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WorksheetsMonetary / Fiscal Policy
Total questions: 15
Worksheet time: 10mins
Name
Class
Date
1.
An example of expansionary fiscal policy would be
a)
cutting taxes.
b)
cutting government spending.
c)
cutting production of consumer goods.
d)
cutting prices of consumer goods.
2.
How could the Federal Reserve encourage banks to lend out more of their reserves?
a)
reduce the discount rate
b)
raise the required amount of reserve
c)
increase the prime rate
d)
reduce the money supply
3.
Open market operations are
a)
the processes by which money enters into circulation.
b)
reserves greater than the required amounts
c)
the buying and selling of government securities to alter the supply of money.
d)
rates of interest banks charge on short-term loans to their best customers.
4.
The rate the Fed charges banks for a loan
a)
Prime rate
b)
Federal fund rate
c)
Reserve Ratio
d)
Discount rate
5.
The use of taxes and government spending to affect the economy
a)
Monetary Policy
b)
Fiscal Policy
c)
Contractionary Policy
d)
Expansionary Policy
6.
A plan to reduce aggregate demand and slow the economy
a)
Contractionary Fiscal Policy
b)
Expansionary Fiscal Policy
c)
Contractionary Monetary Policy
d)
Expansionary Monetary Policy
7.
The manipulation of the money supply in order to influence the cost and the availability of credit is
a)
Banking Policy
b)
Fiscal Policy
c)
Monetary Policy
d)
Spending Policy
8.
If the Federal Reserve raises interest rates to combat rapid inflation, what might be a negative outcome?
a)
international trade would stop
b)
taxes will rise
c)
The government would put a freeze on prices
d)
Unemployment rates would rise
9.
Which of the following is a monetary policy action used to combat a recession?
a)
cutting taxes
b)
increasing the money supply
c)
decreasing the money supply
d)
raising taxes
10.
The Federal Reserve wants to reduce the nation's money supply. This could be accomplished by doing all of the following EXCEPT
a)
decreasing the discount rate.
b)
increasing the reserve requirement.
c)
selling securities on the open market.
d)
making banks hold a reserve for all types of deposits.
11.
If policy makers are concerned about inflation, which fiscal and monetary policies would be MOST effective?
a)
lowering taxes and buying bonds
b)
lowering taxes and raising the reserve requirement
c)
increasing taxes and lowering the discount rate
d)
increasing taxes and selling bonds
12.
If the Federal Reserve System wanted to stimulate the U.S. economy and reduce unemployment, it would
a)
A. cause interest rates to decrease because low interest rates encourage businessgrowth and expansion
b)
B. cause interest rates to rise because high interest rates encourage business growthand expansion
c)
C. increase the discount rate it charges banks, which would increase the money supply
d)
D. increase consumer spending by reducing the money supply
13.
If the Federal reserve and Government are attempting to encourage growth and stimulate the economy, which actions would each take?
(monetary / fiscal)
(monetary / fiscal)
a)
increase the Required reserve / increase government spending
b)
sell government securities / decrease taxes
c)
decrease the interest rate / increase government spending
d)
buy government securities / decrease government spending
14.
What dollar amount should appear in place of the letter S in the table?
a)
$200,000
b)
$1,800,000
c)
$2,200,000
d)
$180,000
15.
What dollar amount should appear in place of the letter P in the table?
a)
$1,000,000
b)
$100,000
c)
$1,900,000
d)
$1,900
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