FISCAL/MONETARY POLICY REVIEW

What are the two main tools the government uses to stabilize the economy?

• Fiscal Policy and Monetary Policy

• Taxation and Spending

• Interest Rates and Inflation Control

• Subsidies and Tariffs

What is the primary goal of contractionary fiscal policy?

• Reduce inflation and return unemployment to the natural rate

• Increase government spending

• Decrease unemployment

• Increase disposable income

Which of the following is a trade-off of increasing government spending without raising taxes?

• Budget Deficit

• Budget Surplus

• Decreased National Debt

• Increased Tax Revenue

What does a debt to GDP ratio greater than 100% indicate?

• The country's debt exceeds its total economic output

• The country has no debt

• The country's GDP is greater than its debt

• The country is in a budget surplus

Which of the following is NOT a component of the national debt?

• State and local government debts

• Debt held by the public

• Intragovernmental debt

• Foreign holdings

Fiscal Policy is....​ ​ (a)  

• an action by Congress
• an action by the Federal Reserve

Monetary Policy is ....​ (a)  

• an action by the Federal Reserve
• an action by Congress

This is generally true about a peak in the business cycle.

• Declining GDP

• Low Inflation

• Low Unemployment

• High Unemployment

The following is true regarding a trough in the business cycle.

• Low Inflation

• Low Unemployment

• High Inflation

• Rising GDP

GDP in the US historically...

• has always increased as the US has only seen times of prosperity

• generally trends upward over time, despite both positive and negative business cycles

• generally trends downward over time, despite business cycles

• mostly trends downward, except for a few moments of unusual prosperity