Unit 4 and 5 Review

During an expansionary phase of the business cycle the government could implement a

contractionary fiscal policy in order to —

• stimulate economic growth
• prevent inflation
• encourage consumer spending
• reduce unemployment

Contractionary fiscal policies address inflationary economic problems and are intended to —

• Reduce government spending and reduce taxes
• Increase government spending and reduce taxes
• Decrease the amount of money in circulation

• Increase government spending and increase taxes

Which one of the following is both a source of federal revenue and an area of spending?

• Education

• Healthcare

• Property tax

• Social Security

What is the primary goal of contractionary fiscal policies?

• To stimulate economic growth

• To increase government spending

• To reduce inflation

• To decrease taxes

The following, 12 districts and banks, the president appoints the chairman / chairwoman, board members serve 14 year terms, and Nationally chartered bank members, are all characteristics of what?

• Federal Reserve System
• International Monetary Fund
• Treasury Department

• Stock Exchange

During a recessionary phase of the business cycle, the government could implement an expansionary fiscal policy in order to —

• prevent inflation

• stimulate economic growth

• reduce government spending

• increase taxes

Which of the following type of tax is collected by state and local governments but not by the

federal government?

• income tax
• sales tax
• corporate tax
• property tax

What was the impact of leaving the gold standard on the U.S. dollar's value?

• Increase in value due to economic growth

• Decrease in value due to inflation and reduced purchasing power

• No change in value

• Increase in value due to rise in global demand

What is the most probable outcome when the Federal Reserve increases the reserve requirement?

• There will be less money available to loan to businesses and people

• The economy becomes unstable and inflation increases.

• Interest rates tend to increase and borrowing becomes more expensive.

• Banks are less likely to lend money and slow down economic growth.

To encourage banks to lend more money rather than holding it, the Federal Reserve can —

• Increase interest rates

• Decrease the reserve requirement ratio

• Increase the reserve requirement ratio

• Decrease the money supply