fiscal, limited and ample reserves

Front

What is one potential impact of limited monetary reserves on a country's economy?

Back

Higher interest rates

Answer explanation

Limited monetary reserves can lead to higher interest rates as the country may need to borrow more, increasing demand for loans and pushing interest rates up.

Tags

DOK Level 2: Skill/Concept

Front

How might a central bank respond to limited monetary reserves to stabilize the economy? Options: Lowering interest rates, Selling government bonds, Increasing the money supply, Implementing austerity measures

Back

Selling government bonds

Answer explanation

Selling government bonds is a way for a central bank to respond to limited monetary reserves by injecting liquidity into the economy.

Tags

DOK Level 3: Strategic Thinking

Front

What role does a central bank play in managing a country's monetary reserves?

Back

Controlling the money supply

Answer explanation

The central bank plays a role in managing a country's monetary reserves by controlling the money supply.

Tags

DOK Level 2: Skill/Concept

Front

Evaluate the potential risks and benefits of a central bank holding ample monetary reserves.

Back

Benefits include economic stability; risks include inflation.

Answer explanation

The correct choice highlights the benefits of economic stability and the risks of inflation associated with a central bank holding ample monetary reserves.

Tags

DOK Level 3: Strategic Thinking

Front

What is a common approach for a central bank to manage limited monetary reserves?

Back

Raising interest rates

Answer explanation

Raising interest rates is a common approach for a central bank to manage limited monetary reserves by controlling inflation and encouraging saving.

Tags

DOK Level 2: Skill/Concept

Front

Which of the following best describes a strategy for managing limited monetary reserves? Increasing foreign aid, Reducing interest rates, Implementing austerity measures, Expanding social programs

Back

Implementing austerity measures

Answer explanation

Implementing austerity measures is the best strategy for managing limited monetary reserves by reducing spending and improving financial stability.

Tags

DOK Level 2: Skill/Concept

Front

What is the main goal of contractionary fiscal policy?

Back

to reduce inflation

Front

Which of the following is likely to happen if the government implements a contractionary fiscal policy? Options: Aggregate demand will increase, inflation rates will increase, unemployment rates may increase, the budget deficit will increase.

Back

unemployment rates may increase

Front

Which of the following statements about fiscal policy is true?

• Fiscal policy is primarily concerned with controlling the money supply.

, increasing taxes is a form of expansionary fiscal policy, fiscal polilcy can directly influence the level of aggregate demand in the economy, fiscal policy decisions are made by the central bank

Back

fiscal polilcy can directly influence the level of aggregate demand in the economy

Front

Which of the following is an example of an automatic stabilizer in fiscal policy?

• Government deciding to build new infrastructure

, tax rebates issued during a recession, unemployment benefits, central bank reducing interest rates

Back

unemployment benefits