This quiz works best with JavaScript enabled. Home > Finance > Economics > Macroeconomics > Monetary And Fiscal Policy > Monetary And Fiscal Policy – Quiz 16 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Monetary And Fiscal Policy Quiz 16 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. When we are in a recession, we need A) Expansionary Fiscal and Monetary Policy. B) Contractionary Fiscal and Monetary Policy. Show Answer Correct Answer: A) Expansionary Fiscal and Monetary Policy. 2. Inflation is occurring. What should the Federal Reserve do? A) Raise taxes. B) Lower government spending. C) Sell Bonds. D) Lower the discount rate. Show Answer Correct Answer: C) Sell Bonds. 3. To increase the nation's money supply, the Fed can: A) Decrease the discount rate. B) Sell government securities in the open market. C) Increase the discount rate. D) Increase the reserve requirement. Show Answer Correct Answer: A) Decrease the discount rate. 4. What is the main reason why Americans have been reluctant to raise taxes? A) To reduce government spending. B) To encourage economic growth. C) To adhere to supply side economics. D) To stimulate consumer spending. Show Answer Correct Answer: B) To encourage economic growth. 5. Who provides an individual with a W-2 form? A) Your employer. B) The federal government. C) The IRS. D) The employee. Show Answer Correct Answer: A) Your employer. 6. Which of the following is NOT a tool of the Federal Reserve A) Setting Discount Rates. B) Increasing or Decreasing Taxes. C) Changing the Reserve Requirements in Banks. D) Buying and selling securities using open market operations. Show Answer Correct Answer: B) Increasing or Decreasing Taxes. 7. How many districts are there in the Federal Reserve System A) 24. B) 10. C) 15. D) 12. Show Answer Correct Answer: D) 12. 8. 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. 9. 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. 10. 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. 11. 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. 12. 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. 13. 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. 14. Which of the following would be an appropriate monetary policy measure to combat inflation? A) Buy binds. B) Sell bonds. C) Increase taxes. D) Decrease taxes. Show Answer Correct Answer: B) Sell bonds. 15. Which market structure did John D. Rockefeller's Oil industry fall under? A) Oligopoly. B) Monopoly. C) Perfect Competition. D) Monopolistic Competition. Show Answer Correct Answer: B) Monopoly. 16. 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. 17. The ..... curve illustrates the relationship between tax rates and total tax revenues. A) Reagan. B) Keynesian. C) Laffer. D) Wilson. Show Answer Correct Answer: C) Laffer. 18. The Federal Government spends more than it takes in as revenue. A) Budget deficit. B) Expenditure ratio. C) Budget surplus. D) National debt. Show Answer Correct Answer: A) Budget deficit. 19. The higher the reserve ratio, the higher the money supply. A) True. B) False. Show Answer Correct Answer: B) False. 20. In order to control the money supply in the economy, the Federal Reserve will ..... A) Increase or decrease interest rates. B) Decrease taxes. C) Build more highways. D) Increase government spending. Show Answer Correct Answer: A) Increase or decrease interest rates. 21. 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. 22. The situation in which increases in government spending lead to reductions in private spending A) Expansionary policy. B) Expansionary monetary policy. C) Contractionary policy. D) Crowding out. Show Answer Correct Answer: D) Crowding out. 23. 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. 24. 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. 25. If you are a classical economist, which state would you support? A) The more the government spends to improve the economy, the better. B) The government is the key to economy success. C) Let the economy work out its own problems. D) The government should be involved to help during recessions. Show Answer Correct Answer: C) Let the economy work out its own problems. 26. 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. 27. 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. 28. If the economy is in an inflationary period, what action would Fiscal Policy most likely take? A) Increase taxes. B) Increase Spending. C) Decrease taxes. D) Decrease the discount rate. Show Answer Correct Answer: A) Increase taxes. 29. FOMC is made up of ..... and ..... A) Board of Governors Five Presidents of the Federal Reserve Banks. B) New York's President Chairman. C) Chairman Reserve presidents. D) Chairman President of the US. Show Answer Correct Answer: A) Board of Governors Five Presidents of the Federal Reserve Banks. 30. Fiscal policy tools deal with what? A) How government regulates the amount of money in circulation. B) A general, sustained upward movement of prices for goods and services in an economy. C) The gathering of tax revenues and using the money that's raised. D) None of above. Show Answer Correct Answer: C) The gathering of tax revenues and using the money that's raised. ← 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