Fiscal Policy Air Test

The tools of fiscal policy are...

• Interest rates

• Taxes and Government spending

• Checks and balances

• Open market operations

Which is an example of expansionary fiscal policy?

• The Federal reserve lowers the discount rate

• The government raises taxes on all citizens by 5%

• The government increases spending by building more infrastructure

• The federal reserve increases the reserve requirement

When would Congress want to use expansionary fiscal policy?

• During periods of high inflation

• When the economy hits the peak of the business cycle

• During periods of high unemployment

• During an election

What is the purpose of Fiscal Policy?

• contribute to economic growth and stability

• keep rich people from getting too rich

• functions exactly like Fiscal Policy

• give Congress and the political parties more control of the economy

During economic crisis, the primary role of the Federal Government is to promote a healthy economy by...

• controlling the budget

• setting spending levels

• manipulating taxes and government spending

• loaning out money

An increase in government spending leads to...

• An increase in public goods and services

• A decrease in public goods and services

Which of the following is responsible for fiscal policy?

• the Federal Bureau of Investigation

• the Federal Reserve

• Congress & the President

• the Federal Reserve banks

What is fiscal policy primarily concerned with?

• Monetary supply

• Government spending and taxation

• Interest rates

• Trade tariffs

Which of the following is a tool of fiscal policy?

• Open market operations

• Discount rate

• Government spending

• Foreign exchange rates

What is a potential effect of contractionary fiscal policy?

• Increased inflation

• Decreased unemployment

• Reduced government debt

• Higher consumer spending