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MIDTERM EXAMINATION: MONETARY AND CENTRAL BANKING

Total questions: 50

Worksheet time: 47mins

Name
Class
Date
1.
a rise in the cost of goods and services
a)
inflation
b)
discount rate
c)
interest
d)
monetary policy
2.

Fee charged by the Federal Reserve Bank for other member banks to borrow money from the FED through the discount window?

a)

inflation

b)

interest

c)

discount rate

d)

reserve requirement

3.

The goal of monetary policy is to

a)

sell bonds

b)

reduce unemployment

c)

prevent inflationary and recessionary economic periods

d)

increase tariffs on foreign countries

4.

"The Fed" refers to the....

a)

Federal Bureau of Investigation

b)

Federal Government

c)

Federal Reserve System/Bank

d)

Federal Income Tax

5.
The federal government is attempting to encourage spending by consume rs 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
6.
If the United States is experiencing inflation, the Fed will likely
a)
Increase the supply of money in the economy
b)
Decrease the supply of money in the economy
7.
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
8.
Does increasing the money supply cause inflation or deflation?
a)
Inflation
b)
Deflation
9.

number of federal reserve district banks?

a)

5

b)

10

c)

12

d)

21

10.
Raising the discount rate will reduce
a)
unemployment
b)
inflation
11.
Money loses its value when it
a)
It becomes too plentiful
b)
becomes too portabale
c)
is divisible
d)
is durable
12.
Lowering the reserve requirement will reduce
a)
unemployment
b)
inflation
13.

What are two main monetary tools the government has?

a)

government spending and reserve requirement

b)

taxes and government spending

c)

buy/selling bonds and discount rate

d)

discount rate and taxes

14.

Which answer below is something that the FED does NOT do? Remember, the FED has three main fiscal tools to impact money supply.

a)

buy/sell bonds

b)

increase/decrease discount rate

c)

increase/decrease income tax rates

d)

increase/decrease reserve requirement

15.

Choose the 2 answers below that are fiscal policy tools of the Federal Government

a)

Local referendums

b)

Taxes

c)

Discount Rate

d)

Government Spending

16.

If the economy was going into a recession, what would the Federal government do with taxes?

a)

increase them

b)

do nothing

c)

decrease them

17.

If the economy was going into an inflationary period, what would the Federal government do with government spending?

a)

increase it

b)

do nothing

c)

decrease it

18.
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
19.

The federal government's overall approach to spending and taxes is called

a)

Physical Policy

b)

Fiscal Policy

c)

вежба

d)

Monetary Policy

20.
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
21.

An example of expansionary is what? (Multiple answers - must pick all to receive credit)

a)

Decrease taxes

b)

Raise taxes

c)

Government spends more on Science research

d)

Government cuts organizations like the National Science Foundation

22.

Examples of contractionary fiscal policy includes which of the following (choose all correct answers)?

a)

Raise taxes on corporations

b)

Lower the corporate tax rate

c)

Government increases spending on research in Antarctica

d)

Government cuts spending on education

23.

One pro of a flat tax is:

a)

Taxes the rich more than low-income families

b)

Many government employees and tax preparers would lose their jobs

c)

Lawmakers cannot create loopholes for corporations and lobbyists for campaign contributions or personal favors

d)

Can create corruption and cause loopholes

24.

"The Fed refers to the Federal Reserve System, the Central Bank of the United States. The FOMC is the Federal Open Market Committee, the group responsible for implementing monetary policy."

a)

Fiscal policy

b)

Monetary policy

25.

"In February, lawmakers set themselves up to reach a more permanent spending agreement by the end of March. Congress agreed to increases to domestic and defense spending over the next two years, raising funding for domestic programs by $128 billion and hiking defense budgets by $160 billion. But they didn’t actually decide where the money would go."

a)

Fiscal policy

b)

Monetary policy

26.

"The U.S. Federal Reserve is almost certain to hike interest rates Wednesday to the highest level in a decade: 1.5 to 1.75 percent. "

a)

Fiscal policy

b)

Monetary policy

27.

Which is NOT one of government's role in the economy?

a)

Protecting property rights

b)

Maintaining competition

c)

Protecting consumers, savers, and investors

d)

Protecting monopolistic corporations

28.

Margot is on break at a bakery she works at and notices an OSHA (Occupational Safety and Health Administration) sign in the break room. What role is the government taking in the economy?

a)

Protecting workers

b)

Protecting consumers, savers, and investors

c)

Protecting property rights

d)

Maintaining competition

29.

"The wildlife refuge, located along the banks of the Rio Grande, will be one of the first construction sites for the border wall if Congress approves funding. Unlike private land along the border, which the government would need to use eminent domain to acquire, the 2,088-acre preserve is an easy target." Which role in the economy is the government practicing?

a)

Protecting property rights

b)

Maintaining competition

c)

Protecting consumers, savers, and investors

d)

Protecting workers

30.

What is an example of a positive externality?

a)

Air pollution from factories

b)

Eminent domain

c)

Allowing people to smoke on school campuses

d)

A student getting immunizations in order to go to school

31.

Monetary policy decisions are decided by:

a)

Congress

b)

Senate

c)

The Fed

d)

President

32.

The goals of monetary policy include (more than one answer - pick all correct answers for credit):

a)

regulating the amount of money circulating in the economy

b)

Keep inflation high

c)

Keep inflation low

d)

Keep unemployment low

e)

Raise the unemployment levels

33.

"The Consumer Financial Protection Bureau is a U.S. government agency that makes sure banks, lenders, and other financial companies treat you fairly." What role in the economy is the government?

a)

Following the 5th amendment

b)

Protecting property rights

c)

Protecting workers

d)

Protecting consumers, savers, and investors

34.

Who is in charge of Monetary Policy

a)

The Government

b)

The Federal Reserve System

c)

The states

d)

The Department of the Treasury

35.

Monetary Policy is the Federal Reserve Systems attempt to...

a)

control the amount of money in circulation

b)

control the Federal Government's debt

c)

control state governments' spending

d)

none of these answers are correct.

36.
Which of these is NOT a monetary policy tool?
a)
Discount rate
b)
Balance Accounts
c)
Open Market Operation
d)
Reserved Requirements
37.

A contractionary policy means that the Fed is attempting to

a)

increase the size of the nation's money supply

b)

decrease the size of the nation's money supply

38.

Which policy would help fight inflation?

a)

Expansionary

b)

Contractionary

39.

Which policy would help fight unemployment?

a)

Expansionary

b)

Contractionary

40.

During a recession, the Fed should use...

a)

an expansionary policy

b)

a contractionary policy

41.

During an expansion, the Fed should use...

a)

an expansionary policy

b)

a contractionary policy

42.
Selling bonds
a)
increases money supply
b)
decreases money supply
43.
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
44.
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
45.
What action would the Federal Reserve take to control inflation?
a)
Buy government securities
b)
Decrease the required reserve ratio
c)
Increase taxes
d)
Increase the discount rate
46.
The Fed keeps a certain amount of money out of circulation. This is referred to as....
a)
Reserve requirement
b)
Emergency Fund
c)
Stockpile
d)
Hoard
47.
During an expansion what would you do to prevent inflation?
a)
Lower the RRR, Lower the DR, Buy Bonds
b)
Raise the RRR, Raise the DR, Sell Bonds
48.
What type of money do they use in the Philippines?
a)
rupee
b)
franc
c)
peso
49.

What is the main job of Congress?

a)

Make laws

b)

Enforce laws

c)

Break laws

d)

Interpret laws

50.

Representatives serve for a term of ______ years.

a)

two

b)

four

c)

six

d)

ten

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