This quiz works best with JavaScript enabled. Home > Economics > Macroeconomics > Monetary And Fiscal Policy > Monetary And Fiscal Policy – Quiz 17 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Monetary And Fiscal Policy Quiz 17 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Which of the following people were proponents of classical economics A) Arthur Laffer. B) JFK. C) Ronald Reagan. D) Herbert Hoover. Show Answer Correct Answer: D) Herbert Hoover. 2. The actions the Fed takes to influence the level of real GDP and the rate of inflation in a country A) Monetary Policy. B) Fiscal Policy. Show Answer Correct Answer: A) Monetary Policy. 3. In a contractionary monetary policy, the central bank might: A) Increase the money supply and lower interest rates. B) Decrease the money supply and raise interest rates. C) Increase government spending and lower taxes. D) Decrease government spending and raise taxes. Show Answer Correct Answer: B) Decrease the money supply and raise interest rates. 4. Expansionary fiscal policies are laws aimed at reducing unemployment. How might Congress use discretionary expansionary fiscal policy? A) Decrease the discount rate. B) Increase taxes. C) Decrease government spending. D) Increase government spending and decrease taxes. Show Answer Correct Answer: D) Increase government spending and decrease taxes. 5. Which of the following tools of fiscal policy would decrease unemployment? A) Decrease the discount rate. B) Increase government spending. C) Increase tax rates. D) Increase the reserve requirement. Show Answer Correct Answer: B) Increase government spending. 6. Which is a key characteristic of an automatic stabilizer? A) They take time to be implemented. B) They occur automatically based on the phase of the business cycle we are in. C) They must be paid back to the government. D) Only corporations have access to automatic stabilizers. Show Answer Correct Answer: B) They occur automatically based on the phase of the business cycle we are in. 7. How does a budget surplus relate to the national debt? A) They are the same thing. B) Budget surplus are more than the national debt. C) Budget surplus reduce the size of the national debt. D) Budget surplus create the national debt. Show Answer Correct Answer: C) Budget surplus reduce the size of the national debt. 8. When the supply and demand for money are expressed in a graph with the interest rate on the vertical axis and the quantity of money on the horizontal axis, an increase in the price level A) Shifts money demand to the right and increases the interest rate. B) None of these answers. C) Shifts money demand to the right and decreases the interest rate. D) Shifts money demand to the left and increases the interest rate. Show Answer Correct Answer: A) Shifts money demand to the right and increases the interest rate. 9. When the FOMC engages in buying and selling of US securities it is called ..... A) Fiscal policy. B) Stock operations. C) Open market operations. D) Tax and spend policy. Show Answer Correct Answer: C) Open market operations. 10. Which of the following is an example of "supply-side" economics? A) Higher federal taxes. B) Trying to increase aggregate demand. C) More government agencies and oversight. D) Reduced government regulation. Show Answer Correct Answer: D) Reduced government regulation. 11. Increasing taxing & decreasing government spending to slow the economy is referred to as A) Budget surplus. B) Monetary policy. C) Contractionary policy. D) Budget deficit. Show Answer Correct Answer: C) Contractionary policy. 12. Money functions as a ..... A) Medium of exchange. B) Measure of value. C) Store of value. D) All of the above. Show Answer Correct Answer: D) All of the above. 13. The Federal Reserve uses this to correct recession. A) Expansionary Fiscal Policy. B) Expansionary Monetary Policy. C) Contractionary Fiscal Policy. D) Contractionary Monetary Policy. Show Answer Correct Answer: B) Expansionary Monetary Policy. 14. When the Fed buys and sells government securities, they are attempting to influence ..... A) Federal funds rate. B) Discount rate. C) Stock market. D) Mortgage interest index. Show Answer Correct Answer: A) Federal funds rate. 15. Who makes decisions on monetary policy within the Federal Reserve? A) The president makes decisions on monetary policy. B) The president nominates members of the Board of Governors. C) The president changes the interest rate on required and excess reserves. D) The president confirms Senate nominations to the Board of Governors. Show Answer Correct Answer: B) The president nominates members of the Board of Governors. 16. The economy is experiencing rapid inflation. Which fiscal policy action should the government implement to try to fix this problem? A) Increase taxes. B) Decrease interest rates. C) Increase government spending. D) Decrease reserve requirements. Show Answer Correct Answer: A) Increase taxes. 17. The goals of moneytary policy do NOT include the promotion of ..... A) Maximum employment. B) Stable prices. C) Moderate long-term interest rates. D) Low taxes. Show Answer Correct Answer: D) Low taxes. 18. What are the main objectives of environmental policies? A) Protect the environment, conserve natural resources, and promote sustainable development. B) Destroy the environment, deplete natural resources, and encourage unsustainable development. Show Answer Correct Answer: A) Protect the environment, conserve natural resources, and promote sustainable development. 19. Contractionary Fiscal Policy involves A) Increase the money supply and increase interest rates. B) Increasing govt. spending and decrease taxes. C) Decrease interest rates decrease money supply. D) Decrease govt. spending and increase taxes. Show Answer Correct Answer: D) Decrease govt. spending and increase taxes. 20. Keynesian Economics believes that increased govt. spending will bring the economy out of recession A) True. B) False. Show Answer Correct Answer: A) True. ← 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