Economic Policy

Who is in charge of fiscal policy?

• Government
• Federal Reserve

Which of the following are responsible for making fiscal policy decision? 

• The President and Congress
• The Federal Reserve System
• The National Council of Economic Advisors
• The commerce Department

Taxing & spending to slow the economy is referred to as 

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

If the unemployment rate is rising and GDP is falling, the fiscal policy action that the federal government should MOST likely follow is 

• decreasing taxes.
• decreasing spending.
• decreasing the money supply.
• decreasing the reserve requirement.

When the government raises taxes, what does it take out of circulation?

• Money
• Credit
• People
• Jobs

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

• Physical Policy
• Fiscal Policy
• Money
• Monetary Policy

If and economy experiences a dramatic rise in prices, which fiscal policy action could be taken?

• Selling securities on the open market
• Raising interest rates
• Reducing government spending
• Raising reserve requirements

Money loses its value when it

• It becomes too plentiful
• becomes too portabale
• is divisible
• is durable

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 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.