Fiscal policy refers to

Select one:

a. the techniques used by a firm to reduce its tax liability.

b. the behaviour of the nation's central bank, regarding the nation's money supply.

c. the government's ability to regulate a firm's behaviour in the financial markets.

d. the spending and taxing policies used by the government to influence the economy.

If the budget deficit is lower than it was last year, we could say that

Select one:

a. the level of aggregate demand will be higher than it was last year.

b. the government must have a reflationary fiscal stance.

c. ceteris paribus, the level of aggregate demand will be lower than it was last year.

d. the government's fiscal stance is deflationary.

If the government wants to reduce unemployment, government spending should be ________ and/or taxes should be ________.

Select one:

a. increased /decreased

b. increased/ increased

c. decreased/ decreased

d. decreased/ increased

When a country has a public sector borrowing requirement, it means that

Select one:

a. the government has accumulated debt over a number of years.

b. the total expenditure of central government, local government and public corporations exceeds the tax revenues and sales revenues collected by those bodies.

c. central government's spending exceeds its tax receipts.

d. nationalised industries are being subsidised.

A government wishing to operate a tighter monetary policy might

Select one:

a. raise interests rates and manipulate the money supply.

b. work to lower the exchange rate.

c. lower interest rates to encourage spending and discourage savings.

d. promote investment in other countries by British firms.

Which of the following actions by the Bank of England will result in a decrease in the money supply?

Select one:

a. A decrease in government spending.

b. Buying government securities in the open market.

c. A decrease in the bank rate.

d. Imposing a higher liquidity rate on banks.

The economy's unemployment rate is 10% and the inflation rate is 1%. The most appropriate policy for the Chancellor of the Exchequer ask the Bank of England to pursue would be to

Select one:

a. do nothing because the inflation rate is so low.

b. raise interest rates to try to stimulate saving.

c. increase the money supply to try to reduce the unemployment rate.

d. reduce the money supply to try to bring the inflation rate to zero.

Which of the following represents an action by the Bank of England which is designed to decrease the money supply?

Select one:

a. A decrease in the liquidity ratio.

b. An increase in tax rates.

c. Selling government securities in the open market.

d. Decrease in the bank rate.

If the European central Bank cuts interest rates and the Bank of England does not, it is likely that the value of the will ________ and the UK trade deficit will ________.

Select one:

a. fall/decrease

b. rise/ increase

c. fall/ increase

d. rise/ decrease

Which of the following isnotusually given as a reason for having a single EC currency?

Select one:

a. Lower inflation

b. Lower interest rates

c. Elimination of exchange rate uncertainty

d. Elimination of asymmetric shocks