This quiz works best with JavaScript enabled. Home > Economics > Macroeconomics > Monetary And Fiscal Policy > Monetary And Fiscal Policy – Quiz 6 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Monetary And Fiscal Policy Quiz 6 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Which of the following is not part of the Fed A) Congressional Budget Office. B) Board of Governors. C) Reserve Banks. D) Federal Open Market Committee. Show Answer Correct Answer: A) Congressional Budget Office. 2. What is the primary lever in broad-based macroeconomic policy due to Americans' aversion to raising taxes and the government's limited ability to cut spending? A) Monetary policy. B) Supply side economics. C) Quantitative Easing. D) Fiscal policy. Show Answer Correct Answer: A) Monetary policy. 3. What are things in budget called that can't be cut? A) Mandatory spending. B) Inflation. C) Discretionary Spending. D) Reserves. Show Answer Correct Answer: A) Mandatory spending. 4. How can the FED stimulate spending in the economy A) By going to fiat money. B) By demanding the commercial banks increase their APRs on loans. C) By decreasing the cost of borrowing money. D) None of these. Show Answer Correct Answer: C) By decreasing the cost of borrowing money. 5. When an increase in government purchases increases the income of some people, and those people spend some of that increase in income on additional consumer goods, we have seen a demonstration of A) The multiplier effect. B) Supply-side economics. C) The crowding-out effect. D) None of these answers. Show Answer Correct Answer: A) The multiplier effect. 6. Explain the difference between expansionary and contractionary fiscal policy. A) Expansionary fiscal policy increases government spending and/or increases taxes. B) Expansionary fiscal policy increases government spending and/or decreases taxes, while contractionary fiscal policy decreases government spending and/or increases taxes. C) Expansionary fiscal policy decreases government spending and/or decreases taxes. D) Contractionary fiscal policy increases government spending and/or decreases taxes . Show Answer Correct Answer: B) Expansionary fiscal policy increases government spending and/or decreases taxes, while contractionary fiscal policy decreases government spending and/or increases taxes. 7. The formula used to calculate the amount a bank needs to keep on reserve at the Federal Reserve is known as A) Prime rate. B) Discount rate. C) Reserve requirement. D) Excess reserves. Show Answer Correct Answer: C) Reserve requirement. 8. During periods of inflation the Fed will ..... the money supply by ..... government securities. A) Decrease buying. B) Increase buying. C) Decrease selling. D) Increase selling. Show Answer Correct Answer: C) Decrease selling. 9. The rate the Federal Reserve charges banks to borrow money from the Fed. (bank to Federal Reserve lending) A) Open Market Operations. B) Federal Funds Rate. C) Discount Rate. D) Required Reserve Ratio. Show Answer Correct Answer: C) Discount Rate. 10. Goal of Monetary Policy A) Manage economic growth with stable prices (controlling inflation) and sustainable high employment by adjusting the money supply. B) Manage economic growth by influencing demand and employment. Show Answer Correct Answer: A) Manage economic growth with stable prices (controlling inflation) and sustainable high employment by adjusting the money supply. 11. The interest rate the Federal Reserve charges other banks for loans A) Discount Rate. B) Required Reserve Ratio. C) Interest on Reserves. D) Open market operations. Show Answer Correct Answer: A) Discount Rate. 12. Contractionary Monetary Policy discourages banks from loaning out money by selling bonds and increasing the reserve requirement. A) TRUE. B) FALSE. Show Answer Correct Answer: A) TRUE. 13. How many people are NOT in the Labor Force? Unemployed (Looking for job) = 20 Retired = 5 Prison = 2 School = 10 Employed = 180 Unemployed (not looking for job) = 20 A) 20. B) 40. C) 37. D) 140. Show Answer Correct Answer: C) 37. 14. This type of tax is a tax paid directly to the government, such as income tax. A) Progressive Tax. B) Direct Tax. C) Indirect Tax. D) Proportional Tax. Show Answer Correct Answer: B) Direct Tax. 15. Unemployment rate has doubled, the FED should A) Lower taxes. B) Increase government spending. C) Buy bonds. D) Increase discount rate. Show Answer Correct Answer: C) Buy bonds. 16. What is the main way the Federal Reserve controls the money supply? A) Clearing checks. B) Supplying actual currency. C) Setting interest rates. D) Loan money to other banks. Show Answer Correct Answer: C) Setting interest rates. 17. Progressive tax structure is when A) The tax rate declines as income increases. B) The tax rate increases as income increases. C) The tax rate remains the same, regardless of size of income. D) The tax rate increases the total volume of consumer expenditures. Show Answer Correct Answer: B) The tax rate increases as income increases. 18. Money no linger backed by gold and silver reserves A) Exchange rate. B) Gold standard. C) Fiat. D) Certificates. Show Answer Correct Answer: C) Fiat. 19. How much of our tax $ is going to the massive stimulus package to help our economy fight off recession from the coronavirus? A) 800 billion. B) 1 trillion. C) 2 trillion. D) 3 trillion. Show Answer Correct Answer: C) 2 trillion. 20. Who is responsible for making fiscal policy decisions? A) The President and Congress. B) The Federal Reserve System. C) The National Council of Economic Advisors. D) The Federal Open Market Committee. Show Answer Correct Answer: A) The President and Congress. ← 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 7Monetary And Fiscal Policy Quiz 8Monetary And Fiscal Policy Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books