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