Role of Government Quiz #2v2

Which of the following results should be included where the question mark appears in the illustration?

• unemployment
• inflation
• consumer spending
• production

Which of the following results should be included where the question mark appears in the illustration?

• the reserve requirement
• interest rate
• inflation
• unemployment

If the Federal Reserve raises interest rates to combat rapid inflation, what might be a negative outcome?

• Unemployment rates would rise
• taxes will rise 
• The government would put a freeze on prices
• international trade would stop 

If the Federal reserve and Government are attempting to encourage growth and stimulate the economy, which actions would each take? 
(monetary / fiscal)

• increase the Required reserve / increase government spending
• sell government securities / decrease taxes
• decrease the interest rate / increase government spending
• buy government securities / decrease government spending

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.

The rate the Fed charges banks for a loan

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

Taxing & spending to help the economy grow is referred to as

• expansionary policy
• monetary policy
• contractionary policy
• budget deficit

Taxing & spending to slow the economy is referred to as 

• budget surplus 
• monetary policy
• contractionary policy
• budget deficit

The federal government's overall approach to spending and taxes is called

• Physical Policy
• Fiscal Policy
• Money
• 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.