Fiscal and Monetary Policy Review

Which of the following is responsible for monetary policy?

• the Federal Bureau of Investigation

• the Federal Reserve

• Congress & the President

• the US Government

Which of the following statements is true?

• Contractionary monetary policy would increase government revenue & slow down the economy.

• Contractionary fiscal policy would decrease the reserve requirement & slow down the economy.

• Contractionary fiscal policy would lead to a decrease in national debt.

• Contractionary monetary policy leads to a budget deficit.

Which fiscal policy tool would be used if the economy were in a trough?

• decrease reserve requirement

• increase individual tax rate

• sell bonds through open market operations

• increase government spending

Which of the following fiscal policy tools would decrease the national debt?

• increase income taxes

• decrease income taxes

• increase money supply

• decrease money supply

Which of the following are fiscal policy tools (select more than one)?

• adjusting the reserve requirement

• adjusting the discount rate

• changing government spending

• changing income taxes

• buying/selling bonds via open market operations

Which monetary policy tool would speed up the economy?

• increasing reserve requirement

• decreasing income taxes

• increasing government spending

• decreasing interest paid on reserves

Which combination of fiscal and monetary policy would speed up the economy?

• increase taxes; decrease reserve requirement

• decrease taxes; decrease discount rate

• increase spending; increase interest on reserves

• decrease spending; sell bonds via open market operations

Which monetary policy tool would be expansionary?

• decrease reserve requirement

• increase discount rate

• increase interest paid on reserves

• selling bonds via open market operations

Choose the tools that the government would use to increase economic activity. (SELECT MORE THAN ONE.)

• increase taxes

• decrease taxes

• increase spending

• decrease spending

• decrease discount rate

President Trump is directly involved with which of the following?

• fiscal policy

• monetary policy

• setting the discount rate

• changing the reserve requirement