(5.5) Economic Policy

What are the three economic goals that policymakers aim to achieve?

• Full employment, economic growth, and price stability

• High taxes, low spending, and inflation

• Trade surplus, low unemployment, and high interest rates

• Budget deficit, national debt, and low GDP

What is fiscal policy?

• The use of interest rates to control the economy

• The use of spending and taxing to affect the economy

• The regulation of foreign trade

• The management of national debt

What does monetary policy involve?

• Adjusting tax rates

• Controlling government spending

• Affecting interest rates

• Regulating imports and exports

What is the result of a government collecting more tax revenue than it spends?

• Budget deficit

• Budget surplus

• National debt

• Economic recession

What is the national debt?

• The total amount of money a country owes

• The annual budget deficit

• The total tax revenue collected

• The GDP of a country

What is one of the tools used by the Federal Reserve to conduct monetary policy?

• Increasing taxes

• Adjusting the Federal Funds Rate

• Implementing trade tariffs

• Regulating stock markets

How does increasing the money supply affect inflation?

• It decreases inflation

• It has no effect on inflation

• It promotes inflation

• It stabilizes inflation

What happens to household and business spending when borrowing costs decrease?

• Spending decreases

• Spending remains unchanged

• Spending increases

• Spending becomes unpredictable

Which of the following is NOT a tool used by the Federal Reserve for monetary policy?

• Lending money to banks

• Changing reserve requirements

• Implementing fiscal policy

• Buying and selling securities

What happens to employment and GDP growth when spending increases?

• Both decrease

• Both remain unchanged

• Both increase

• Employment decreases, GDP remains unchanged