This quiz works best with JavaScript enabled. Home > Economics > Macroeconomics > Monetary And Fiscal Policy > Monetary And Fiscal Policy – Quiz 2 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Monetary And Fiscal Policy Quiz 2 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Monetary policy refers to the actions the A) Federal Reserve takes to manage government spending and taxes to pursue its economic objectives. B) President and Congress take to manage government spending and taxes to pursue their economic objectives. C) President and Congress take to manage the money supply and interest rates to pursue their economic objectives. D) Federal Reserve takes to manage the money supply and interest rates to pursue its macroeconomic policy objectives. Show Answer Correct Answer: D) Federal Reserve takes to manage the money supply and interest rates to pursue its macroeconomic policy objectives. 2. Why might a bank hold excess reserves? A) To be sure that they meet their customers' demands. B) To make check cashing easier. C) To keep from lending too much money. D) All of the above. Show Answer Correct Answer: A) To be sure that they meet their customers' demands. 3. A plan to increase aggregate demand and stimulate the economy through taxing and spending A) Contractionary Fiscal Policy. B) Expansionary Fiscal Policy. C) Contractionary Monetary Policy. D) Expansionary Monetary Policy. Show Answer Correct Answer: B) Expansionary Fiscal Policy. 4. What could the government do when they are implementing Fiscal Policy? A) Raise taxes and determine government spending. B) Act as the government's bank. C) Regulate banking activity. D) Provide check-clearing services to banks. Show Answer Correct Answer: A) Raise taxes and determine government spending. 5. "The Fed refers to the Federal Reserve System, the Central Bank of the United States. The FOMC is the Federal Open Market Committee, the group responsible for implementing monetary policy." A) Fiscal policy. B) Monetary policy. Show Answer Correct Answer: B) Monetary policy. 6. This monetary policy requires banks to have a certain percentage of cash on hand at all times. These banks are required to hold the money on reserve. A) Reserve requirement ratio. B) Open Market Operations. C) Interest on Reserves. D) Discount Rate. Show Answer Correct Answer: A) Reserve requirement ratio. 7. Which of these most relates to Monetary Policy A) Budgets. B) Elected Officials. C) Taxes. D) Money supply. Show Answer Correct Answer: D) Money supply. 8. The Federal Reserve does all of the following except ..... A) Fiscal Policy. B) Check clearing for banks. C) Dealing with the money supply. D) Regulate banks. Show Answer Correct Answer: A) Fiscal Policy. 9. Open Market Operations is A) Buying and selling of government securities. B) Buying and selling of tax credits. C) Interest rates used when banks borrow from other banks. D) Least used tool of the FED. Show Answer Correct Answer: A) Buying and selling of government securities. 10. When would the Federal Reserve by bonds and lower interest rates? A) When an economy is experiencing inflation. B) When and economy is growing too fast. C) When businesses are growing too fast. D) When aggregate demand is decreasing. Show Answer Correct Answer: D) When aggregate demand is decreasing. 11. Taxing and Spending are the two things that the Government can do to influence the economy. These influences are known as: A) Expansionary Policy. B) Contractionary Policy. C) Monetary Policy. D) Fiscal Policy. Show Answer Correct Answer: D) Fiscal Policy. 12. The United States Federal income tax is a ..... A) Proportional tax. B) Progressive tax. C) Regressive tax. D) Sales tax. Show Answer Correct Answer: B) Progressive tax. 13. Franklin Roosevelt's New Deal program is an example of the use of ....., A) Keynesian economics. B) Let it happen. C) Supply side economics. D) Adam Smith's theory of the invisible hand. Show Answer Correct Answer: A) Keynesian economics. 14. What is the purpose of monetary policy? A) To regulate foreign trade. B) To change the money supply. C) To change federal income tax levels. D) To increase subsidies to aid businesses. Show Answer Correct Answer: B) To change the money supply. 15. Fiscal Policy is the A) Use of taxing and interest rates to influence the economy. B) Use of money supply and interest rates to influence the economy. C) Use of taxing and govt. spending to influence the economy. D) Use of govt. spending and money supply to influence the economy. Show Answer Correct Answer: C) Use of taxing and govt. spending to influence the economy. 16. All of the followings are jobs of the Federal Reserve: A) To protect the money supply. B) To stop people from counterfeiting money. C) To inflate or deflate the money supply. D) All of the above. Show Answer Correct Answer: D) All of the above. 17. The main holder of UK government bonds is currently A) The Bank of England. B) Insurance companies and pension funds. C) Commercial banks. D) UK households. Show Answer Correct Answer: A) The Bank of England. 18. Which statement explains how the Federal Reserve can control rising inflation? A) It can decrease the reserve requirements so banks will have more in excess reserves to lend out to their customers. B) It can decrease the interest paid on banks' reserves which encourages banks to lend more money to customers. C) It can increase the discount rate, which raises consumer interest rates and discourages customers from borrowing money. D) It can decrease the discount rate, which signals banks to lower their interest rates charged to customers for loans. This leads to encouraging more lending and spending. Show Answer Correct Answer: C) It can increase the discount rate, which raises consumer interest rates and discourages customers from borrowing money. 19. The total value in dollars of all the goods and services sold in a country during a single year is referred to ..... A) Inflation. B) GDP. C) CPI. D) Unemployment. Show Answer Correct Answer: B) GDP. 20. Government policies to try and decrease the output of the economy in times of excessive inflation by increasing taxes or decreasing spending. A) Supply-Side Economics. B) Demand-Side Economics. C) Contractionary Fiscal Policy. D) Expansionary Fiscal Policy. Show Answer Correct Answer: C) Contractionary Fiscal Policy. ← PreviousNext →Related QuizzesMacroeconomics QuizzesEconomics QuizzesMonetary And Fiscal Policy Quiz 1Monetary 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