Fiscal and Monetary Policy Concepts

The video explores macro and microeconomic views, focusing on how the government influences the economy through monetary and fiscal policies. It explains the role of central banks like the Federal Reserve in managing the money supply and interest rates. The video also covers fiscal policy, highlighting Congress's role in taxation and government spending. Finally, it discusses the implications of budget deficits and national debt.

What is the primary role of the government during economic downturns?

• To focus on international trade

• To increase taxes

• To implement policies to stabilize the economy

• To reduce the money supply

What is the main function of a central bank like the Federal Reserve?

• To print money

• To regulate the money supply and set interest rates

• To control government spending

• To manage international trade agreements

How does the Federal Reserve stimulate the economy?

• By reducing government spending

• By increasing taxes

• By lowering short-term interest rates

• By increasing the money supply

What is a potential consequence of increasing the money supply?

• Increased unemployment

• Decreased GDP

• Increased inflation

• Decreased inflation

What is fiscal policy primarily concerned with?

• Managing international trade

• Regulating the money supply

• Taxation and government spending

• Setting interest rates

How can the government stimulate the economy through fiscal policy?

• By increasing taxes

• By reducing government spending

• By lowering taxes and increasing spending

• By increasing interest rates

What is a budget deficit?

• When government spending equals revenue

• When the national debt is paid off

• When government spending exceeds revenue

• When government revenue exceeds spending

What is one challenge of fiscal policy?

• It is quick to implement

• It can be slow to enact due to political processes

• It is not influenced by politics

• It often leads to budget surpluses

How does the government typically cover a budget deficit?

• By borrowing funds

• By increasing exports

• By reducing public services

• By printing more money

What is the advantage of monetary policy over fiscal policy?

• It is managed by a smaller, non-political group

• It is slower to implement

• It is more politically driven

• It focuses on taxation