Fiscal and Monetary Policy

The interest rate the FED charges banks to borrow money will be lowered to help the economy grow and raised to slow the economy

• reserve requirement

• discount rate

• bank rate

• monetary bank

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

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

• ignore

• end

To help the economy grow, the government can

• increase spending

• decrease spending

• lower the minimum wage

• raise taxes

Taxing and Spending are tools of

• fiscal policy

• monetary policy

Monetary policy decisions are made by:

• Congress

• Senate

• The Fed

• President

The headline below indicates which type of policy:

"Fed unleashes another big rate hike in bid to curb inflation"

• Fiscal policy

• Monetary policy

Who is responsible for making fiscal policy decisions? 

• The President and Congress
• The Federal Reserve System
• The National Council of Economic Advisors
• The Federal Open Market Committee

If the unemployment rate is rising and GDP is falling, the fiscal policy action that the federal government should MOST likely follow is 

• decreasing taxes.
• decreasing spending.
• decreasing the money supply.
• decreasing the reserve requirement.

During a contraction / recession, the Federal Government should use

• an expansionary fiscal policy

• a contractionary fiscal policy