University of Texas, Rio Grande Valley

• ECON 2301

• Chapter 11—Fiscal Policy and the Federal Budget MULTIPLE CHOICE 1. Fiscal policy refers to a. efforts to balance a government's budget. b. changes in the money supply to achieve particular economic goals. c. changes in government expenditures and taxation to achieve particular economic goals. d. the change in private expenditures that occurs as a consequence of changes in government spending. 2. Suppose Congress increases income taxes. This is an example of a. expansionary fiscal policy. b. expansionary monetary policy. c. contractionary fiscal policy. d. contractionary monetary policy. 3. An expansionary fiscal policy will a. always result in a budget deficit. b. always result in a budget surplus. c. sometimes result in a budget deficit. d. never result in a budget surplus. e. More information is necessary to answer this question.