This quiz works best with JavaScript enabled. Home > Finance > Economics > Macroeconomics > Monetary And Fiscal Policy > Monetary And Fiscal Policy – Quiz 9 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Monetary And Fiscal Policy Quiz 9 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. ..... the reserve requirement will decrease the money supply A) Decrease. B) Increase. Show Answer Correct Answer: B) Increase. 2. A budget deficit..... A) Is the same as the national deficit. B) Increases the National Debt. C) Has no relation to the national Debt. D) Lowers the National Debt. Show Answer Correct Answer: B) Increases the National Debt. 3. If inflation is 5% and GDP is up 4.5%, what should the FED do? A) Lower the reserve requirement. B) Raise income taxes. C) Buy bonds. D) Sell securities. Show Answer Correct Answer: D) Sell securities. 4. Monetary Policies responsibilities include: A) Buying and selling securities. B) Lending Money to Banks. C) Pay interest on bank reserves. D) All of the Above. Show Answer Correct Answer: D) All of the Above. 5. Which of the following is a reduction in the tax in general? A) Tax credit. B) Tax waiver. C) Tax exemption. D) Tax deduction. Show Answer Correct Answer: A) Tax credit. 6. The Central bank of the United States is called A) Bank of America. B) US Bank. C) The Federal Reserve. D) Bank of the United States. Show Answer Correct Answer: C) The Federal Reserve. 7. When interest rates rise, the demand for money (think of loans) A) Increases. B) Decreases. C) Is unaffected. D) None of above. Show Answer Correct Answer: B) Decreases. 8. How are spending and interest rates related? A) Higher interest rates, less investment spending. B) Higher interest rates, more investment spending. C) Lower interest rates, less investment spending. D) None of the Above. Show Answer Correct Answer: A) Higher interest rates, less investment spending. 9. In order to help the economy grow, the FED may ..... the reserve requirement, allowing banks to loan more people money so that they spend more A) Raise. B) Lower. C) Spend more. D) Save more. Show Answer Correct Answer: B) Lower. 10. The best explanation of how a government uses fiscal policy to intervene in an economy is ..... A) Increasing import costs. B) Reducing tariffs. C) Raising the number of items produced. D) Changing levels of taxes and government spending. Show Answer Correct Answer: D) Changing levels of taxes and government spending. 11. Expansionary monetary policy is conducted by increasing the money supply A) False. B) True. Show Answer Correct Answer: B) True. 12. Which of the following is a tool of monetary policy used by central banks? A) Fiscal stimulus. B) Subsidies to industries. C) Government spending. D) Open market operations. Show Answer Correct Answer: D) Open market operations. 13. Fiscal policy during periods of inflation is likely to be ..... A) Expansionary. B) Contractionary. C) Both Expansionary and Contractionary. D) Neither Expansionary note Contractionary. Show Answer Correct Answer: B) Contractionary. 14. This group is in charge of overseeing of the day to day business of the Federal Reserve + setting interest rates A) 12 District Banks. B) Federal Government. C) Federal Open Market Committee (FOMC). D) Member Banks. Show Answer Correct Answer: C) Federal Open Market Committee (FOMC). 15. Decisions about how much to spend and how much to tax are part of ..... A) Monetary Policy. B) Fiscal Policy. Show Answer Correct Answer: B) Fiscal Policy. 16. Which agency within the Executive 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: A) Office of Management and Budget. 17. Will the following slow down the economy or stimulate the economy:cut federal spending A) Slow down. B) Stimulate. C) No economic change. D) None of above. Show Answer Correct Answer: A) Slow down. 18. The largest category of spending for state and local governments is ..... A) Highways. B) Education. C) Fire and Police. D) Medical Costs. Show Answer Correct Answer: B) Education. 19. Higher discount rate, higher interest rates, higher reserve requirement A) Contractionary Fiscal Policy. B) Expansionary Monetary Policy. C) Expansionary Fiscal Policy. D) Contractionary Monetary Policy. Show Answer Correct Answer: D) Contractionary Monetary Policy. 20. Expansionary monetary policy is when there is too little money, the FED wants to discourage banks from borrow so they decrease the discount rate. A) TRUE. B) FALSE. Show Answer Correct Answer: B) FALSE. 21. GDP is a measure of all the goods and services bought and sold in a 3 month period but it doesn't include A) The sale of second hand goods. B) The sale of new cars. C) Products purchased by minors only adults. D) Includes all of the above. Show Answer Correct Answer: A) The sale of second hand goods. 22. When would the FED use an expansionary policy A) When they want to stimulate spending in the economy. B) When they want to reduce spending in the economy. C) When they want to regulate make transactions. D) None of above. Show Answer Correct Answer: A) When they want to stimulate spending in the economy. 23. Who controls the monetary policy in the US? A) The Federal Reserve. B) The Government. Show Answer Correct Answer: A) The Federal Reserve. 24. When the Federal Reserve buys government securities (bonds) in the open market, how will it affect the following economic indicators? A) Unemployment:increase Gross Domestic Product:increase. B) Unemployment:increase Gross Domestic Product:decrease. C) Unemployment:decrease Gross Domestic Product:decrease. D) Unemployment:decrease Gross Domestic Product:increase. Show Answer Correct Answer: D) Unemployment:decrease Gross Domestic Product:increase. 25. A general rise in prices and goods and services over a period of time (a) A) Deflation. B) Unemployment. C) Interest rates. D) A Inflation. Show Answer Correct Answer: D) A Inflation. 26. Changes the Fed makes in the money supply A) Contractionary policy. B) Expansionary policy. C) Fiscal policy. D) Monetary policy. Show Answer Correct Answer: D) Monetary policy. 27. A tax that is paid to a third party, and built into the cost of the goods or services is known as a(n) A) Income Tax. B) Regressive Tax. C) Indirect Tax. D) Progressive Tax. Show Answer Correct Answer: C) Indirect Tax. 28. Roman coins are an example of which characteristic of money? A) Divisibility. B) Acceptability. C) Durability. D) Uniformity. Show Answer Correct Answer: C) Durability. 29. The federal government is attempting to encourage spending by consume rs and businesses, a fiscal policy that would BEST serve this purpose would be A) Decreasing government spending. B) Reducing the investment tax credit. C) Decreasing taxes. D) Balancing the budget. Show Answer Correct Answer: C) Decreasing taxes. 30. How are Fiscal policy and the Federal Reserve similiar A) They both use the same tools to fix economic problems. B) They both try to promote economic stability. C) The always must have congressional approval before passing. D) They both have a Board of Governors. Show Answer Correct Answer: B) They both try to promote economic stability. ← 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