1) The government implements expansionary fiscal policies

to stimulate economic growth. Which of the following is

NOT a possible consequence of these policies?

a) Increased aggregate demand

b) Higher inflation rates

c) Lower interest rates

d) Reduced budget deficit

Answer: d) Reduced budget deficit

Rationale: Expansionary fiscal policies involve increasing

government spending and/or reducing taxes to boost

aggregate demand. This is typically done by increasing the

budget deficit, not reducing it.

2) What is the main goal of monetary policy in the context

of macroeconomics?

a) Maintaining price stability

b) Maximizing economic growth

c) Reducing income inequality

d) Controlling government expenditure

Answer: a) Maintaining price stability

Rationale: The main goal of monetary policy is to ensure

price stability by controlling inflation and preventing

excessive fluctuations in the money supply.

3) A country experiences a recession characterized by high

unemployment and low aggregate demand. Which of the

following fiscal policies can be used to counteract these

conditions?