Exploring Monetary vs. Fiscal Policy

What is the primary goal of both monetary and fiscal policies?

• To reduce the national debt

• To regulate stock markets

• To improve the health of the economy

• To increase international trade

Which two main tools does monetary policy use to influence the economy?

• Interest rates and government spending

• Money supply and taxation

• Taxation and consumer spending

• Interest rates and money supply

What role does the Federal Reserve play in setting interest rates?

• It has no role in interest rates

• It influences rates through market operations

• It only advises banks on rates

• It directly sets all interest rates

What is the purpose of the Fed Funds rate?

• Rate for international loans

• Rate for loans between the Federal Reserve and banks

• Rate for interbank loans

• Rate for consumer loans

Who controls fiscal policy?

• International bodies

• State governments

• The Executive and Legislative branches

• The Federal Reserve

What are the two main components of fiscal policy?

• Banking regulations and loans

• Consumer spending and investment

• Government spending and taxation

• Interest rates and money supply

How does government spending influence the economy?

• By decreasing taxation

• By increasing consumer savings

• By injecting money into certain sectors

• By regulating international trade

What was the effect of the payroll tax holiday?

• Decreased corporate taxes

• Increased government revenue

• Reduced individual tax burden

• Increased export tariffs

How does monetary policy differ from fiscal policy in terms of money creation?

• Monetary policy creates new money, fiscal redistributes existing money

• Both redistribute existing money

• Both create new money

• Monetary policy redistributes existing money, fiscal creates new money

What is the main intent of both monetary and fiscal policies?

• To monitor and control inflation rates

• To increase government control over the economy

• To stabilize the banking system

• To stimulate economic activity and spending