This quiz works best with JavaScript enabled. Home > Economics > Macroeconomics > Monetary And Fiscal Policy > Monetary And Fiscal Policy – Quiz 1 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Monetary And Fiscal Policy Quiz 1 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Through open market operations, the RBI buys and sells government securities to influence the supply of bank reserves. When the RBI wants to increase reserves, it does what? A) Buys Securities. B) Sells Securities. Show Answer Correct Answer: A) Buys Securities. 2. What would the money multiplier be if the reserve requirement is 20% A) 40. B) 5. C) 20. D) 4. Show Answer Correct Answer: B) 5. 3. The amount of deposits that banks are required to hold and not lend out are the ..... A) Loan rates. B) Hold backs. C) Reserves. D) Bank balances. Show Answer Correct Answer: C) Reserves. 4. If we are in a recession, fiscal policy should A) Reduce agricultural subsidies. B) Postpone highway construction programs. C) Reduce taxes. D) Have a surplus budget. Show Answer Correct Answer: C) Reduce taxes. 5. What short term effect can result in a tight money policy from the Fed? A) Lower Interest Rates. B) Higher Interest Rates. C) Increased inflation. D) Increased investment spending. Show Answer Correct Answer: B) Higher Interest Rates. 6. The federal reserve increases interest rates in order to slow down growth and decrease inflation. The government has implemented (a) A) A Contractionary Monetary Policy. B) Expansionary Monetary Policy. Show Answer Correct Answer: A) A Contractionary Monetary Policy. 7. Fiscal policy is determined by A) Congress and the Federal Reserve. B) The president and the Federal Reserve. C) Congress and the President. D) The Federal Reserve. Show Answer Correct Answer: C) Congress and the President. 8. Monetary Policy is created by the ..... where as Fiscal Policy is created by the ..... A) President and Congress; Federal Reserve. B) State Governments; Federal Reserve. C) Federal Reserve; President and Congress. D) Federal Reserve; State Governments. Show Answer Correct Answer: C) Federal Reserve; President and Congress. 9. Who is responsible for making fiscal policy decision? A) The President and Congress. B) The Federal Reserve System. C) The National Council of Economic Advisors. D) The Department of Commerce. Show Answer Correct Answer: A) The President and Congress. 10. How many workers in textile industry? A) Microeconomics. B) Macroeconomics. Show Answer Correct Answer: A) Microeconomics. 11. When the President/Congress decrease taxes, this would A) Increase consumers spending and real GDP. B) Decrease consumer spending and real GDP. C) Have no effect on consumer spending or real GDP. D) None of above. Show Answer Correct Answer: A) Increase consumers spending and real GDP. 12. The largest category of spending for the federal government is ..... A) Interest on the federal debt. B) The military. C) Entitlement programs such as Social Security and Medicare. D) Education. Show Answer Correct Answer: C) Entitlement programs such as Social Security and Medicare. 13. The National level of the Federal Reserve consists of: A) Local Member banks. B) 12 National districts. C) Board of Governors. D) The President & The Senate. Show Answer Correct Answer: C) Board of Governors. 14. Which is NOT a tool of monetary policy A) Open market operations. B) Tax policies. C) Reserve requirement. D) Discount rate. Show Answer Correct Answer: B) Tax policies. 15. Who creates the federal budget A) The President. B) Congress. C) The Federal Reserve. D) The people. Show Answer Correct Answer: A) The President. 16. The Federal Reserve changing the Reserve Requirement is an example of ..... A) Fiscal Policy. B) Monetary Policy. Show Answer Correct Answer: B) Monetary Policy. 17. Fiscal policy deals with what? A) How government regulates the amount of money in circulation. B) Government expenditures in excess of government revenues. C) A general, sustained upward movement of prices for goods and services in an economy. D) Raising taxes and using the money that's raised. Show Answer Correct Answer: D) Raising taxes and using the money that's raised. 18. Which of the following policies can the central bank complete to decrease the money supply? A) Increase the reserve ratio. B) Lower the discount rate. C) Buy bonds on the open market. D) Increase income tax. Show Answer Correct Answer: A) Increase the reserve ratio. 19. When would Congress do expansionary policy A) Borrowing is up, and many loans are being made. B) Many businesses are closing down. C) Unemployment is in the normal 4-5% range. D) Inflation has doubled in the last two quarters. Show Answer Correct Answer: B) Many businesses are closing down. 20. On your paycheck stub, gross income is ..... A) Not usually disclosed to you. B) The same as take-home pay. C) The total amount earned. D) The amount taken out of your paycheck for taxes. Show Answer Correct Answer: C) The total amount earned. Next →Related QuizzesMacroeconomics QuizzesEconomics QuizzesMonetary And Fiscal Policy Quiz 2Monetary And Fiscal Policy Quiz 3Monetary And Fiscal Policy Quiz 4Monetary And Fiscal Policy Quiz 5Monetary And Fiscal Policy Quiz 6Monetary And Fiscal Policy Quiz 7Monetary And Fiscal Policy Quiz 8Monetary And Fiscal Policy Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books