Monetary and Fiscal Policy Concepts

When the federal government uses its spending and revenue to influence the economy

• Fiscal Policy

• Monetary Policy

• Keynesian Policy

• Supply Side Policy

Keynesian followers believe this entity should increase demand during contractions

• Federal Government

• Federal Reserve

• State Governments

• Individual Producers

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 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 is responsible for fiscal policy?

• the Federal Bureau of Investigation

• the Federal Reserve

• Congress & the President

• the Federal Reserve banks

Which of the following are related to adjusting the supply of money and credit? (SELECT 2.)

• monetary policy

• fiscal policy

• adjusting amounts banks may loan out to customers

• decreasing income taxes consumers have to pay

• preparing US budget

How are monetary policy and fiscal policy similar?

• They are both done by the President.

• They are both done by the Fed.

• They are both used to keep the economy stable.

• They both use four tools.

How does the Federal Reserve reduce swings in the economy?

• Control the ability of the government to spend money.

• Control the ability of banks to lend money.

• Control the ability of the consumer to spend/lend money

• Be able to change the amount of money that can be lent to big business.

Decisions the Fed makes about money & banking is called

• discount rate
• open market operations
• budget deficit
• monetary policy

The lower the interest rate, the more banks will do what?

• borrow money

• print money

• increase the interest rate

• fire the bankers