This quiz works best with JavaScript enabled. Home > Finance > Economics > Macroeconomics > Monetary And Fiscal Policy > Monetary And Fiscal Policy – Quiz 8 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Monetary And Fiscal Policy Quiz 8 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. What school of economists are strong proponents of the use of monetary policy to induce growth? A) Keynesians. B) Neo-classicals. C) Both neo-classicals and Keynesians. D) Both discourage it. Show Answer Correct Answer: A) Keynesians. 2. Everyone pays the same percent in taxes. A) Sales tax. B) Progressive tax. C) Regressive tax. D) Proportional tax. Show Answer Correct Answer: D) Proportional tax. 3. The institution responsible for managing a nation's money supply is the ..... A) Trade Commission. B) Central Bank. C) Government Regulator. D) National Security. Show Answer Correct Answer: B) Central Bank. 4. Over all increase in prices in a short period of time can be describes as A) A good thing because there is lots of spending. B) A bad thing because it points toward a rise in inflation. C) Neither prices are always rising. D) None of above. Show Answer Correct Answer: B) A bad thing because it points toward a rise in inflation. 5. Number of federal reserve district banks? A) 5. B) 12. C) 10. D) 21. Show Answer Correct Answer: B) 12. 6. What is the term used for the Federal Reserve's activity of buying and selling government debt? A) Fiscal policy. B) Monetary policy. C) Open market operations. D) Quantitative easing. Show Answer Correct Answer: D) Quantitative easing. 7. The government uses fiscal policy to try and achieve ..... A) Full employment. B) Stable prices. C) Economic growth. D) All of these. Show Answer Correct Answer: D) All of these. 8. An example of a contractionary fiscal policy would be if: A) Taxes were cut. B) The Fed decrease the fed funds rate. C) Taxes were increased. D) The government bailed out GM. Show Answer Correct Answer: C) Taxes were increased. 9. What will the FEDs do when GDP is increasing dramatically A) Increase the discount rate. B) Decrease the discount rate. C) Neither. D) None of above. Show Answer Correct Answer: A) Increase the discount rate. 10. What is the main way the Federal Reserve influences the money supply through Open Market Operations? A) Supplying currency. B) Clearing checks. C) Setting interest rates. D) Buying and selling government debt. Show Answer Correct Answer: D) Buying and selling government debt. 11. There are ..... Federal Reserve Banks. A) 5. B) 15. C) 12. D) 10. Show Answer Correct Answer: C) 12. 12. An increase in the marginal propensity to consume (MPC) A) Rarely occurs because the MPC is set by congressional legislation. B) Lowers the value of the multiplier. C) Has no impact on the value of the multiplier. D) Raises the value of the multiplier. Show Answer Correct Answer: D) Raises the value of the multiplier. 13. Gross Domestic Product is calculated by adding which four spending categories? A) Consumer spending, business expenditures, government spending, investment. B) Consumer spending, business investments, government spending, net exports. C) Wages, rent, salary, interest. D) None of above. Show Answer Correct Answer: B) Consumer spending, business investments, government spending, net exports. 14. Since 2008-09 UK monetary policy has involved A) Bank Rate control and QE. B) QE and exchange rate control. C) Exchange rate control and Bank Rate. D) Bank rate, QE and exchange rate control. Show Answer Correct Answer: A) Bank Rate control and QE. 15. If Tiffany redeemed a bond that earned 5% interest over the past 10 years, which function of money was BEST represented in this scenario? A) Store of value. B) Unit of account. C) Standard of value. D) Medium of exchange. Show Answer Correct Answer: A) Store of value. 16. The phase of a business cycle in which unemployment at the lowest level is a ..... A) Expansion. B) Contraction / recession. Show Answer Correct Answer: B) Contraction / recession. 17. Monetary policy refers to what? A) How government regulates the amount of money in circulation. B) The federal government's overall approach to spending, borrowing, and taxation. C) A general, sustained upward movement of prices for goods and services in an economy. D) The upper limit set on the amount of money the government may borrow to meet its existing legal obligations. Show Answer Correct Answer: A) How government regulates the amount of money in circulation. 18. How does a decrease in income tax rates affect consumers and businesses? A) It reduces disposable income for consumers and increases costs for businesses. B) It increases disposable income for consumers and reduces costs for businesses. C) It decreases disposable income for consumers and increases costs for businesses. D) It has no impact on disposable income or business costs. Show Answer Correct Answer: B) It increases disposable income for consumers and reduces costs for businesses. 19. The rate the Federal Reserve charges banks to borrow money from one another. (bank to bank lending) A) Federal Funds Rate. B) Discount Rate. C) Open Market Operations. D) Required Reserve Ratio. Show Answer Correct Answer: A) Federal Funds Rate. 20. Unemployment caused by a fall in demand for goods and services across the economy. A) Seasonal unemployment. B) Cyclical unemployment. C) Frictional unemployment. D) Structural unemployment. Show Answer Correct Answer: B) Cyclical unemployment. 21. The main duty of the FOMC is ..... A) Setting monetary policy. B) Informing the president about the economy. C) Informing Congress about the economy. D) None of these. Show Answer Correct Answer: A) Setting monetary policy. 22. What happens to interest rates under a loose money policy? A) Decrease. B) Disappear. C) Stay the same. D) Increase. Show Answer Correct Answer: A) Decrease. 23. The long-run effect of an increase in the money supply is to A) Increase the interest rate. B) Decrease the price level. C) Increase the price level. D) Decrease the interest rate. Show Answer Correct Answer: C) Increase the price level. 24. What is the term used for the process of the Federal Reserve buying and selling government debt? A) Quantitative easing. B) Fiscal policy. C) Monetary policy. D) Open market operations. Show Answer Correct Answer: D) Open market operations. 25. What is the name of the interest rate set by the Federal Reserve? A) Prime rate. B) Discount rate. C) Libor rate. D) Federal funds rate. Show Answer Correct Answer: D) Federal funds rate. 26. A decrease in money supply A) Contractionary monetary policy. B) Fiscal policy. C) Monetary policy. D) Expansionary monetary policy. Show Answer Correct Answer: A) Contractionary monetary policy. 27. The Federal Reserve uses the discount rate to maintain growth and stability in the US. If people are paying more for loans, did the discount rate increase or decrease? A) Decrease. B) Increase. Show Answer Correct Answer: B) Increase. 28. What is the main reason why the government is unlikely to reduce spending on Social Security and Medicare? A) The government's limited ability to cut spending. B) The influence of supply side economics. C) The population's aversion to tax increases. D) The aging population and political consequences. Show Answer Correct Answer: D) The aging population and political consequences. 29. What is the primary goal of expansionary fiscal policy? A) To reduce inflation. B) To increase government revenue. C) To stimulate economic growth and reduce unemployment. D) To reduce government spending. Show Answer Correct Answer: C) To stimulate economic growth and reduce unemployment. 30. Decreasing taxing & increasing spending to help the economy grow is referred to as A) Budget deficit. B) Monetary policy. C) Expansionary policy. D) Contractionary policy. Show Answer Correct Answer: C) Expansionary policy. ← 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 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books