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Year 11 Exam  >  Year 11 Tests  >  Test: Fiscal Policy - Year 11 MCQ

Test: Fiscal Policy - Year 11 MCQ


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10 Questions MCQ Test - Test: Fiscal Policy

Test: Fiscal Policy for Year 11 2024 is part of Year 11 preparation. The Test: Fiscal Policy questions and answers have been prepared according to the Year 11 exam syllabus.The Test: Fiscal Policy MCQs are made for Year 11 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Fiscal Policy below.
Solutions of Test: Fiscal Policy questions in English are available as part of our course for Year 11 & Test: Fiscal Policy solutions in Hindi for Year 11 course. Download more important topics, notes, lectures and mock test series for Year 11 Exam by signing up for free. Attempt Test: Fiscal Policy | 10 questions in 20 minutes | Mock test for Year 11 preparation | Free important questions MCQ to study for Year 11 Exam | Download free PDF with solutions
Test: Fiscal Policy - Question 1
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What does a budget surplus indicate?

Detailed Solution for Test: Fiscal Policy - Question 1
A budget surplus occurs when government revenue exceeds government expenditure. This indicates that the government has more income than it spends during a specific period.
Test: Fiscal Policy - Question 2
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Which type of government expenditure includes investments in infrastructure and capital assets?

Detailed Solution for Test: Fiscal Policy - Question 2
Capital Expenditures are investments in infrastructure and capital assets such as highways, schools, and hospitals. These expenditures aim to improve long-term economic productivity and public services.
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Test: Fiscal Policy - Question 3
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Why does the government intervene in markets by taxing demerit goods?

Detailed Solution for Test: Fiscal Policy - Question 3
The government taxes demerit goods to correct market failures, as these goods have negative externalities that harm society, such as cigarettes and alcohol.
Test: Fiscal Policy - Question 4
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What is the primary purpose of progressive taxation?
Detailed Solution for Test: Fiscal Policy - Question 4
Progressive taxation aims to redistribute income by taxing higher incomes at higher rates, thereby reducing income inequality.
Test: Fiscal Policy - Question 5
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How does expansionary fiscal policy aim to stimulate economic growth?
Detailed Solution for Test: Fiscal Policy - Question 5
Expansionary fiscal policy stimulates economic growth by increasing government spending or reducing taxes, thereby boosting aggregate demand.
Test: Fiscal Policy - Question 6
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What can immediate government spending on infrastructure projects like roads lead to?
Detailed Solution for Test: Fiscal Policy - Question 6
Immediate government spending on infrastructure projects creates jobs in the short term and enhances economic growth in the long term by improving productivity.
Test: Fiscal Policy - Question 7
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How does a budget deficit affect public debt?
Detailed Solution for Test: Fiscal Policy - Question 7
A budget deficit increases public debt as the government needs to borrow to cover the shortfall between revenue and expenditure.
Test: Fiscal Policy - Question 8
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Which tax system imposes taxes based on income and profits?
Detailed Solution for Test: Fiscal Policy - Question 8
The progressive tax system imposes taxes based on income and profits, with higher incomes taxed at higher rates.
Test: Fiscal Policy - Question 9
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What is the primary source of government revenue?
Detailed Solution for Test: Fiscal Policy - Question 9
Taxation is the primary means through which the government generates revenue to fund public expenditures.
Test: Fiscal Policy - Question 10
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How does indirect taxation differ from direct taxation?
Detailed Solution for Test: Fiscal Policy - Question 10
Indirect taxation is applied on spending, such as VAT and excise duties, and is paid by consumers when purchasing goods and services.
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