Econ. Unit 2 - GDP - Macroeconomics

Which of the following is responsible for fiscal policy?

• the Federal Bureau of Investigation

• the Federal Reserve

• Congress & the President

• the Federal Reserve banks

Which fiscal policy tool would be used if the economy were in a trough?

• increase the money supply

• increase individual tax rate

• decrease the money supply

• increase government spending

Which monetary policy tool would speed up the economy?

• increasing reserve requirement to decrease the money supply

• decreasing income taxes

• increasing government spending

• decreasing interest paid on reserves to increase the money supply

Which monetary policy tool would be expansionary?

• decrease reserve requirement to increse the money supply

• increase discount rate to decrease the money supply

• increase interest paid on reserves to decrease the money supply

• selling bonds via open market operations to decrease the money supply

How are monetary policy and fiscal policy similar?

• They are both done by the President.

• They are both done by the Fed.

• They are both used to keep the economy stable.

• They both use four tools.

The Federal Reserve sells bonds to decrease the money supply. What type of policy is this?

• Contractionary Fiscal Policy

• Expansionary Fiscal Policy

• Contractionary Monetary Policy

• Expansionary Monetary Policy

GDP declines during a(an)

• peak

• contraction

• expansion

Economic recovery begins-

• above the trend line

• at the end of a recession (trough)

• at the "boom" period

GDP will begin to decline at-

• the peak.

• the trough.

• the contractionary phase.

Inflation measures...

• the value of all final goods and services produced

• an increase in the general price level

• the percentage of people looking for work that can't find it

• the economic freedom an economy offers