Exploring Fiscal vs. Monetary Policy

What are the two main tools governments use to manage the economy?

• Import and export regulations

• Fiscal policy and monetary policy

• Taxation and deregulation

• Supply and demand

What is the primary goal of expansionary fiscal policy?

• To decrease the money supply

• To increase economic output and reduce unemployment

• To reduce government spending

• To increase interest rates

What does contractionary fiscal policy aim to combat?

• Deflation

• Inflation

• Unemployment

• Government spending

Who was a major proponent of supply-side economics?

• John Maynard Keynes

• Milton Friedman

• Lyndon Johnson

• Ronald Reagan

What is deficit spending?

• Spending less than the revenue

• The total amount of money the government has

• Reducing taxes to increase spending

• Spending more money than is coming in as revenue

How do banks contribute to the money supply according to the video?

• By lending out deposits

• By increasing taxes

• By setting fiscal policies

• By printing more money

What is the effect of high interest rates on borrowing?

• It increases borrowing

• It only affects government borrowing

• It decreases borrowing

• It has no effect on borrowing

What role does the Federal Reserve play in monetary policy?

• It decides government spending

• It directly sets tax rates

• It sets the required reserve ratio for banks

• It prints new currency

What is the purpose of open market operations by the Federal Reserve?

• To regulate the stock market

• To control inflation and deflation

• To buy and sell government securities

• To set the national budget

What is the main goal of both fiscal and monetary policies?

• To regulate international trade

• To ensure high stock market returns

• To increase government revenue

• To maintain low unemployment and control inflation