This quiz works best with JavaScript enabled. Home > Finance > Economics > Macroeconomics > Monetary And Fiscal Policy > Monetary And Fiscal Policy – Quiz 1 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Monetary And Fiscal Policy Quiz 1 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Through open market operations, the RBI buys and sells government securities to influence the supply of bank reserves. When the RBI wants to increase reserves, it does what? A) Buys Securities. B) Sells Securities. Show Answer Correct Answer: A) Buys Securities. 2. What would the money multiplier be if the reserve requirement is 20% A) 5. B) 4. C) 20. D) 40. Show Answer Correct Answer: A) 5. 3. The amount of deposits that banks are required to hold and not lend out are the ..... A) Bank balances. B) Reserves. C) Hold backs. D) Loan rates. Show Answer Correct Answer: B) Reserves. 4. If we are in a recession, fiscal policy should A) Reduce agricultural subsidies. B) Reduce taxes. C) Have a surplus budget. D) Postpone highway construction programs. Show Answer Correct Answer: B) Reduce taxes. 5. What short term effect can result in a tight money policy from the Fed? A) Lower Interest Rates. B) Increased inflation. C) Higher Interest Rates. D) Increased investment spending. Show Answer Correct Answer: C) Higher Interest Rates. 6. The federal reserve increases interest rates in order to slow down growth and decrease inflation. The government has implemented (a) A) A Contractionary Monetary Policy. B) Expansionary Monetary Policy. Show Answer Correct Answer: A) A Contractionary Monetary Policy. 7. Fiscal policy is determined by A) Congress and the Federal Reserve. B) The president and the Federal Reserve. C) Congress and the President. D) The Federal Reserve. Show Answer Correct Answer: C) Congress and the President. 8. Monetary Policy is created by the ..... where as Fiscal Policy is created by the ..... A) President and Congress; Federal Reserve. B) State Governments; Federal Reserve. C) Federal Reserve; President and Congress. D) Federal Reserve; State Governments. Show Answer Correct Answer: C) Federal Reserve; President and Congress. 9. Who is responsible for making fiscal policy decision? A) The President and Congress. B) The Federal Reserve System. C) The National Council of Economic Advisors. D) The Department of Commerce. Show Answer Correct Answer: A) The President and Congress. 10. How many workers in textile industry? A) Macroeconomics. B) Microeconomics. Show Answer Correct Answer: B) Microeconomics. 11. When the President/Congress decrease taxes, this would A) Increase consumers spending and real GDP. B) Decrease consumer spending and real GDP. C) Have no effect on consumer spending or real GDP. D) None of above. Show Answer Correct Answer: A) Increase consumers spending and real GDP. 12. The largest category of spending for the federal government is ..... A) Interest on the federal debt. B) The military. C) Entitlement programs such as Social Security and Medicare. D) Education. Show Answer Correct Answer: C) Entitlement programs such as Social Security and Medicare. 13. The National level of the Federal Reserve consists of: A) The President & The Senate. B) Board of Governors. C) 12 National districts. D) Local Member banks. Show Answer Correct Answer: B) Board of Governors. 14. Which is NOT a tool of monetary policy A) Open market operations. B) Discount rate. C) Tax policies. D) Reserve requirement. Show Answer Correct Answer: C) Tax policies. 15. Who creates the federal budget A) The Federal Reserve. B) The President. C) Congress. D) The people. Show Answer Correct Answer: B) The President. 16. The Federal Reserve changing the Reserve Requirement is an example of ..... A) Monetary Policy. B) Fiscal Policy. Show Answer Correct Answer: A) Monetary Policy. 17. Fiscal policy deals with what? A) How government regulates the amount of money in circulation. B) Government expenditures in excess of government revenues. C) A general, sustained upward movement of prices for goods and services in an economy. D) Raising taxes and using the money that's raised. Show Answer Correct Answer: D) Raising taxes and using the money that's raised. 18. Which of the following policies can the central bank complete to decrease the money supply? A) Increase the reserve ratio. B) Lower the discount rate. C) Buy bonds on the open market. D) Increase income tax. Show Answer Correct Answer: A) Increase the reserve ratio. 19. When would Congress do expansionary policy A) Borrowing is up, and many loans are being made. B) Many businesses are closing down. C) Unemployment is in the normal 4-5% range. D) Inflation has doubled in the last two quarters. Show Answer Correct Answer: B) Many businesses are closing down. 20. On your paycheck stub, gross income is ..... A) Not usually disclosed to you. B) The same as take-home pay. C) The total amount earned. D) The amount taken out of your paycheck for taxes. Show Answer Correct Answer: C) The total amount earned. 21. 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. 22. 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. 23. A plan to increase aggregate demand and stimulate the economy through taxing and spending A) Contractionary Monetary Policy. B) Contractionary Fiscal Policy. C) Expansionary Monetary Policy. D) Expansionary Fiscal Policy. Show Answer Correct Answer: D) Expansionary Fiscal Policy. 24. 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. 25. "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. 26. 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) Open Market Operations. B) Interest on Reserves. C) Reserve requirement ratio. D) Discount Rate. Show Answer Correct Answer: C) Reserve requirement ratio. 27. Which of these most relates to Monetary Policy A) Elected Officials. B) Money supply. C) Budgets. D) Taxes. Show Answer Correct Answer: B) Money supply. 28. The Federal Reserve does all of the following except ..... A) Regulate banks. B) Dealing with the money supply. C) Check clearing for banks. D) Fiscal Policy. Show Answer Correct Answer: D) Fiscal Policy. 29. 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. 30. 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. Next →Related QuizzesMacroeconomics QuizzesEconomics QuizzesMonetary 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 8Monetary And Fiscal Policy Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books