This quiz works best with JavaScript enabled. Home > Finance > Economics > Macroeconomics > Monetary And Fiscal Policy > Monetary And Fiscal Policy – Quiz 17 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Monetary And Fiscal Policy Quiz 17 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. How does the Federal Reserve influence the amount of money in circulation through interest rates? A) By charging high interest rates to encourage borrowing. B) By charging low interest rates to discourage borrowing. C) By setting interest rates for banks to lend money. D) By buying and selling government debt. Show Answer Correct Answer: C) By setting interest rates for banks to lend money. 2. If Congress raises taxes, the FED should A) Buy bonds. B) Decrease spending. C) Sell bonds. D) Decrease the discount rate. Show Answer Correct Answer: C) Sell bonds. 3. The amount of money banks are supposed to hold back to pays its customers. A) Open Market Operations. B) Discount Rate. C) Required Reserve Ratio. D) Federal Funds Rate. Show Answer Correct Answer: C) Required Reserve Ratio. 4. Being able to attribute a definite price on an item: A) Medium of Exchange. B) Specialization. C) Store of Value. D) Unit of Account. Show Answer Correct Answer: D) Unit of Account. 5. Part of the spending on the Caldecott Tunnel project in northern California came from the American Reinvestment and Recovery Act, which is an example of ..... aimed at increasing real GDP and employment. A) Contractionary fiscal policy. B) Discretionary fiscal policy. C) An automatic stabilizer. D) A transfer payment. Show Answer Correct Answer: B) Discretionary fiscal policy. 6. ..... for ice cream will ..... when the weather is cold. A) Demand, decrease. B) Monopoly, demand. C) Demand, increase. D) Demand, supply. Show Answer Correct Answer: A) Demand, decrease. 7. What is the interest rate called that the Federal Reserve sets? A) Libor rate. B) Discount rate. C) Federal funds rate. D) Prime rate. Show Answer Correct Answer: B) Discount rate. 8. The top of the organizational chart of the Federal Reserve System is the ..... A) Chairperson. B) Head of the largest bank in the country. C) President of the US. D) Mayor of Washington D.C. Show Answer Correct Answer: A) Chairperson. 9. Which is an example of representative money? A) Checks. B) A $ 50 bill. C) Diamonds. D) A fur coat. Show Answer Correct Answer: A) Checks. 10. The New York Federal Reserve building holds what percentage of the world's gold supply? A) 75%. B) 25%. C) 30%. D) 20%. Show Answer Correct Answer: B) 25%. 11. Which of the following statements regarding taxes is correct? A) Most economists believe that, in the short run, the greatest impact of a change in taxes is on aggregate supply, not aggregate demand. B) An increase in taxes shifts the aggregate demand curve to the right. C) A decrease in taxes shifts the aggregate supply curve to the left. D) A permanent change in taxes has a greater effect on aggregate demand than a temporary change in taxes. Show Answer Correct Answer: D) A permanent change in taxes has a greater effect on aggregate demand than a temporary change in taxes. 12. If the discount rate were to be increased what would happen to the money supply A) Increase. B) Decrease. C) Stay the Same. D) None of the Above. Show Answer Correct Answer: B) Decrease. 13. Expansionary Fiscal Policy examples are: A) Cutting Taxes and Decreasing Government Spending. B) Raising Taxes and decreasing government spending. C) Raising Taxes and increasing government spending. D) Cutting taxes and increasing government spending. Show Answer Correct Answer: D) Cutting taxes and increasing government spending. 14. A 1040 form is used to: A) Apply for loans from banks. B) File taxes. C) Fund personal expenditures. D) Calculate your income. Show Answer Correct Answer: B) File taxes. 15. What is the most likely reason Contractionary Fiscal Policy is not often implemented? A) It works too quickly. B) It is unpopular to raise people's taxes. C) It takes too long to work. D) It leads to increases in the national debt. Show Answer Correct Answer: B) It is unpopular to raise people's taxes. 16. Lowering the reserve requirement will reduce A) Inflation. B) Unemployment. Show Answer Correct Answer: B) Unemployment. 17. Who can propose to raise or lower taxes? A) President. B) Congress. C) The Federal Reserve. D) The President with Congress. Show Answer Correct Answer: D) The President with Congress. 18. The MPC is.75. Congress increase government spending by $ 100 billion and increases taxes by $ 100 billion. The GDP A) Decreases by $ 800 billion. B) Increases by $ 100 billion. C) Increases by $ 800 billion. D) Remains the same. Show Answer Correct Answer: B) Increases by $ 100 billion. 19. 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. 20. 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 interest-rate effect. D) The fiscal effect. Show Answer Correct Answer: C) The interest-rate effect. 21. 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. 22. 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. 23. 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. 24. Which of the following best defines "excise tax" ? A) Tax on the transfer of property when someone dies. B) Tax on donation of money or wealth. C) Tax on people's earnings. D) Tax on the manufacture or sale of certain items. Show Answer Correct Answer: D) Tax on the manufacture or sale of certain items. 25. 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. 26. 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. 27. The largest source of state and local revenue is ..... A) Corporate taxes. B) Gift taxes. C) Excise taxes. D) Sales taxes. Show Answer Correct Answer: D) Sales taxes. 28. The headline below indicates which type of policy:"Fed unleashes another big rate hike in bid to curb inflation" A) Monetary Policy. B) Fiscal Policy. Show Answer Correct Answer: A) Monetary Policy. 29. Which one of the following statements about bonds is true? A) Their coupon is fixed. B) They cannot be resold. C) Their price is fixed. D) Their yield is fixed. Show Answer Correct Answer: A) Their coupon is fixed. 30. Which statement describes the discount rate? A) The interest rate charged to the Federal Reserve by member banks. B) The interest rate charged to member banks by the Federal Reserve. C) The interest rate charged to member banks by other member banks. D) The interest rate charged to customers by member banks. Show Answer Correct Answer: B) The interest rate charged to member banks by the Federal Reserve. ← 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