Question

1. Protectionism refers to government policies that:

   	A.	give foreign producers tax credits in an effort to increase their exports.
   	B.	stimulate trade between countries and increase domestic producers profit.
   	C.	restrict imports of foreign products.
   	D.	restrict the output of domestic producers to keep their prices high.

2. Which could be sources of funding for a government that wants to increase government expenditures?

   	A.	both taxes and borrowing
   	B.	neither taxes nor borrowing
   	C.	taxes only
   	D.	borrowing only

3. When fiscal policy is done through tax cuts instead of spending increases:

   	A.	the resulting spending won't pass the cost–benefit test.
   	B.	there are likely to be many “bridges to nowhere.”
   	C.	the resulting fiscal stimulus will be spent by the government.
   	D.	individuals rather than government employees will decide how the stimulus gets spent.

Answer 1

Option C is correct. protectionism basically refers to the policy of the government that restrict the amount of foreign goods and services entering into the country. It imposes tariffs and other non tariff barriers instead of giving tax credits to foreigners. Therefore it discourages trade between countries and not stimulate the same

Option A is correct. Government can borrow from the market or it can increase taxes to finance its deficit

Option D is correct. It is possible that the resultant stimulus is entirely saved. However when government increases its spending it has the decision making authorities where to spend it