741. What is the crowding-out effect in the context of fiscal policy?
A) An increase in government spending leading to a decrease in private investment.
B) An increase in consumer spending resulting from government stimulus.
C) An increase in government borrowing leading to higher interest rates and a reduction in private investment.
D) A decrease in government spending causing an increase in private investment.
742. What is the multiplier effect in economics?
A) The decrease in government spending resulting in a decrease in overall economic activity.
B) The impact of a tax cut on reducing consumer spending.
C) The amplification of an initial change in spending throughout the economy.
D) The decrease in consumer spending leading to a decrease in production and employment.
743. What is the purpose of the Consumer Price Index (CPI)?
A) To measure the total output of goods and services in an economy.
B) To calculate the unemployment rate.
C) To measure changes in the average prices of goods and services purchased by households.
D) To assess the overall health of financial markets.
744. What is the difference between fiscal policy and monetary policy?
A) Fiscal policy involves changes in government spending and taxation, while monetary policy involves changes in the money supply and interest rates.
B) Fiscal policy and monetary policy are the same thing.
C) Fiscal policy focuses on international trade, while monetary policy focuses on domestic economic conditions.
D) Fiscal policy involves changes in interest rates, while monetary policy involves changes in government spending.
745. What is the role of the Council of Economic Advisers (CEA) in the United States?
A) To regulate financial markets.
B) To oversee international trade agreements.
C) To provide the President with economic advice and analysis.
D) To set monetary policy.
746. What is the relationship between inflation and the purchasing power of money?
A) Inflation reduces the purchasing power of money, meaning that the same amount of money buys fewer goods and services.
B) Inflation has no impact on the purchasing power of money.
C) Inflation increases the purchasing power of money.
D) Inflation and the purchasing power of money are unrelated.
747. What is the Laffer Curve used to illustrate?
A) The relationship between interest rates and investment.
B) The relationship between tax rates and government revenue.
C) The impact of government spending on economic growth.
D) The trade-off between inflation and unemployment.
748. What is the difference between automatic stabilizers and discretionary fiscal policy?
A) Automatic stabilizers are built-in features of the tax and transfer system that automatically stabilize the economy, while discretionary fiscal policy involves deliberate actions by the government.
B) Automatic stabilizers and discretionary fiscal policy are the same thing.
C) Automatic stabilizers are tools used by the Federal Reserve, while discretionary fiscal policy involves changes in interest rates.
D) Automatic stabilizers refer to changes in government spending, while discretionary fiscal policy involves changes in taxes.
749. What is the main tool used by the Federal Reserve for implementing monetary policy?
A) Government spending.
B) Changes in tax rates.
C) Fiscal policy.
D) Open market operations.
750. What is the primary goal of supply-side economics?
A) To control inflation.
B) To reduce government spending.
C) To stimulate economic growth by lowering tax rates and encouraging production.
D) To increase government intervention in the economy.
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