Economic policy
  • 1. Economic policy refers to the actions that a government takes in the economic sphere. It involves decisions on how resources are allocated, how taxes are levied, how regulations are implemented, and how monetary policy is conducted. Economic policy aims to promote economic growth, stability, and prosperity for a country's citizens. It encompasses a wide range of measures, including fiscal policy, monetary policy, trade policy, and regulatory policy. Effective economic policy requires a balance between market forces and government intervention to ensure sustainable economic development and social welfare.

    What is the role of supply-side economics in economic policy?
A) Aims to redistribute wealth among citizens
B) Emphasizes government interventions in market activities
C) Focuses on boosting long-term economic growth by increasing the supply of goods and services
D) Advocates for high levels of government spending
  • 2. Which of the following is a tool of trade policy?
A) Tariffs
B) Unemployment benefits
C) Income taxes
D) Social security payments
  • 3. What is the impact of a strong currency on exports?
A) It leads to increased demand for exports
B) It decreases the cost of exports and boosts competitiveness
C) It has no effect on export levels
D) It makes exports more expensive and can reduce competitiveness
  • 4. What is the purpose of an import quota in trade policy?
A) To stabilize currency exchange rates
B) To promote consumer choices
C) To limit the quantity of a specific imported good
D) To encourage domestic production of imports
  • 5. What is the purpose of a free trade agreement?
A) To impose trade restrictions for national security reasons
B) To eliminate tariffs and reduce trade barriers among participant countries
C) To regulate the prices of imported goods
D) To control the exchange rates between participating countries
  • 6. What is the purpose of competition policy?
A) To increase government intervention in market activities
B) To ensure fair competition and prevent anti-competitive practices in markets
C) To funnel government subsidies to favored industries
D) To control international trade agreements
  • 7. What is the primary function of the World Trade Organization (WTO) in trade policy?
A) To oversee environmental conservation efforts
B) To regulate international trade and resolve trade disputes
C) To enforce domestic tax policies
D) To promote regional economic integration
  • 8. Which of the following is a tool of fiscal policy?
A) Interest rate adjustments.
B) Government spending.
C) Foreign exchange market interventions.
D) Income tax collection.
  • 9. Which of the following is a tool of competition policy?
A) Antitrust laws
B) Import tariffs
C) Tax incentives for corporations
D) Trade embargoes
  • 10. What is the purpose of a wealth tax as part of tax policy?
A) Reducing income tax on high earners
B) Taxation on assets to reduce wealth inequality
C) Tax incentives for foreign investors
D) Tax deductions for charitable donations
  • 11. What is the relationship between inflation and unemployment in the Phillips Curve?
A) There is no relationship between inflation and unemployment.
B) A direct relationship – higher unemployment is associated with higher inflation.
C) An inverse relationship – lower unemployment is associated with higher inflation.
D) Both move in the same direction – higher unemployment leads to lower inflation.
  • 12. What does the term 'quantitative easing' represent in monetary policy?
A) Restricting bank lending activities
B) Lowering currency exchange rates
C) Raising interest rates to control inflation
D) Central bank's purchase of financial assets to increase money supply
  • 13. Which of the following is a tool of monetary policy?
A) Social security benefits.
B) Open market operations.
C) Minimum wage legislation.
D) Infrastructure spending.
  • 14. What does the term 'protectionism' refer to in trade policy?
A) Encouraging foreign direct investment
B) Supporting international trade organizations
C) Promoting free trade agreements
D) The use of trade barriers to protect domestic industries from foreign competition
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