EOC Exam Practice Questions (Fiscal and Monetary Policy)

What is one way the Federal Reserve System regulates economic activity?

• Regulating tariff rates on foreign imports

• Regulating production of consumer goods

• Regulating the amount of money in circulation

• Regulating spending by the federal government

The federal government controls taxation and spending policy

These are both parts of what policy?

• Fiscal

• Monetary

If the government were to raise taxes and decrease spending, this would be an example of an attempt to __________ economic growth

• encourage

• slow

The federal government has a number of tools that can be used to maintain economic stability or foster economic growth

These tools often involve changes in taxing or government spending

Identify whether each policy listed is related to taxes or spending

POLICY: The government decides to begin a massive effort to rebuild the nation’s highways

• Spending Policy

• Tax Policy

The federal government has a number of tools that can be used to maintain economic stability or foster economic growth

These tools often involve changes in taxing or government spending

Identify whether each policy listed is related to taxes or spending

POLICY: The government increases deductions for households with students attending college

• Spending Policy

• Tax Policy

The federal government has a number of tools that can be used to maintain economic stability or foster economic growth

These tools often involve changes in taxing or government spending

Identify whether each policy listed is related to taxes or spending

POLICY: The government has extended unemployment benefits for qualified workers for an additional six weeks

• Spending Policy

• Tax Policy

The federal government has a number of tools that can be used to maintain economic stability or foster economic growth

These tools often involve changes in taxing or government spending

Identify whether each policy listed is related to taxes or spending

POLICY: The government has increased revenues by charging extra fees for consumption of gasoline

• Spending Policy

• Tax Policy

The Federal Reserve (the Fed) adjusts its practices based on its desired outcomes

Sometimes the Federal Reserve wants to foster growth in the economy, other times it wants to foster economic contraction

Choose what desired outcomes fit with the following two goals

OUTCOME: Increase the money supply

• Foster Economic Growth

• Foster Economic Contraction

The Federal Reserve (the Fed) adjusts its practices based on its desired outcomes

Sometimes the Federal Reserve wants to foster growth in the economy, other times it wants to foster economic contraction

Choose what desired outcomes fit with the following two goals

OUTCOME: Decrease the money supply

• Foster Economic Growth

• Foster Economic Contraction

The Federal Reserve (the Fed) adjusts its practices based on its desired outcomes

Sometimes the Federal Reserve wants to foster growth in the economy, other times it wants to foster economic contraction

Choose what desired outcomes fit with the following two goals

OUTCOME: Encourage spending

• Foster Economic Growth

• Foster Economic Contraction