Unit 2: Government and the Economy

Who is responsible for making fiscal policy decision? 

• The President and Congress
• The Federal Reserve System
• The National Council of Economic Advisors
• The Department of Commerce

The federal government's overall approach to spending and taxes is called

• Physical Policy

• Fiscal Policy

• The Federal Reserve

• Monetary Policy

What can the government do to slow the economy in order to reduce inflation?

• lower taxes

• raise taxes

• spend more

To help the economy grow, the government can

• increase spending

• decrease spending

• lower the minimum wage

• raise taxes

The action by the FED to adjust the size of the money supply, and to adjust interest rates in order to keep prices down and employment high.

• fiscal policy

• monetary policy

In order to help the economy grow, the FED may____________the reserve requirement, allowing banks to loan more people money so that they spend more

• lower

• raise

• spend more

• save more

In order to slow the economy, the FED may____________ the reserve requirements and there will be less money to loan out to people.

• increase

• decrease

• spend more

• tax more

What are things in budget called that can't be cut?

• Mandatory spending

• Inflation

• Discretionary Spending

• Reserves

Most government spending goes where?

• Education

• Healthcare

• Defense

• Science

Tools of Fiscal Policy are

• Spending, borrowing, taxing

• Money supply, interest rates

• Lending money to private banks, paying interest on bank reserves

• The Central Bank