Jeopardy - Fiscal Policy
Federal Budget
Discretionary
Fiscal Policy
Automatic
Stabilizers
Limitations
Tools/ Situations
10
10
10
10
10
20
20
20
20
20
30
30
30
30
30
40
40
40
40
40
50
50
50
50
50
This occurs when the government
spends more than it collects in
taxes.
Federal Budget
– 10 points
Answer: Budget Deficit
The Government spends less
than it receives in revenue.
Federal Budget
– 20 points
Answer: Budget Surplus
An equal amount of
Government expenditure
and revenue.
Federal Budget
– 30 points
Answer: Balanced Budget
Name three ways of dealing with a
budget surplus.
Federal Budget
– 40 points
Answer:
1) Reduce the Government Debt
2) Keep the Surplus Idle
3) Give the surplus back to the taxpayers
Increasing Government spending therefore raising the budget deficitduring recessionary periods helps
provide economic stimulus. This is
an example of what theory.
Federal Budget
– 50 points
Answer: Keynesian Theory
Increasing aggregate
demand to stimulate
economic growth is an
example of …
Discretionary Fiscal Policy
– 10 points
Answer: Expansionary policy
State two types of Discretionary fiscal policy.
Discretionary Fiscal Policy
– 20 points
Answer: Expansionary policy and
Contractionary policy
Decreasing taxes and/or
increasing government
spending is an example of …
Discretionary Fiscal Policy–
30 points
Answer: Expansionary policy
To reduce inflation, the
government implements
Contractionary policy
_____________
Discretionary Fiscal Policy
– 40 points
Discretionary fiscal policy happens
when the Government takes
deliberate actions through legislation
spending or taxation
to alter _______
______ policies in
order to influence the level of
________
spending and __________.
employment
Discretionary Fiscal Policy
– 50 points
During a recession the
number of people eligible for
this insurance increases.
Automatic Stabilizers
– 10 points
Answer: Employment Insurance
Helps to prevent the economy from
falling deeply into recession by
decreasing taxes.
Automatic Stabilizers
– 20 points
Answer: Progressive Income Tax
Employment insurance creates an
_______
increase in government spending and
economic activity.
Automatic Stabilizers
– 30 points
__________
Fiscal drag is built in
stabilization that prevents the
economy from recovering
from the state of high
unemployment and low
economic activity
Automatic Stabilizers
– 40 points
Automatic economic stabilizers are
measures that operate automatically
_________
increase the budget surplus in
to _______
inflationary periods and increase
the budget deficit in ________.
recession
Automatic Stabilizers
– 50 points
The number of main problems
associated with fiscal policy is
Four (4)
______
Limitations
– 10 points
This is the time it takes before a
fiscal policy change has an impact
in the economy.
Limitations
– 20 points
Answer: Implementation Lag
___________
Recognition lag is the time it
takes for the government to
recognize that a economic
problem exists and how severe
it is.
Limitations
– 30 points
As Canada is a democratic
nation, this time period for
solving an economic problem is
very lengthy.
Limitations
– 40 points
Answer: Decision Lag
This period of time also
known as the effect lag,
shows the effectiveness of the
decision on aggregate
expenditure, output and
employment.
Limitations
– 50 points
Answer: Impact Lag
Government spending goes up
while taxes remain the same.
State if it’s Contractionary policy
or Expansionary policy.
Tools/Situation
– 10 points
Answer: Expansionary policy
As government expenditure is increasing,
therefore increasing aggregate demand
Name the two gaps shown in this graph.
Recessionary Gap:
Low
levels of employment, output, and
inflation. Able to increae the output level
without upward pressure on the prices of
all goods/services because most of
society’s resources are sitting idle
Inflationary Gap:
At higher
levels, prices tend to rise much more
rapidly. There is a direct relation
between output level and prices
Tools/Situation– 20 points
If the following scenarios were to occur, how do you correct the situation
Scenario
National
unemployment
rate rises to 12%
Inflation is
strong at a rate
of 14% per year
Objective for
Action on Taxes
Aggregate Demand
(increase/
(increase/
decrease)
decrease)
increase
decrease
Action on
Government
Spending
(increase/
decrease)
Effect on
Effect on the
Federal Budget National Debt
(deficit/
(increase/
surplus)
decrease)
increase towards increase
deficit
increase decrease towards decrease
surplus
decrease
Tools/Situations– 30 points
The government reduces the wages of its
employees while raising taxes on the
consumers and businesses. Other
government spending remains the same.
State if it’s Contractionary policy or
Expansionary policy.
Category 5 – 40 points
Answer: Contractionary policy.
As taxes increase and government incomes
decrease
Scenario
Automatic or
Discretionary
Expansionary or
Contractionary
As a result of a recession, more
families qualify for welfare
benefits
A
E
The government raises corporate
tax rates
D
C
The government launches a new
defenses program
D
E
Incomes fall. And as a result
people pay a smaller fraction of
their incomes in taxes
A
E
D
C
The government cuts all employee
wages and salaries by 5%
Tools/Situations – 50 points