Fiscal and Monetary Policy

An example of expansionary fiscal policy would be

• cutting taxes.
• cutting government spending.
• cutting production of consumer goods.
• cutting prices of consumer goods.

How could the Federal Reserve encourage banks to lend out more of their reserves?

• reduce the discount rate
• raise the required amount of reserve
• increase the prime rate
• reduce the money supply

Open market operations are

• the processes by which money enters into circulation. 
• reserves greater than the required amounts
• the buying and selling of government securities to alter the supply of money.
• rates of interest banks charge on short-term loans to their best customers.

The rate the Fed charges banks for a loan

• Discount rate
• Federal fund rate
• reserve ratio
• prime rate

The use of taxes and government spending to affect the economy

• Monetary Policy
• Fiscal Policy
• Contractionary Policy
• Expansionary Policy

a plan to reduce aggregate demand and slow the economy

• Contractionary Fiscal Policy
• Expansionary Fiscal Policy
• Contractionary Monetary Policy
• Expansionary Monetary Policy

refers to government revenue, spending, and debt

• Fractional Reserve Banking
• Legal Reserves
• Fiscal
• Reserve system

Congress cutting taxes is an example of ....

• Fiscal Policy
• Monetary Policy

During a recession, which of the following is likely to occur?

• an increase in real wages
• an increase in production
• and increase in the GDP growth rate
• an increase in the unemployment rate

If the federal government is attempting to encourage spending by consumers and businesses, a fiscal policy BEST serving this purpose would be

• decreasing taxes.
• decreasing government spending.
• reducing the investment tax credit.
• balancing the budget.