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Worksheetsfiscal and monetary policy
Total questions: 70
Worksheet time: 55mins
Name
Class
Date
1.
What term is used to describe an increase in the general price level?
a)
Deflation
b)
Monetary policy
c)
Stagnation
d)
Inflation
2.
Which of the following are responsible for making fiscal policy decision?
a)
The President and Congress
b)
The Federal Reserve System
c)
The National Council of Economic Advisors
d)
The commerce Department
3.
Taxing & spending to help the economy grow is referred to as
a)
expansionary policy
b)
monetary policy
c)
contractionary policy
d)
budget deficit
4.
Taxing & spending to slow the economy is referred to as
a)
budget surplus
b)
monetary policy
c)
contractionary policy
d)
budget deficit
5.
The federal government's overall approach to spending and taxes is called
a)
Physical Policy
b)
Fiscal Policy
c)
Money
d)
Monetary Policy
6.
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.
7.
If the unemployment rate is rising and GDP is falling, the fiscal policy action that the federal government should MOST likely follow is
a)
decreasing taxes.
b)
decreasing spending.
c)
decreasing the money supply.
d)
decreasing the reserve requirement.
8.
Stimulus checks, lower interest rates, decrease in the reserve requirement and lower taxes are all examples of
a)
Monetary Policy
b)
Fiscal Policy
c)
Contractionary Policy
d)
Expansionary Policy
9.
The use of taxes and government spending to affect the economy
a)
Monetary Policy
b)
Fiscal Policy
c)
Contractionary Policy
d)
Expansionary Policy
10.
When we need to slow economic growth, we need
a)
Expansionary Fiscal and Monetary Policy
b)
Contractionary Fiscal and Monetary Policy
11.
How does a budget deficit relate to the national debt?
a)
They are the same thing.
b)
Budget deficits are more than the national debt.
c)
Budget deficits reduce the size of the national debt.
d)
Budget deficits create the national debt.
12.
If and economy experiences a dramatic rise in prices, which fiscal policy action could be taken?
a)
Selling securities on the open market
b)
Raising interest rates
c)
Reducing government spending
d)
Raising reserve requirements
13.
How are fiscal and monetary policies similar?
a)
They both use the same tools to fix economic problems
b)
They both try to promote economic stability.
c)
They always must have Congressional approval before passing.
d)
They both are decided by a Board of Governors.
14.
refers to government revenue, spending, and debt
a)
Fractional Reserve Banking
b)
Legal Reserves
c)
Fiscal
d)
Reserve system
15.
The use of taxes and government spending to affect the economy
a)
Monetary Policy
b)
Fiscal Policy
c)
Contractionary Policy
d)
Expansionary Policy
16.
Fiscal Policy is the means by which the government keeps the economy stable through taxes and programs provided to the people.
a)
True
b)
False
17.
The federal government's overall approach to spending and taxes is called
a)
Physical Policy
b)
Fiscal Policy
c)
Money
d)
Monetary Policy
18.
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
19.
Fiscal Policy is concerned with
a)
Government Spending and taxation
b)
Consumer spending and productivity
c)
Government spending and the money supply
d)
Taxation and inflation
20.
The Federal government is concerned that economic growth is too high, that it is unsustainable, and that inflation is resulting. Which of the following fiscal policies might be enacted to reduce inflation?
a)
Increasing taxation
b)
Open market sales
c)
decreasing taxation
d)
Increasing government spending
21.
When the government spends more money than they take in each year is called a _________?
a)
Debt
b)
Deficit
c)
Surplus
d)
Expansionary
22.
"The Fed" refers to the....
a)
Federal Bureau of Investigation
b)
Federal Government
c)
Federal Reserve System
d)
Federal Income Tax
23.
There are _______ Regional Federal Reserve Banks, and one Federal Reserve Board of Governors.
a)
50
b)
4
c)
12
d)
52
24.
what is the purpose of Monetary Policy?
a)
contribute to economic growth and stability
b)
keep rich people from getting too rich
c)
Functions like Fiscal Policy
d)
give Congress and the political parties more control of the economy
25.
The goals of monetary policy do NOT include the promotion of _____
a)
Moderate long-term interest rates
b)
Stable prices
c)
Maximum employment
d)
High government spending.
26.
These are IOUs from the U.S. government to people that finance a little piece of the government's debt in exchange for a very small amount of interest
a)
Government Bonds, or Securities
b)
Government Credit
c)
Government Cash
d)
Government Holdings
27.
The primary role of the Federal Reserve Bank is to steer the economy by
a)
controlling the budget
b)
setting spending levels.
c)
controlling the money supply.
d)
loaning out money.
28.
Cash that banks must keep in the vault.
a)
excess reserves
b)
fiscal policy
c)
required reserves
d)
crowding out effect
29.
The exchange of goods and services without using money is known as...
a)
near money.
b)
bartering.
c)
double coincidence of wants.
d)
fiat money.
30.
Which of the following would the FED us to increase the money supply?
a)
raise the discount rate
b)
raise the required reserves
c)
buy bonds/securities
d)
print more money
31.
If the Federal Reserve wanted to stimulate the economy (make it grow), they might
a)
Sell Treasury bonds
b)
Buy Treasury bonds
c)
Spend more money
d)
Spend less money
32.
Which of the following scenarios would cause the nation’s money supply to increase?
a)
Decreasing government spending
b)
Lowering interest rates
c)
Raising interest rates
d)
Selling bonds to investors
33.
Which of the following scenarios would cause the nation’s money supply to increase?
a)
Decreasing government spending
b)
Lowering interest rates
c)
Raising interest rates
d)
Selling bonds to investors
34.
This is a paper component of the money supply, today consisting of Federal Reserve notes.
a)
coins
b)
currency
c)
both coins and currency
d)
debit cards
35.
Money loses its value when it
a)
becomes too plentiful
b)
becomes too portabale
c)
is divisible
d)
is durable
36.
____________ is the price paid for the use of money.
a)
Gold
b)
Monetary policy
c)
Fiscal policy
d)
The interest rate
37.
In institution that accepts deposits and makes loans is defined as
a)
A bank
b)
Insurance
c)
Gambling
d)
A loan shark
38.
____________ is the price paid for the use of money.
a)
Gold
b)
Monetary policy
c)
Fiscal policy
d)
The interest rate
39.
An increase in the money supply will
a)
Reduce interest rates and increase aggregate demand.
b)
Reduce interest rates and decrease aggregate demand.
c)
Raise interest rates and increase aggregate demand.
d)
Raise interest rates and decrease aggregate demand.
40.
Ceteris paribus, if the Fed sells bonds through open market operations, the money
a)
Supply curve should shift rightward.
b)
Supply curve should shift leftward.
c)
Demand curve should shift rightward.
d)
Demand curve should shift leftward.
41.
Which of the following would the FED us to increase the money supply?
a)
raise the discount rate
b)
raise the required reserves
c)
buy bonds/securities
d)
print more money
42.
Which phase of the business cycle would you be in if the FED recommended the use of contractionary policy?
a)
expansion
b)
contraction
c)
recession
d)
trough
43.
Which of the following is NOT a major tool of the FED?
a)
required reserves
b)
discount rate
c)
printing new money
d)
excess reserves
44.
Inflation is measured by...
a)
Consumer Price Index (CPI).
b)
Gross National Product (GNP).
c)
Gross Domestic Product (GDP).
d)
Securities & Exchange Commission (SEC).
45.
Which statement BEST describes the U S government’s monetary policy and fiscal policy?
a)
Monetary policy reflects the Federal Reserve’s authority to change the money supply; fiscal policy reflects the government’s power to influence the economy through taxes, expenditures, and borrowing.
b)
Monetary policy reflects the Federal Reserve’s authority to change tax rates; fiscal policy reflects the government’s power to influence the money supply by lowering the discount rate for loans to banks.
c)
Monetary policy refers to the Federal Reserve’s influence in the economy through borrowing and creating a deficit; fiscal policy refers to the government’s authority to increase spending.
d)
Monetary policy refers to the Federal Reserve’s authority to increase spending; fiscal policy refers to the government’s authority to increase the discount rate for loans to banks.
46.
How are fiscal and monetary policies similar?
a)
They both use the same tools to fix economic problems
b)
They both try to promote economic stability.
c)
They always must have Congressional approval before passing.
d)
They both are decided by a Board of Governors.
47.
If the economy is in a recession, the Federal Reserve could do all of the following EXCEPT
a)
Lower taxes
b)
Lower the discount rate
c)
Buy securities
d)
Lower the required reserve ratio
48.
Which of the following is not a tool of fiscal policy?
a)
Taxing
b)
Spending
c)
Interest Rates
49.
The Federal Reserve changing the Reserve Requirement is an example of .....
a)
Fiscal Policy
b)
Monetary Policy
50.
The central bank in the USA that regulates the monetary system is known as
a)
The FED
b)
FDIC
c)
The IRS
d)
Social Security
51.
What is the most likely reason Contractionary Fiscal Policy is not often implemented?
a)
It takes too long to work
b)
It is unpopular to raise people's taxes
c)
It works too quickly
d)
It leads to increases in the national debt
52.
Too much inflation in the economy is fixed by
a)
budget deficits
b)
loose monetary policy
c)
FED purchase of government bonds and securities
d)
Tight Money Policy
53.
"The Fed" refers to the....
a)
Federal Bureau of Investigation
b)
Federal Government
c)
Federal Reserve System
d)
Federal Income Tax
54.
What happens to the money circulation, when the FED orders a tight money policy?
a)
more money is put out into circulation
b)
less money is put into circulation
c)
circulation stays the same
d)
interest rates rise
55.
Lowering interest rates to stimulate the economy is called:
a)
Fiscal policy
b)
Monetary policy
c)
Easy Money
d)
Tight Money
56.
Which of the following results should be included where the question mark appears in the illustration?
a)
unemployment
b)
inflation
c)
consumer spending
d)
production
57.
Which of the following results should be included where the question mark appears in the illustration?
a)
the reserve requirement
b)
interest rate
c)
inflation
d)
unemployment
58.
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
59.
Which items on the graph are part of M1?
a)
currency and savings deposits
b)
currency, traveler’s checks plus demand deposits, and other checkable deposits
c)
other checkable deposits, money market mutual funds, and small time deposits
d)
currency, savings deposits, and small time deposits
60.
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
61.
How much money must the bank keep on hand if the Required Reserve is 20% and there is a deposit of $1000.
a)
20
b)
50
c)
200
d)
1020
62.
If the federal government is attempting to encourage spending by consumers and businesses, a fiscal policy BEST serving this purpose would be
a)
decreasing taxes.
b)
decreasing government spending.
c)
reducing the investment tax credit.
d)
balancing the budget.
63.
The rate the Fed charges banks for a loan
a)
Discount rate
b)
Federal fund rate
c)
reserve ratio
d)
prime rate
64.
What is one tool that measures the rate of inflation?
a)
GDP
b)
Federal Reserve
c)
unemployment
d)
consumer price index
65.
Macroeconomics is the study of?
a)
People
b)
Decisions of individuals
c)
The economy as a whole
66.
amount of deposits that banks are required to keep on hand
a)
monetary policy
b)
money creation
c)
reserve requirements
d)
prime rate
67.
In a recession, the Fed would likely
a)
Increase the supply of money in the economy
b)
Decrease the supply of the money in the economy
68.
The Federal Reserve
a)
is made up of 12 district banks and 25 branch banks.
b)
is managed by a 12-member board of directors.
c)
is made up of district banks that operate independently from one another.
69.
Taxing & spending to slow the economy is referred to as
a)
budget surplus
b)
monetary policy
c)
contractionary policy
d)
budget deficit
70.
Fiscal Policy is concerned with
a)
Government Spending and taxation
b)
Consumer spending and productivity
c)
Government spending and the money supply
d)
Taxation and inflation
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