This quiz works best with JavaScript enabled. Home > Economics > Macroeconomics > Monetary And Fiscal Policy > Monetary And Fiscal Policy – Quiz 12 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Monetary And Fiscal Policy Quiz 12 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. There are ..... Federal Reserve Banks. A) 5. B) 10. C) 12. D) 15. Show Answer Correct Answer: C) 12. 2. An increase in the marginal propensity to consume (MPC) A) Raises the value of the multiplier. B) Has no impact on the value of the multiplier. C) Rarely occurs because the MPC is set by congressional legislation. D) Lowers the value of the multiplier. Show Answer Correct Answer: A) Raises the value of the multiplier. 3. Gross Domestic Product is calculated by adding which four spending categories? A) Consumer spending, business expenditures, government spending, investment. B) Consumer spending, business investments, government spending, net exports. C) Wages, rent, salary, interest. D) None of above. Show Answer Correct Answer: B) Consumer spending, business investments, government spending, net exports. 4. Since 2008-09 UK monetary policy has involved A) Bank Rate control and QE. B) QE and exchange rate control. C) Exchange rate control and Bank Rate. D) Bank rate, QE and exchange rate control. Show Answer Correct Answer: A) Bank Rate control and QE. 5. If Tiffany redeemed a bond that earned 5% interest over the past 10 years, which function of money was BEST represented in this scenario? A) Store of value. B) Unit of account. C) Standard of value. D) Medium of exchange. Show Answer Correct Answer: A) Store of value. 6. The phase of a business cycle in which unemployment at the lowest level is a ..... A) Expansion. B) Contraction / recession. Show Answer Correct Answer: B) Contraction / recession. 7. Monetary policy refers to what? A) How government regulates the amount of money in circulation. B) The federal government's overall approach to spending, borrowing, and taxation. C) A general, sustained upward movement of prices for goods and services in an economy. D) The upper limit set on the amount of money the government may borrow to meet its existing legal obligations. Show Answer Correct Answer: A) How government regulates the amount of money in circulation. 8. How does a decrease in income tax rates affect consumers and businesses? A) It reduces disposable income for consumers and increases costs for businesses. B) It increases disposable income for consumers and reduces costs for businesses. C) It decreases disposable income for consumers and increases costs for businesses. D) It has no impact on disposable income or business costs. Show Answer Correct Answer: B) It increases disposable income for consumers and reduces costs for businesses. 9. The rate the Federal Reserve charges banks to borrow money from one another. (bank to bank lending) A) Open Market Operations. B) Federal Funds Rate. C) Discount Rate. D) Required Reserve Ratio. Show Answer Correct Answer: B) Federal Funds Rate. 10. Unemployment caused by a fall in demand for goods and services across the economy. A) Frictional unemployment. B) Seasonal unemployment. C) Structural unemployment. D) Cyclical unemployment. Show Answer Correct Answer: D) Cyclical unemployment. 11. The main duty of the FOMC is ..... A) Setting monetary policy. B) Informing the president about the economy. C) Informing Congress about the economy. D) None of these. Show Answer Correct Answer: A) Setting monetary policy. 12. What happens to interest rates under a loose money policy? A) Increase. B) Decrease. C) Stay the same. D) Disappear. Show Answer Correct Answer: B) Decrease. 13. The long-run effect of an increase in the money supply is to A) Increase the interest rate. B) Decrease the price level. C) Increase the price level. D) Decrease the interest rate. Show Answer Correct Answer: C) Increase the price level. 14. What is the term used for the process of the Federal Reserve buying and selling government debt? A) Quantitative easing. B) Open market operations. C) Monetary policy. D) Fiscal policy. Show Answer Correct Answer: B) Open market operations. 15. What is the name of the interest rate set by the Federal Reserve? A) Discount rate. B) Federal funds rate. C) Prime rate. D) Libor rate. Show Answer Correct Answer: B) Federal funds rate. 16. A decrease in money supply A) Monetary policy. B) Fiscal policy. C) Expansionary monetary policy. D) Contractionary monetary policy. Show Answer Correct Answer: D) Contractionary monetary policy. 17. The Federal Reserve uses the discount rate to maintain growth and stability in the US. If people are paying more for loans, did the discount rate increase or decrease? A) Increase. B) Decrease. Show Answer Correct Answer: A) Increase. 18. What is the main reason why the government is unlikely to reduce spending on Social Security and Medicare? A) The government's limited ability to cut spending. B) The influence of supply side economics. C) The population's aversion to tax increases. D) The aging population and political consequences. Show Answer Correct Answer: D) The aging population and political consequences. 19. What is the primary goal of expansionary fiscal policy? A) To reduce inflation. B) To increase government revenue. C) To stimulate economic growth and reduce unemployment. D) To reduce government spending. Show Answer Correct Answer: C) To stimulate economic growth and reduce unemployment. 20. Decreasing taxing & increasing spending to help the economy grow is referred to as A) Expansionary policy. B) Monetary policy. C) Contractionary policy. D) Budget deficit. Show Answer Correct Answer: A) Expansionary policy. ← PreviousNext →Related QuizzesMacroeconomics QuizzesEconomics QuizzesMonetary And Fiscal Policy Quiz 1Monetary 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 8 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books