Economic Stabilization - Standard 7

Monetary policy differs from fiscal policy in that monetary policy is

• more sensitive to political considerations.

• under the control of the Federal Reserve System.

• more time-consuming to implement.

• related to tax increases and decreases.

A short time ago the economy was booming. Now, real GDP has declined for the last six months and businesses are cutting back their production and laying off workers. Which part of the business cycle best describes these events?

• Peak

• Expansion

• Recession

• Trough

Fiscal policy refers to the power of the federal government to

• tax and spend.

• print money.

• control credit.

• All of the above

Which fiscal policy would be most likely to slow the growth of our economy?

• Higher taxes

• Increased government spending

• A lower discount rate

• Increased selling of government securities by the Open Market Committee

Most businesses are producing at or near capacity; the unemployment rate is very low; and consumer spending is brisk. Which part of the business cycle best describes these events?

• Peak

• Expansion

• Recession

• Trough