary fiscal policies stimulate aggregate demand, and this quiz and worksheet combo will help you cement test understanding of these vital policies. The quiz questions will help you test how well you understand the effects of these policies, some of the vocabulary related to these policies, and the situations in which expansionary fiscal policies are beneficial.

Quiz & Worksheet Goals

In these assessments, you'll be tested on:

  • The effects of expansionary fiscal policies
  • Factors related to these policies
  • The vocabulary of these policies
  • The theory behind expansionary fiscal policies

Skills Practiced

This quiz and worksheet will allow you to test the following skills:

  • Reading comprehension - ensure that you draw the most important information from the related lesson on expansionary fiscal policies
  • Making connections - use understanding of the general concepts of the economy and government involvement in the economy
  • Critical thinking - apply relevant concepts to examine information about fiscal policies in a different light
  • Information recall - access the knowledge you've gained regarding expansionary fiscal policies

Additional Learning

To learn more about these policies, review the following lesson Expansionary Fiscal Policy and Aggregate Demand. This lesson covers the following objectives:

  • Define expansionary fiscal policies
  • Understand how these policies affect and are affected by factors in the overall economy
  • Define the purpose of expansionary fiscal policies
  • Determine when expansionary policies are warranted, according to Keynesian economists
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