Fiscal and Monetary Policy Flashcard

Front

Fiscal policy is:

Back

The use of government spending and revenue collection to influence the economy

Front

Which best describes "expansionary fiscal policy"?

Back

Increasing government spending and lowering taxes

Front

Which best describes "contractionary fiscal policy"? Options: Increasing government spending and lowering taxes, Decreasing government spending and increasing taxes, Increasing government spending and increasing taxes, Decreasing government spending and lowering taxes

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Decreasing government spending and increasing taxes

Front

Which fiscal policy would you want to use at point 3?

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Expansionary

Front

If the unemployment rate is rising and GDP is falling, what fiscal policy action should the federal government MOST likely follow? Options: decreasing taxes, decreasing spending, decreasing the money supply, decreasing the reserve requirement.

Back

decreasing taxes.

Front

If an economy experiences a dramatic rise in prices, which fiscal policy action could be taken? Options: Selling securities on the open market, Raising interest rates, Reducing government spending, Raising reserve requirements

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Reducing government spending

Front

The Federal government is concerned that economic growth is too high, that it is unsustainable, and that inflation is resulting. Which fiscal policy might be enacted to reduce inflation? Options: Increasing taxation, Open market sales, decreasing taxation, Increasing government spending

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Increasing taxation

Front

Which is an example of automatic stabilizer? Options: Stimulus checks that congress had to vote on, A paycheck from your employer, Unemployment Insurance, Interest on your savings account

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Unemployment Insurance

Front

Expansionary fiscal policies lead to ___________________ spending.

Back

deficit

Front

Who is in charge of Monetary Policy?

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The Federal Reserve Systems