WorksheetsFiscal and Monetary Policies Refresher
Total questions: 12
Worksheet time: 6mins
Government’s use of its taxing and spending powers to influence the economy is called ...
Fiscal policy
Monetary Policy
Supply Side Policy
Moral suasion
Two distinct aspects of fiscal policy are discretionary policy and ...
Tax policy
Bank rate policy
Automatic stabilizers
Moral suasion
Fiscal policy is used to increase growth (and therefore improve unemployment) and to ...
reduce interest rates
increase interest rates
reduce inflation
persuade banks to lend more money
Calculating national income (i.e., GDP) using the expenditure method uses which calculation?
AD = C - I - G - (X - M)
AD = C + I + G + (X + M)
AD = C + I - G - (X - M)
AD = C + I + G + (X - M)
The government can do all of the following to increase aggregate demand and reduce a recessionary gap, EXCEPT:
spend more money
decrease welfare payments
decrease taxes to leave consumers more money to spend
decrease taxes on businesses to leave them more money to invest
Examples of automatic stabilizers are progressive income taxes and ...
Changes to the reserve requirements
Changes to the bank rate
Unemployment benefits
Moral suasion
Fiscal policy can help control rapid and escalating inflation, but can also cause crowding out, which is...
increases in government spending but decreases in consumer spending
the decrease in interest rates
people crowding into banks and department stores
an aspect of moral suasion
Demand for money is determined mainly by level of ...
unemployment
production in the economy
interest rates
moral suasion
Mechanisms through which Money Supply Policy is transmitted include:
reserve requirements, changes to government spending
reserve requirements, open market operations, bank rate policy
level of taxation, government spending
moral suasion
Inflation Targeting is best defined as:
using fiscal policy to keep inflation rates near 3%
using monetary policy to push bank rates to zero
using fiscal policy to lower the inflation rate
using monetary policy to maintain a particular rate of inflation
An acceptable target rate of inflation is ...
between 1.5% and 2.5%.
0%
anything above 3%
preferably negative (below 0%)
Time lags in fiscal and monetary policies include:
decision lag 1, experimentation lag, decision lag 2
exploration period, discussion period, experimentation period
recognition lag, decision lag, implementation lag
moral suasion
