This quiz works best with JavaScript enabled. Home > Economics > Macroeconomics > Monetary And Fiscal Policy > Monetary And Fiscal Policy – Quiz 26 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Monetary And Fiscal Policy Quiz 26 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Dual Mandate A) The federal reserve's responsibility to use fiscal policy to promote maximum employment and price stability. B) The people's job to mandate paying their debt. C) The federal reserve's responsibility to use monetary policy to promote maximum employmeny and price stability. D) Government actions or policies that shield domestic industries from competition. Show Answer Correct Answer: C) The federal reserve's responsibility to use monetary policy to promote maximum employmeny and price stability. 2. Who can propose to raise or lower taxes? A) President. B) Congress. C) The President with Congress. D) The Federal Reserve. Show Answer Correct Answer: C) The President with Congress. 3. The MPC is.75. Congress increase government spending by $ 100 billion and increases taxes by $ 100 billion. The GDP A) Increases by $ 800 billion. B) Decreases by $ 800 billion. C) Remains the same. D) Increases by $ 100 billion. Show Answer Correct Answer: D) Increases by $ 100 billion. 4. How does a central bank use open market operations to influence the economy? A) By buying and selling government securities to control the money supply and interest rates. B) By directly controlling government spending on public projects. C) By imposing tariffs and quotas on imports and exports. D) By providing subsidies to struggling industries. Show Answer Correct Answer: A) By buying and selling government securities to control the money supply and interest rates. 5. For the USA, the most important source of the downward slope of the aggregate demand curve is probably A) The wealth effect. B) The exchange-rate effect. C) The fiscal effect. D) The interest-rate effect. Show Answer Correct Answer: D) The interest-rate effect. 6. The function of money as a medium of exchange A) Facilitates transactions by serving as a means of payment. B) Money is fungible. C) Provides a common measure of value for goods and services. D) Can be saved, stored and retrieved and still have value. Show Answer Correct Answer: A) Facilitates transactions by serving as a means of payment. 7. If saving increases and borrowing decreases, AD will ..... A) Increase. B) Decrease. C) Not change. D) None of above. Show Answer Correct Answer: B) Decrease. 8. The central bank in a country decides to increase the interest rate in the economy. How is this likely to affect the level of consumption and of investment in the economy? A) Higher consumption and investment. B) Lower consumption and investment. C) Higher consumption and lower investment. D) Lower consumption and investment. Show Answer Correct Answer: B) Lower consumption and investment. 9. Which of the following best defines "excise tax" ? A) Tax on donation of money or wealth. B) Tax on people's earnings. C) Tax on the manufacture or sale of certain items. D) Tax on the transfer of property when someone dies. Show Answer Correct Answer: C) Tax on the manufacture or sale of certain items. 10. After the federal budget is ok'd by Congress what is the next step. A) Sent to the President for approval. B) Veto is overridden by Congress. C) Sent to the OMB for approval. D) None of the Above. Show Answer Correct Answer: A) Sent to the President for approval. 11. If the budget has greater expenditures than revenue it is experiencing a A) Surplus. B) Balanced Budget. C) Deficit. D) None of the Above. Show Answer Correct Answer: C) Deficit. 12. The largest source of state and local revenue is ..... A) Corporate taxes. B) Excise taxes. C) Gift taxes. D) Sales taxes. Show Answer Correct Answer: D) Sales taxes. 13. The headline below indicates which type of policy:"Fed unleashes another big rate hike in bid to curb inflation" A) Fiscal Policy. B) Monetary Policy. Show Answer Correct Answer: B) Monetary Policy. 14. Which one of the following statements about bonds is true? A) Their price is fixed. B) Their coupon is fixed. C) Their yield is fixed. D) They cannot be resold. Show Answer Correct Answer: B) Their coupon is fixed. 15. Which statement describes the discount rate? A) The interest rate charged to customers by member banks. B) The interest rate charged to the Federal Reserve by member banks. C) The interest rate charged to member banks by the Federal Reserve. D) The interest rate charged to member banks by other member banks. Show Answer Correct Answer: C) The interest rate charged to member banks by the Federal Reserve. 16. Banks create money when ..... A) They print money. B) They make loans. C) Pays employees. D) Steal your money. Show Answer Correct Answer: B) They make loans. 17. Interest Rates that the Fed charges banks A) Prime Rate. B) Federal Funds Rate. C) Discount Rate. D) Credit Rate. Show Answer Correct Answer: C) Discount Rate. 18. The goals of all monetary supply is ..... A) Lower prices and reduced employment. B) Price stability and maximum employment. C) Better roads and better military. D) All of the these. Show Answer Correct Answer: B) Price stability and maximum employment. 19. Tools of Fiscal Policy are A) Spending, borrowing, raising or lowering taxes. B) Money supply, interest rates. C) The Central Bank. D) None of above. Show Answer Correct Answer: A) Spending, borrowing, raising or lowering taxes. 20. Lower discount rate, lower interest rates, lower reserve requirement A) Contractionary Fiscal Policy. B) Expansionary Fiscal Policy. C) Contractionary Monetary Policy. D) Expansionary Monetary Policy. Show Answer Correct Answer: D) Expansionary Monetary 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