This quiz works best with JavaScript enabled. Home > Economics > Macroeconomics > Monetary And Fiscal Policy > Monetary And Fiscal Policy – Quiz 24 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Monetary And Fiscal Policy Quiz 24 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. What is the main purpose of the Federal Reserve's Open Market Operations? A) To set interest rates for banks. B) To clear checks and regulate banks. C) To control the money supply by buying and selling government debt. D) To supply currency to banks. Show Answer Correct Answer: C) To control the money supply by buying and selling government debt. 2. Which agency within the Legislative Branch deals with the federal budget. A) Office of Management and Budget. B) Budget Office. C) Congressional Budget Office. D) Trump's Accountant. Show Answer Correct Answer: C) Congressional Budget Office. 3. Taxes that impose a higher percentage of taxes on lower incomes than on higher incomes A) Regressive. B) Progressive. C) Proportional. D) All of these. Show Answer Correct Answer: A) Regressive. 4. A large budget deficit will lead to A) Crowded economy. B) Crowding in Effect. C) Crowding out effect. D) All of the Above. Show Answer Correct Answer: C) Crowding out effect. 5. Which of the following is not likely to happen when the money supply is increased A) Decrease in interest rates. B) Increased spending. C) Economic growth. D) Lowering of GDP. Show Answer Correct Answer: D) Lowering of GDP. 6. When an increase in government purchases raises incomes, shifts money demand to the right, raises the interest rate, and lowers investment, we have seen a demonstration of A) Supply-side economics. B) None of these answers. C) The crowding-out effect. D) The multiplier effect. Show Answer Correct Answer: C) The crowding-out effect. 7. Which of the following would be an appropriate monetary policy measure to combat inflation? A) Increase taxes. B) Decrease taxes. C) Sell bonds. D) Buy binds. Show Answer Correct Answer: C) Sell bonds. 8. Which market structure did John D. Rockefeller's Oil industry fall under? A) Monopoly. B) Oligopoly. C) Perfect Competition. D) Monopolistic Competition. Show Answer Correct Answer: A) Monopoly. 9. Interest Rate that banks charge to other banks A) Federal funds rate. B) Prime rate. C) Discount rate. D) Credit rate. Show Answer Correct Answer: A) Federal funds rate. 10. The ..... curve illustrates the relationship between tax rates and total tax revenues. A) Reagan. B) Laffer. C) Keynesian. D) Wilson. Show Answer Correct Answer: B) Laffer. 11. The Federal Government spends more than it takes in as revenue. A) National debt. B) Budget deficit. C) Budget surplus. D) Expenditure ratio. Show Answer Correct Answer: B) Budget deficit. 12. The higher the reserve ratio, the higher the money supply. A) True. B) False. Show Answer Correct Answer: B) False. 13. In order to control the money supply in the economy, the Federal Reserve will ..... A) Increase government spending. B) Decrease taxes. C) Increase or decrease interest rates. D) Build more highways. Show Answer Correct Answer: C) Increase or decrease interest rates. 14. What are the two types of government spending? A) Automatic & Discretionary. B) Federal & State. C) Public and Private. D) None of above. Show Answer Correct Answer: A) Automatic & Discretionary. 15. The situation in which increases in government spending lead to reductions in private spending A) Expansionary monetary policy. B) Crowding out. C) Expansionary policy. D) Contractionary policy. Show Answer Correct Answer: B) Crowding out. 16. Fiscal policy is any economic action taken by the government. What are the two specific actions that the government can take to promote economic growth? A) Increase taxes and spending. B) Decrease taxes and spending. C) Decrease taxes and increase spending. D) Increase taxes and decrease spending. Show Answer Correct Answer: C) Decrease taxes and increase spending. 17. To increase the money supply, the Federal Reserve would A) Decrease discount rates to boost consumer/business spending. B) Increase Reserve Requirements on banks. C) Print more and more money. D) Buy government securities and bonds on the open market. Show Answer Correct Answer: A) Decrease discount rates to boost consumer/business spending. 18. If you are a classical economist, which state would you support? A) Let the economy work out its own problems. B) The more the government spends to improve the economy, the better. C) The government should be involved to help during recessions. D) The government is the key to economy success. Show Answer Correct Answer: A) Let the economy work out its own problems. 19. If the US Congress passes an increase in income tax that is A) Fiscal Policy and Contractionary Policy. B) Monetary and Contractionary Policy. C) Fiscal and Expansionary Policy. D) Monetary and Expansionary Policy. Show Answer Correct Answer: A) Fiscal Policy and Contractionary Policy. 20. The tools of fiscal policy are ..... A) Interest rates. B) Tax and/or spending. C) Open market operations. D) None of above. Show Answer Correct Answer: B) Tax and/or spending. ← 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