This quiz works best with JavaScript enabled. Home > Finance > Economics > Macroeconomics > Monetary And Fiscal Policy > Monetary And Fiscal Policy – Quiz 12 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Monetary And Fiscal Policy Quiz 12 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. The Federal Reserve uses this to correct recession. A) Expansionary Monetary Policy. B) Expansionary Fiscal Policy. C) Contractionary Monetary Policy. D) Contractionary Fiscal Policy. Show Answer Correct Answer: A) Expansionary Monetary Policy. 2. When the Fed buys and sells government securities, they are attempting to influence ..... A) Stock market. B) Mortgage interest index. C) Discount rate. D) Federal funds rate. Show Answer Correct Answer: D) Federal funds rate. 3. Who makes decisions on monetary policy within the Federal Reserve? A) The president makes decisions on monetary policy. B) The president nominates members of the Board of Governors. C) The president changes the interest rate on required and excess reserves. D) The president confirms Senate nominations to the Board of Governors. Show Answer Correct Answer: B) The president nominates members of the Board of Governors. 4. The economy is experiencing rapid inflation. Which fiscal policy action should the government implement to try to fix this problem? A) Decrease reserve requirements. B) Increase government spending. C) Decrease interest rates. D) Increase taxes. Show Answer Correct Answer: D) Increase taxes. 5. The goals of moneytary policy do NOT include the promotion of ..... A) Stable prices. B) Low taxes. C) Moderate long-term interest rates. D) Maximum employment. Show Answer Correct Answer: B) Low taxes. 6. What are the main objectives of environmental policies? A) Protect the environment, conserve natural resources, and promote sustainable development. B) Destroy the environment, deplete natural resources, and encourage unsustainable development. Show Answer Correct Answer: A) Protect the environment, conserve natural resources, and promote sustainable development. 7. Contractionary Fiscal Policy involves A) Increase the money supply and increase interest rates. B) Increasing govt. spending and decrease taxes. C) Decrease interest rates decrease money supply. D) Decrease govt. spending and increase taxes. Show Answer Correct Answer: D) Decrease govt. spending and increase taxes. 8. Keynesian Economics believes that increased govt. spending will bring the economy out of recession A) True. B) False. Show Answer Correct Answer: A) True. 9. As a result of coronavirus, what did the Fed lower the discount rate to in order to encourage banks, individuals, and businesses to borrow money and stimulate the economy? A) 2%. B) 1%. C) 0%. D) 3%. Show Answer Correct Answer: C) 0%. 10. The leaders of a small country decide that they need to enact contractionary fiscal policy to reduce the inflation rate. Therefore, they decreased spending and increased taxes. How would this action affect the national budget and the national debt? A) National Budget:deficit National Debt:decrease. B) National Budget:surplus National Debt:decrease. C) National Budget:deficit National Debt:increase. D) National Budget:surplus National Debt:increase. Show Answer Correct Answer: C) National Budget:deficit National Debt:increase. 11. It usually takes Congress about 18 months to draft this A) A bill. B) The Federal Budget. C) Articles of Impeachment. D) All of the Above. Show Answer Correct Answer: B) The Federal Budget. 12. Increase in the national debt would be caused by A) Increasing govt. spending and increase taxes. B) Increasing govt. spending and decrease taxes. C) Decreasing govt. spending and increase taxes. D) Increase interest rates and decrease the money supply. Show Answer Correct Answer: B) Increasing govt. spending and decrease taxes. 13. Which of the following describes what the Fed would do to pursue an expansionary monetary policy? A) Use open market operations to buy bonds. B) Use open market operations to sell bonds. C) Raise the reserve requirement. D) Use discount policy to raise the discount rate. Show Answer Correct Answer: A) Use open market operations to buy bonds. 14. The Federal Reserve sells securities/bonds as part of Open Market Operations. What is the result? A) Money supply increases. Aggregate Demand decreases. B) Money supply decreases. Aggregate Demand increases. C) Money supply decreases. Aggregate Demand decreases. D) Money supply increases. Aggregate Demand increases. Show Answer Correct Answer: C) Money supply decreases. Aggregate Demand decreases. 15. If the Federal Reserve decreased reserve requirements, then it is likely trying to accomplish which of the following? A) A decrease in the price level. B) A decrease in aggregate demand. C) An increase in gross domestic product. D) An increase in the unemployment rate. Show Answer Correct Answer: C) An increase in gross domestic product. 16. This group, comprised of seven members, that is in charge of major decisions in the Federal Reserve is known as A) Board of Governors. B) Federal Open Market Committee. C) The Federal Reserve Banker. D) None of the above. Show Answer Correct Answer: A) Board of Governors. 17. Which of the following is an automatic stabilizer? A) Spending on public schools. B) Military spending. C) All of these answers are automatic stabilizers. D) Spending on the space shuttle. E) Unemployment benefits. Show Answer Correct Answer: E) Unemployment benefits. 18. True/False:The higher your property value, the more you pay in taxes which help support the community. A) True. B) False. Show Answer Correct Answer: A) True. 19. If government is trying to promote stability and economy growth through tax cuts, what type of policy are they using? A) Contractionary/Restrictive Fiscal Policy. B) Expansionary Fiscal Policy. C) Tight Money Policy. D) Easy Money Policy. Show Answer Correct Answer: B) Expansionary Fiscal Policy. 20. During a recession the Fed will ..... the money supply by ..... government securities. A) Increase buying. B) Increase selling. C) Decrease buying. D) Decrease selling. Show Answer Correct Answer: A) Increase buying. 21. In what type of business organization is the business a separate unit from the owner(s)? A) Franchise. B) Partnership. C) Corporation. D) Sole proprietorship. Show Answer Correct Answer: C) Corporation. 22. Comparing price tags at different stores is using money as a A) Store of value. B) Bartering. C) Unit of account. D) Medium of exchange. Show Answer Correct Answer: C) Unit of account. 23. Suppose a wave of investor and consumer pessimism in the USA causes a reduction in spending. If the US Federal Reserve (which has a broader remit than the Bank of England which is charged only with controlling inflation) chooses to engage in activist stabilization policy, it should A) Increase government spending and decrease taxes. B) Decrease the money supply. C) Decrease government spending and increase taxes. D) Decrease interest rates. Show Answer Correct Answer: D) Decrease interest rates. 24. An increase in money supply A) Fiscal policy. B) Contractionary monetary policy. C) Monetary policy. D) Expansionary monetary policy. Show Answer Correct Answer: D) Expansionary monetary policy. 25. The inflation target is set by A) The Governor of the Bank of England. B) The Bank of England. C) The MPC of the Bank of England. D) The Government. Show Answer Correct Answer: D) The Government. 26. When the our government spends more than it takes in during a given year we are in A) A budget surplus. B) A budget deficit. C) A neutral budget. D) A trade deficit. Show Answer Correct Answer: B) A budget deficit. 27. If the Federal Reserve is trying to promote economy stability by lowering the Federal Funds rate, what action would Fiscal Policy take? A) Decrease borrowing. B) Increase taxes. C) Decrease spending. D) Lowering Taxes. Show Answer Correct Answer: D) Lowering Taxes. 28. What is the primary reason why the Federal Reserve is an independent body? A) To control inflation. B) To encourage full employment. C) To avoid political influence. D) To regulate interest rates. Show Answer Correct Answer: C) To avoid political influence. 29. What is the primary reason why Social Security and Medicare spending is unlikely to go down? A) Aging population. B) Decrease in demand. C) Political support. D) Budget constraints. Show Answer Correct Answer: A) Aging population. 30. What is fiscal policy and how does it impact the economy? A) Fiscal policy is the government's use of taxation and spending to influence the economy. B) Fiscal policy is the government's use of foreign aid to influence the economy. C) Fiscal policy is the government's use of exchange rates to influence the economy. D) Fiscal policy is the government's use of interest rates to influence the economy. . Show Answer Correct Answer: A) Fiscal policy is the government's use of taxation and spending to influence the economy. ← 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