This quiz works best with JavaScript enabled. Home > Economics > Macroeconomics > Monetary And Fiscal Policy > Monetary And Fiscal Policy – Quiz 20 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Monetary And Fiscal Policy Quiz 20 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. What is the general trend in federal tax rates over the past 30 years? A) Keeping tax rates steady and progressive. B) Lowering tax rates and making them less progressive. C) Increasing tax rates and making them more progressive. D) Abolishing federal taxes altogether. Show Answer Correct Answer: B) Lowering tax rates and making them less progressive. 2. The idea that the Government should take a hands off approach to the economy is a tenant of which type of economics? A) Keynesian. B) Classical. C) Supply-Side. D) Schaubian. Show Answer Correct Answer: B) Classical. 3. What is the primary task of the Federal Reserve System? A) Setting up rules for banks. B) Clearing checks and supplying currency. C) Regulating taxes and government spending. D) Controlling inflation and encouraging full employment. Show Answer Correct Answer: D) Controlling inflation and encouraging full employment. 4. Aggregate Demand increases, caused by the Federal Reserve A) Expansionary Fiscal Policy. B) Expansionary Monetary Policy. C) Contractionary Fiscal Policy. D) Contractionary Monetary Policy. Show Answer Correct Answer: B) Expansionary Monetary Policy. 5. During periods of high inflation, the Federal government can use this contractionary policy to slow the economy down. A) Increase taxes. B) Decrease taxes. C) Increase spending. D) Sell bonds. Show Answer Correct Answer: A) Increase taxes. 6. Fee charged by the Federal Reserve Bank for other member banks to borrow money from the FED through the discount window? A) Inflation. B) Interest. C) Discount rate. D) Reserve requirement. Show Answer Correct Answer: C) Discount rate. 7. In order to help the economy grow, the government will decrease or lower taxes. This allows people to have more money and buy more goods and services. A) Fiscal policy. B) Monetary policy. Show Answer Correct Answer: A) Fiscal policy. 8. True/False:Does money creation always mean printing more money? A) True. B) False. Show Answer Correct Answer: B) False. 9. Which policy is the following statement associated with? "The plan Obama sent to Congress today asks for higher taxes for corporations, banks and oil, natural gas and coal companies." A) Monetary Policy. B) Fiscal Policy. C) Both Monetary and Fiscal Policy. D) None of above. Show Answer Correct Answer: B) Fiscal Policy. 10. Debt Ceiling A) The upper limit set on the amount of money the government may borrow to meet its existing legal obligations. B) The accumalation of budget deficits. C) The unlimited amount each state has to spend each year. D) An unlimited amount of money the government can borrow. Show Answer Correct Answer: B) The accumalation of budget deficits. 11. How does the central bank use monetary policy to control inflation? A) By adjusting interest rates, and ease of borrowing to influence the money supply and aggregate (total) demand in the economy. B) By controlling the exchange rate. C) By reducing taxes. D) By increasing government spending . Show Answer Correct Answer: A) By adjusting interest rates, and ease of borrowing to influence the money supply and aggregate (total) demand in the economy. 12. Disadvantages include unlimited liability, difficult to raise financial capital, difficulty attracting qualified employees, limited life A) Sole Propriotorship. B) Partnership. C) Corporation. D) None of above. Show Answer Correct Answer: A) Sole Propriotorship. 13. Brian received a 10% pay raise from last year. Because of this raise, he will pay a higher portion of his income in taxes. Which type of tax does this describe? A) Flat. B) Progressive. C) Proportional. D) Regressive. Show Answer Correct Answer: B) Progressive. 14. Debt is an accumulation of surpluses and deficits where the surpluses are greater than the deficits A) True. B) False. Show Answer Correct Answer: B) False. 15. During an economic recession, which fiscal policy action is likely to be effective in stimulating economic growth? A) Decreasing government spending and lowering taxes. B) Increasing government spending and lowering taxes. C) Increasing government spending and raising taxes. D) Decreasing government spending and raising taxes. Show Answer Correct Answer: B) Increasing government spending and lowering taxes. 16. The problem of higher gap between the lower and the higher income group. A) Microeconomics. B) Macroeconomics. Show Answer Correct Answer: B) Macroeconomics. 17. When inflation is high, the federal reserve may want to control inflation by A) Increasing loan rates to discourage people from borrowing money. B) Decreasing loan rates to encourage people to borrow money. Show Answer Correct Answer: A) Increasing loan rates to discourage people from borrowing money. 18. Which are contractionary fiscal policies ..... meant to slow down speedy economic growth? A) Increased taxation and increased government spending. B) Increased taxation and decreased government spending. C) Decreased taxation and no change in government spending. D) No change in taxation and increased government spending. Show Answer Correct Answer: B) Increased taxation and decreased government spending. 19. What is one of the causes of inflation? A) Increase in government spending. B) Decrease in money supply. C) Decrease in consumer spending. D) Increase in interest rates. Show Answer Correct Answer: A) Increase in government spending. 20. An item that maintains its economic worth over time: A) Unit of account. B) Currency. C) Store of Value. D) Medium of Exchange. Show Answer Correct Answer: C) Store of Value. ← 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