Monetary and Fiscal Policy Test

The Federal Reserve sells securities/bonds as part of Open Market Operations. What is the result?

• Money supply increases. Aggregate Demand decreases

• Money supply decreases. Aggregate Demand increases

• Money supply decreases. Aggregate Demand decreases

• Money supply increases. Aggregate Demand increases

Which of these would be the appropriate use of Fiscal and Monetary Policy to correct recession?

• Buy bonds and raise government spending.

• Sell bonds and raise government spending.

• Raise interest rate and raise taxes

• Raise interest rate and lower taxes

When would the Federal Reserve by bonds and lower interest rates?

• When an economy is experiencing inflation

• When and economy is growing too fast

• When businesses are growing too fast

• When aggregate demand is decreasing

The United States Federal income tax is a...

• Proportional tax

• Progressive tax

• Regressive tax

• Sales tax

The Federal Reserve does all of the following except...

• Fiscal Policy

• Check clearing for banks

• Dealing with the money supply

• Regulate banks

The economy is experiencing recession. What should the President and Congress do?

• Decrease taxes

• Buy bonds

• Decrease interest rates

• Decrease spending

The Federal Reserve has how many district banks?

• 20

• 9

• 10

• 12

Regulates banks and manages the nation's money supply.

• President and Congress

• Federal Reserve System

• CEO Office

• Government Administration System

The Federal Government lowers taxes

• Expansionary Fiscal Policy

• Expansionary Monetary Policy

• Contractionary Fiscal Policy

• Contractionary Monetary Policy

This image shows...

• the Federal Governent

• the Federal Reserve System

• the Open Market Economy

• the President and Congress