Monetary and Fiscal Policy: Crash Course Government and Politics

What is the primary task of the Federal Reserve System?

• To control inflation and encourage full employment

• To loan money to other banks and set interest rates

• To supply actual currency

• To set up rules for banks

In what year was the Federal Reserve System created?

• 1933

• 1913

• 1900

• 1925

What is the main way the Fed controls the money supply?

• By supplying actual currency

• By setting interest rates

• By clearing checks

• By creating regulations for banks

What does the bank reserve requirement dictate?

• The amount of money in cash that a bank has to have on hand

• The interest rate banks charge to lend money to each other

• The amount of money a bank can loan out

• The total amount of money held in deposit at the bank

What is Quantitative Easing?

• A fancy way to say the Fed buys and sells government debt

• A method to control inflation

• A way to set interest rates

• A regulation that controls how much money circulates in the economy

What has been the general trend in federal taxes over the past 30 years?

• Higher and less progressive

• Steady and unchanged

• Lower and less progressive

• Higher and more progressive

What are uncontrollables in the federal budget?

• Discretionary spending items

• Funds allocated for emergency situations

• Items that must be spent because they are written into law

• Interest payments on federal debt only

Which of the following is NOT a reason why spending on Social Security and Medicare is unlikely to decline?

• The population is aging

• Older people tend to vote more regularly

• They are funded by state taxes

• People like them

What was the federal government's deficit in 2013?

• Around 1 trillion dollars

• Around 500 billion dollars

• Around 700 billion dollars

• Around 900 billion dollars

What is the largest chunk of government discretionary spending?

• Healthcare for the poor, Medicaid

• Defense

• Department of Education

• Social Security