Fiscal Policy Quiz

What is the purpose of expansionary policies in fiscal policy?

• To decrease economic growth

• To increase economic growth

• To maintain economic stability

• To reduce inflation

Who controls the economy through fiscal policy?

• The Federal Reserve

• The president and Congress

• State governments

• Local municipalities

What is NOT a function of the Federal Reserve in relation to government bonds?

• Selling

• Transferring

• Redeeming

• Printing

What does the Federal Reserve process for the treasury?

• Loan applications

• Tax refunds

• Insurance claims

• Employment applications

What does the Fed do to get out of a recession?

• Decreases the money supply

• Encourages people to save

• Increases the money supply

• Discourages spending

How does the Fed respond to inflation?

• Encourages spending

• Increases the money supply

• Decreases the money supply

• Lowers taxes

What action does the Fed take to discourage spending during inflation?

• Increase taxes

• Decrease the money supply

• Increase government spending

• Lower interest rates

Which tool involves the Fed buying and selling government securities?

• Open-Market Operations

• Reserve Requirement

• Discount Rate

• Interest Rate Swaps

The Fed uses the Discount Rate to influence what?

• Interest Rates

• Tax Rates

• Exchange Rates

• Government Budgets

Open-Market Operations are primarily used to control what?

• Money Supply

• Tax Revenue

• Government Debt

• Trade Deficit