CAIE A-Level Economics AS 5.2 Fiscal Policy Questions
Practise analysing fiscal policy through budgets, tax, spending, debt and AD/AS effects in data tables and policy scenarios.
- Syllabus
- 2026–2028
- Course
- Economics 9708
- Level
- AS
Exam points
- interpret government revenue and spending tables to identify deficits, surpluses or debt effects
- classify tax and spending decisions as expansionary or contractionary fiscal policy
- use AD/AS to explain how fiscal policy changes aggregate demand and output
Covered syllabus points
Question 1
Which statement about government budget surpluses and deficits is the most accurate?
A
A surplus implies that the balance of payments is in surplus.
B
A surplus implies that the government is spending too much money.
C
A deficit implies that the economy is in decline.
D
A deficit implies that the national debt is increasing.
Question 2
What is the equivalent of a country's national debt?
A
the accumulated borrowing of the government
B
the difference between government spending and taxation
C
the interest paid by the government on all the money it owes
D
the total money owed by all households in the country
Question 3
What is most likely to be regressive?
A
corporate profit taxes
B
state pension benefits
C
specific tax on cigarettes
D
unemployment benefits
Question 4
Planned government expenditure for a country in the fiscal year 2016 is estimated at $ 760 billion. The top five areas of expenditure are given in the table.
What is the total amount, in billions of dollars, spent on transfer payments shown in the table?
A
89
B
111
C
264
D
536
Question 5
What is least likely to rise as a result of the use of expansionary fiscal policy?
A
aggregate demand
B
budget surplus
C
nominal income
D
inflation
Question 6
What is most likely to decrease if a government uses expansionary fiscal policy?
A
a balance of payments deficit
B
cyclical unemployment
C
the level of wages
D
the rate of inflation
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