A Level - Government Macroeconomic Intervention

Which is the correct definition of fiscal policy?

• A policy that aims to control the total supply of money in an economy to try and achieve the government’s economic objectives

• A policy that uses government spending and taxation to affect the economy as a whole

• A government policy affecting the amount of supply in an economy

• Laws to control the way people and organisations behave

Which of these is NOT a government objective that fiscal policy is used to achieve?

• Price stability

• Low unemployment

• Economic growth

• Decrease money supply

What is the definition of a budget surplus?

• When tax revenue is greater than government spending

• When government spending is greater than tax revenue

• The source of finance for government spending

• When government spending is equal with tax revenue

Which is an example of expansionary fiscal policy?

• The Federal reserve lowers the discount rate

• The government raises taxes on all citizens by 5%

• The government increases spending by building more infrastructure

• The federal reserve increases the reserve requirement

Which is an example of contractionary fiscal policy?

• The government increasing taxes on all goods and services by 5%

• The central bank increasing interest rates

• The federal reserve purchases bonds

• Government spending increasing

Monetary Policy is the Federal Reserve Systems attempt to ....

• control the Federal Government's debt

• control state governments' spending

• control the amount of money in circulation

• control the maximum price and minimum price

Which of these is NOT a monetary policy tool?

• Discount rate

• Balance Accounts

• Open Market Operation

• Reserved Requirements

If the Federal Reserve wanted to stimulate the economy (make it grow), they might ....

• Buy government's bonds

• Sell government's bonds

• Spend more money

• Spend less money

Which of the following scenarios would cause the nation’s money supply to increase?

• Decreasing government spending

• Raising interest rates

• Lowering interest rates

• Selling government's bonds to investors

What action would the Federal Reserve take to keep inflation low?

• Buy government securities

• Decrease the required reserve ratio

• Increase taxes

• Increase interest rates