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