Monetary and Fiscal policy unit test 2022

Monetary policy refers to what?

• How the Fed regulates the amount of money in circulation

• The federal government’s overall approach to spending, borrowing, and taxation.

• A general, sustained upward movement of prices for goods and services in an economy.

Whose job is it to control the money supply?

• The Executive Branch of Government

• Federal Reserve

• President

Fiscal policy tools deal with what?

• How government regulates the amount of money in circulation

• A general, sustained upward movement of prices for goods and services in an economy.

• the gathering of tax revenues and using the money that's raised

America's central bank is known as what?

• Congress

• Federal Reserve or the FED

• Bank of America

Tools of Fiscal Policy are

• Spending, borrowing, raising or lowering taxes

• Money supply, interest rates

• The Central Bank

When a government spends more than it takes in

• Budget surplus

• Inflation

• Budget Deficit

Goal of Monetary Policy

• Manage economic growth with stable prices (controlling inflation) and sustainable high employment by adjusting the money supply.

• Manage economic growth by influencing demand and employment

Impact of Fiscal Policy

• Can create jobs, increase wages, cause inflation or deflation, and motivate consumer spending

• Controls rates on loans for houses, cars, education, etc.

Which of the following is NOT an objective of monetary policy

• Inflation between 2-3%

• Full employment

• Equal distribution of income

• Economic prosperity

To increase money supply the Federal Reserve will

• Sell bonds to banks

• Buy bonds from banks

• Sell bonds to the government