Question

1. what is the main goal of expansionary fiscal policy?

○ a) increase government debt
○ b) lower unemployment and boost economic growth
○ c) raise interest rates
○ d) reduce exports

1. which of the following is considered mandatory spending in the federal budget?

○ a) building new highways
○ b) social security payments
○ c) military equipment purchases
○ d) research grants to universities

1. what does a budget surplus mean for the government?

○ a) spending equals revenue
○ b) revenue exceeds spending
○ c) spending exceeds revenue
○ d) there is no debt

1. critics of supply - side economics often argue that:

○ a) tax cuts never increase economic growth
○ b) the benefits mostly help higher - income groups
○ c) trade should be reduced
○ d) gdp is not important

1. when trade leads to job losses in certain sectors, one government response is:

Explanation:

1. Expansionary fiscal policy aims to stimulate the economy. Lowering unemployment and boosting economic growth is a key goal. Increasing government debt is a side - effect, raising interest rates is a monetary policy tool (not fiscal), and reducing exports is not a goal of expansionary fiscal policy.
2. Mandatory spending in the federal budget is spending that is required by law. Social Security payments are mandatory as they are based on entitlement programs. Building new highways, military equipment purchases, and research grants are discretionary spending.
3. A budget surplus occurs when revenue exceeds spending. Spending equals revenue is a balanced budget, spending exceeds revenue is a deficit, and a budget surplus does not necessarily mean there is no debt (the government may still have existing debt).
4. Critics of supply - side economics often argue that tax cuts (a key element of supply - side) mostly benefit higher - income groups. Tax cuts can sometimes increase economic growth (though the magnitude is debated), trade reduction is not a main criticism of supply - side, and GDP is important in economic discussions.
5. (Since no options are given for question 5, we focus on the first four)

Answer:

1. B. Lower unemployment and boost economic growth
2. B. Social Security payments
3. B. Revenue exceeds spending
4. B. The benefits mostly help higher - income groups