Fiscal Policy Review

The Central bank of the United States is called

• The Federal Reserve

• Bank of the United States

• US Bank

• Bank of America

If the Federal Reserve raises reserve requirements

• Money Supply Increases

• Money supply decreases

Which of the following is NOT a tool of the Federal Reserve

• Setting Discount Rates

• Increasing or Decreasing Taxes

• Changing the Reserve Requirements in Banks

• Buying and selling securities using open market operations

The President and Congress have the role of passing _____ policy.

• Fiscal

• Monetary

When the President/Congress decrease taxes, this would

• Increase consumers spending and real GDP

• Decrease consumer spending and real GDP

• Have no effect on consumer spending or real GDP

The goal of contractionary fiscal or monetary policy is

• To decrease unemployment and increase economic growth

• To increase inflation

• To decrease inflation

• To increase unemployment and decrease economic growth

The two tools of Fiscal policy are (Select Two)

• Open Market operations

• Taxes

• Government Spending

• Discount Rates

To increase the money supply, the Federal Reserve would

• Decrease discount rates to boost consumer/business spending

• Increase Reserve Requirements on banks

• Print more and more money

• Buy government securities and bonds on the open market

If unemployment is increasing and real GDP has slowed down, the President and Congress should

• Use Expansionary Fiscal Policy by increasing spending

• Use contractionary fiscal policy by decreasing spending

When the our government spends more than it takes in during a given year we are in

• a budget surplus

• a budget deficit

• a neutral budget

• a trade deficit