This quiz works best with JavaScript enabled. Home > Finance > Economics > Macroeconomics > Monetary And Fiscal Policy > Monetary And Fiscal Policy – Quiz 6 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Monetary And Fiscal Policy Quiz 6 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. The Federal Reserve System monitors and regulates the US ..... and ..... system. A) Tax spending. B) Monetary banking. C) Regulation investment. D) Trade commerce. Show Answer Correct Answer: B) Monetary banking. 2. What is the largest chunk of government spending? A) Education. B) Social Security. C) Healthcare for the poor. D) Defense. Show Answer Correct Answer: C) Healthcare for the poor. 3. When we need to slow economic growth, we need A) Expansionary Fiscal and Monetary Policy. B) Contractionary Fiscal and Monetary Policy. Show Answer Correct Answer: B) Contractionary Fiscal and Monetary Policy. 4. Goal of fiscal policy is A) Keep unemployment stable. B) Promote full employment. C) Keep prices stable. D) Promote full employment and price stability. Show Answer Correct Answer: D) Promote full employment and price stability. 5. The actions taken by a central bank to influence the availability and cost of money and credit to help promote national economic goals A) Welfare Policy. B) Monetary Policy. C) Fiscal Policy. D) Tax Policy. Show Answer Correct Answer: B) Monetary Policy. 6. Government gilt sales will likely cause A) Bond yields to rise. B) National Debt to fall. C) Interest rates to fall. D) Crowding in. Show Answer Correct Answer: A) Bond yields to rise. 7. What is the largest chunk of government spending after defense? A) Infrastructure development. B) Social Security. C) Department of Education. D) Healthcare for the poor (Medicaid). Show Answer Correct Answer: D) Healthcare for the poor (Medicaid). 8. How does the Federal Reserve buying bonds affect the size of the money supply? A) It increases the money supply. B) It decreases the money supply. C) It keeps the money supply the same size. D) None of above. Show Answer Correct Answer: A) It increases the money supply. 9. Is it a requirement for the federal government to balance its budget each year? A) Yes. B) No. Show Answer Correct Answer: B) No. 10. The economy is experiencing recession. What should the President and Congress do? A) Decrease interest rates. B) Buy bonds. C) Decrease spending. D) Decrease taxes. Show Answer Correct Answer: D) Decrease taxes. 11. True/False:The Federal Reserve system was created to be able to easily print more money. A) True. B) False. Show Answer Correct Answer: B) False. 12. If government spending increases to $ 20 billion but the government only collects $ 15 billion in tax revenues, how will this affect the federal budget and debt? A) There will be a budget surplus and the debt will likely decrease because there is a surplus of funds to pay it down. B) There will be a budget deficit and the debt will likely increase because there will not be a surplus of funds to pay it down. C) There will be a budget deficit and the debt will likely decrease because there will be a surplus of funds to pay it down. D) There will be a budget surplus and the debt will likely increase because there will be a surplus of funds to pay it down. Show Answer Correct Answer: B) There will be a budget deficit and the debt will likely increase because there will not be a surplus of funds to pay it down. 13. America's central bank is known as what? A) Bank of America. B) Federal Reserve. C) White House. D) Congress. Show Answer Correct Answer: B) Federal Reserve. 14. What is the goal of monetary policy? A) Encourage people to borrow money from the banks. B) To increase inflation in an economy. C) To increase government spending in public services. D) Achieve maximum employment and keep inflation in check. Show Answer Correct Answer: D) Achieve maximum employment and keep inflation in check. 15. Which among the following is incorrect among Moral Suasion: A) RBI may request commercial banks to not to give loans for unproductive purpose. B) So that which may increases inflation. C) Because it does not add to economic development. D) All of the Above. E) None of These. Show Answer Correct Answer: E) None of These. 16. AirAsia dropped fares by 9% to bring back passengers after the incident of airbus crashed. A) Microeconomics. B) Macroeconomics. Show Answer Correct Answer: A) Microeconomics. 17. What is a tax that is the same regardless of income A) Regressive Tax. B) Proportional Tax. C) Progressive Tax. D) None of above. Show Answer Correct Answer: B) Proportional Tax. 18. How much money must the bank keep on hand if the Required Reserve is 20% and there is a deposit of $ 1000. A) 50. B) 20. C) 200. D) 1020. Show Answer Correct Answer: C) 200. 19. Which of the following is the BEST explanation of monetary policy? A) Changing the tax rate. B) Changing the degree of government spending. C) Changing the supply of money to affect interest rates and spending. D) Changing tax rates, spending, and the money supply. Show Answer Correct Answer: C) Changing the supply of money to affect interest rates and spending. 20. The interest rate the Fed charges other banks A) Discount rate. B) Monetarism. C) Open market operations. D) Prime rate. Show Answer Correct Answer: A) Discount rate. 21. Interest Rates that banks charge their best customers A) Federal Funds Rate. B) Prime Rate. C) Discount Rate. D) Credit Rate. Show Answer Correct Answer: B) Prime Rate. 22. Fiscal policy during a recession is likely to be ..... A) Expansionary. B) Contractionary. C) Both Expansionary and Contractionary. D) Neither Expansionary nor Contractionary. Show Answer Correct Answer: A) Expansionary. 23. Higher interest rates, increase in the reserve requirement and higher taxes are all examples of A) Monetary Policy. B) Fiscal Policy. C) Expansionary Policy. D) Contractionary Policy. Show Answer Correct Answer: D) Contractionary Policy. 24. What type of policy does the Fed use to counteract a contraction A) Easy Money Policy. B) Contractionary Fiscal Policy. C) Expansionary Policy. D) Tight Money Policy. Show Answer Correct Answer: A) Easy Money Policy. 25. The budget failed A) A general, sustained upward movement of prices for goods and services in an economy. B) The government earns what it spends. C) The government earns more than it spends. D) Government spends more than it earns. Show Answer Correct Answer: D) Government spends more than it earns. 26. How many districts are in the Federal Reserve System? A) 24. B) 10. C) 15. D) 12. Show Answer Correct Answer: D) 12. 27. What is the role of the Federal Reserve in influencing the amount of money in circulation? 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: D) By buying and selling government debt. 28. If the unemployment rate is too low, the Federal Reserve should ..... the Federal Funds Rate A) Increase. B) Descrease. Show Answer Correct Answer: A) Increase. 29. Monetary policy could be procyclical (i.e. it could actually cause the business cycle to happen) if the Federal Reserve A) Is late recognizing that a recession has begun and conducts expansionary monetary policy. B) Is quick to recognize that a recession has begun and does not conduct expansionary monetary policy. C) Is quick to recognize that a recession has begun and conducts expansionary monetary policy. D) Is late recognizing that a recession has begun and does not conduct expansionary monetary policy. Show Answer Correct Answer: A) Is late recognizing that a recession has begun and conducts expansionary monetary policy. 30. This is where the Federal Reserve pays banks interest to keep money reserved A) Open Market Operations. B) Discount Rate. C) Required Reserve Ratio. D) Interest on Reserves. Show Answer Correct Answer: D) Interest on Reserves. ← 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 7Monetary And Fiscal Policy Quiz 8Monetary And Fiscal Policy Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books