Fiscal and Monetary Policy

Front

Fiscal policy is enacted through changes in

Back

taxation and government spending.

Front

If the MPS in an economy is 0.1, government could shift the aggregate demand curve rightward by $40 billion by

Back

increasing government spending by $4 billion.

Front

If the U.S. Congress passes legislation to raise taxes to control demand-pull inflation, then this would be an example of a(n)

Back

contractionary fiscal policy.

Front

The goal of expansionary fiscal policy is to increase

Back

real GDP.

Front

Due to automatic stabilizers, when the nation's total income rises, government transfer spending

Back

decreases and tax revenues increase.

Front

If you place a part of your summer earnings in a savings account, you are using money primarily as a

Back

store of value.

Front

Assuming no other changes, if checkable deposits increase by $40 billion and currency in circulation decreases by $40 billion, the

Back

M1 money supply will not change.

Front

Which of the following is the basic economic policy function of the Federal Reserve Banks?
Options:
holding the deposits or reserves of commercial banks,
acting as fiscal agents for the federal government,
collecting checks among commercial banks,
controlling the supply of money

Back

controlling the supply of money

Front

The asset demand for money:

Back

varies inversely with the rate of interest.

Front

The use of money and credit controls to change the macroeconomy is

Back

Monetary policy.