This quiz works best with JavaScript enabled. Home > Finance > Economics > Macroeconomics > Monetary And Fiscal Policy > Monetary And Fiscal Policy – Quiz 5 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Monetary And Fiscal Policy Quiz 5 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. According to the Keynesian school's view of the aggregate supply curve, how will a decrease in the interest rate of an economy impact the level of real output and the average price level when the economy is operating at full employment? A) A higher level of real output and higher average price level. B) No change in the level of real output and a higher average price level. C) A lower level of real output and no change in the average price level. D) It will depend on whether or not the economy is operating at full capacity. Show Answer Correct Answer: B) No change in the level of real output and a higher average price level. 2. Which of the following best defines "gift tax" ? A) Tax on donation of money or wealth. B) Tax on the manufacture or sale of certain items. C) Tax on people's earnings. D) Tax on the transfer of property when someone dies. Show Answer Correct Answer: A) Tax on donation of money or wealth. 3. An decrease in government spending or an increase in taxes A) Contractionary policy. B) Monetary policy. C) Fiscal policy. D) Expansionary policy. Show Answer Correct Answer: A) Contractionary policy. 4. Houston is in the ..... district A) Saint Anthony. B) Dallas. C) Houston. D) Step. Show Answer Correct Answer: B) Dallas. 5. What is a tax that increases as income increases A) Regressive Tax. B) Proportional Tax. C) Progressive Tax. D) None of above. Show Answer Correct Answer: C) Progressive Tax. 6. Contractionary Monetary Policy should be used ..... A) During a budget deficit year. B) During Inflation. C) When the economy is in equilibrium. D) During Recession. Show Answer Correct Answer: B) During Inflation. 7. Which is an example of proportional tax? A) Federal income tax. B) Sales tax. C) Death tax. D) Corporate income tax. Show Answer Correct Answer: B) Sales tax. 8. Transactions (buying/selling) are made easier because of this function of money that eliminates the need to barter (trade goods for goods). A) Divisibility. B) Unit of Account. C) Store of Value. D) Medium of Exchange. Show Answer Correct Answer: D) Medium of Exchange. 9. If inflation is too high, the Federal Reserve should ..... the federal funds rate. A) Decrease. B) Increase. Show Answer Correct Answer: B) Increase. 10. Which of the following describes fiscal policy? A) The Federal Reserve and Congress work together to balance the federal budget. B) Congress and the President make tax and spending decisions to stabilize the economy. C) The Federal Reserve uses its tools to stabilize the economy by changing the money supply. D) The President nominates someone to lead the Department of Treasury, while the Senate confirms the nomination. Show Answer Correct Answer: B) Congress and the President make tax and spending decisions to stabilize the economy. 11. If the FED wants to correct inflation, they can A) Buy bonds. B) Lower the discount rate. C) Lower the reserve requirement. D) All of these. E) None of these. Show Answer Correct Answer: E) None of these. 12. On your paycheck stub, net 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. Show Answer Correct Answer: B) The same as take-home pay. 13. Changes the government makes in spending or taxation to achieve particular economic goals A) Monetary policy. B) Fiscal policy. C) Contractionary policy. D) Expansionary policy. Show Answer Correct Answer: B) Fiscal policy. 14. Voting members of the FOMC include 7 members of the ..... and Presidents of the 12 district banks. A) Board of Governors. B) President's Council. C) Senate. D) Financial Institution League. Show Answer Correct Answer: A) Board of Governors. 15. The branch of economics that studies the performance of the nation's economy as a whole is known as A) Microeconomics. B) Gross Domestic Product. C) Macroeconomics. D) Fiscal Policy. Show Answer Correct Answer: C) Macroeconomics. 16. The Federal Government lowers taxes A) Expansionary Monetary Policy. B) Expansionary Fiscal Policy. C) Contractionary Fiscal Policy. D) Contractionary Monetary Policy. Show Answer Correct Answer: B) Expansionary Fiscal Policy. 17. QE involves central bank A) Money printing. B) Bond purchases from the private sector. C) Bond sales to the private sector. D) Raising Bank Rate. Show Answer Correct Answer: B) Bond purchases from the private sector. 18. Stimulus checks, lower interest rates, decrease in the reserve requirement and lower taxes are all examples of A) Contractionary Policy. B) Fiscal Policy. C) Expansionary Policy. D) Monetary Policy. Show Answer Correct Answer: C) Expansionary Policy. 19. The central bank requirement to keep a certain percentage of money at the bank is know as the ..... A) Prime (interest ) rate. B) Mutual fund. C) Reserve requirement (rate, ratio). D) Discount rate. Show Answer Correct Answer: C) Reserve requirement (rate, ratio). 20. ..... is a rate that a bank pays customers for keeping their money A) Collateral. B) Currency. C) Deposit. D) Interest. Show Answer Correct Answer: D) Interest. 21. Which of the following is NOT a function of our money A) Is in limited supply. B) Gives value to objects. C) Buys stuff. D) Holds value. Show Answer Correct Answer: A) Is in limited supply. 22. Interest Rate is the fee that A) The member bank must pay the district bank for a loan. B) You and I must pay our bank for a loan. C) The district bank pays the national bank for a loan. D) The FED pays FOMC for services. Show Answer Correct Answer: B) You and I must pay our bank for a loan. 23. Which of the following best defines "estate tax" ? A) Tax on donation of money or wealth. B) Tax on people's earnings. C) Tax on the transfer of property when someone dies. D) Tax on the manufacture or sale of certain items. Show Answer Correct Answer: C) Tax on the transfer of property when someone dies. 24. Someone who works part-time but wants a full-time job is considered A) Overemployed. B) Underemployed. C) Unhappy. D) A discouraged worker. Show Answer Correct Answer: B) Underemployed. 25. Which of the following is public service? A) National Defense. B) Businesses. C) Education. D) Roads and highways. Show Answer Correct Answer: B) Businesses. 26. Unemployment caused when a person resigns from their job to start looking for a higher paying job that better suits their skills. A) Seasonal. B) Structural. C) Cyclical. D) Frictional. Show Answer Correct Answer: D) Frictional. 27. An erratic monetary policy A) Stagflation. B) Stop and go, on and off monetary policy. C) Expansionary monetary policy. D) Fiscal policy. Show Answer Correct Answer: B) Stop and go, on and off monetary policy. 28. A government taxes the production of cars.What is likely to decrease? A) The supply of cars at every price. B) The revenue for the government. C) The price of cars. D) The cost of supplying cars. Show Answer Correct Answer: A) The supply of cars at every price. 29. To fight a recession the central bank will probably ..... government securities on the open market and ..... the discount rate. A) Buy, lower. B) Sell, raise. C) Buy, raise. D) Sell, lower. Show Answer Correct Answer: A) Buy, lower. 30. The fact that money can be saved for future use or deposited in a bank is which function of money? A) Unit of Account. B) Store of Value. C) Medium of Exchange. D) Acceptability. Show Answer Correct Answer: B) Store of Value. ← 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 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