1.

According to the AS-AD framework, what were the effects of the fiscal and monetary policy mix adopted by the Reserve Bank and government following the economic boom in Australia in 2004?

The AD curve shifted leftward, which decreased output and inflation

AD curve shifted rightward by monetary policy and leftward by fiscal policy, which decreased output and increased inflation.

The AD curve shifted rightward, which increased output and inflation

The AD curve shifted leftward by monetary policy and rightward by fiscal policy, with undetermined output and inflation

2

According to the modified AS-AD framework with an upward sloping AS and a vertical AD, an increase in government spending would result in:

a downward shift in AS.

a rightward shift in AD.

an upward shift in AS.

a leftward shift in AD.

3.

One of the objectives of Australian government fiscal policy is to ensure that government debt is maintained at prudent and sustainable levels, taking into account the overall economic circumstance.

What is another objective of Australian government fiscal policy?

Control interest rates to maintain a low inflation

Moderate cyclical fluctuations in overall economic activity

4.

Which of the following is NOT part of the commonwealth government revenues?

Sales taxes or GST

Interest payments from other governments

Stamp duties

Income tax

5.

Which of the following is NOT an example of the redistribution function of fiscal policy?

Welfare payments to unemployed people

Higher tax rate for high income earners

Medicare levy charged as a percentage of income

Increased spending on infrastructure

6.

According to the modified AS-AD framework with an upward sloping AS and a vertical AD, an increase in taxes would result in which of the following factors?

Higher inflation rate

Higher output level

Lower output level

Lower inflation rate

7.

Which of the following constitutes an expansionary fiscal policy?

Decreased interest rate

Increased taxes

Increased money supply

Increased government spending

8.

Which of the following contributes most to the commonwealth government's projected revenues in the 2018-2019 financial year?

Sales tax

Corporate income tax

Non-tax revenue

Personal income tax

9.

A government budget deficit implies that government debt has been increasing.

What could also be implied from a government budget deficit?

Government revenue is less than government spending

Government debt-to-GDP ratio has been increasing

10.

Suppose that the actual output or GDP in the economy is above the potential or trend GDP.

What should the government conduct to slow down the economy?

Fiscal contraction

Fiscal expansion

11.

Government net debt is defined as:

government revenue less government spending.

financial liabilities or gross debt less the amount of liquid financial assets.

financial assets less financial liabilities.

gross debt to GDP ratio.

12.

According to the modified AS-AD framework with an upward sloping AS and a vertical AD, if the government decides to increase taxes and increase government spending simultaneously by the same amount, what would be the effect to the economy's equilibrium?

Both output level and inflation rate would decrease

There's not enough information to confirm

Both output level and inflation rate would remain unchanged

Both output level and inflation rate would increase

13.

What was the main reason behind the contractionary fiscal policy conducted by the Keating government during the period from 1990 to 1996?

Bring down the rising government debt

Reduce the government's budget deficit

Stimulate the economy and get it out of the recession

Bring down inflation

14.

If the economy is in a recession and the government uses fiscal policy to stimulate the economy, it must be prepared to:

run a budget deficit.

run a budget surplus.

have currency depreciation.

run a current account deficit.

run a current account surplus.

15.

From 1986 to the mid 1990's, what were the fiscal and monetary policy stances in Australia?

Contractionary fiscal policy

Contractionary monetary policy

Expansionary monetary policy

Expansionary fiscal policy