AP Macro Fiscal and Monetary Policy

Which of the following is responsible for fiscal policy?

• the Federal Bureau of Investigation

• the Federal Reserve

• Congress & the President

• the Federal Reserve banks

Which of the following statements is true?

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

• Contractionary fiscal policy would decrease the money supply & 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?

• increase the money supply

• increase individual tax rate

• decrease the money supply

• 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 2)?

• 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 to decrease the money supply

• decreasing income taxes

• increasing government spending

• decreasing interest paid on reserves to increase the money supply

Which is true of a surplus?

(Select 2.)

• a surplus is extra

• a surplus is not enough

• a surplus decreases the national debt

• a surplus increases the national debt

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

• increase income taxes; increase the money supply

• decrease income taxes; increase money supply

• increase gov't spending; decrease money supply

• decrease gov't spending; decrease the money supply

Which monetary policy tool would be expansionary?

• decrease reserve requirement to increse the money supply

• increase discount rate to decrease the money supply

• increase interest paid on reserves to decrease the money supply

• selling bonds via open market operations to decrease the money supply

Choose the fiscal policy tools that would increase economic activity. (SELECT 2.)

• increase taxes

• decrease taxes

• increase government spending

• decrease government spending

• decrease discount rate to increase the money supply