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Taxes Fiscal and Monetary Policy

Total questions: 50

Worksheet time: 38mins

Name
Class
Date
1.
Who is in charge of fiscal policy?
a)

Federal Government

b)

Federal Reserve

c)

The President

d)

States

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.

Reducing taxes and increasing government spending to help the economy grow is referred to as

a)

expansionary policy

b)

monetary policy

c)

contractionary policy

d)

budget deficit

4.

Increasing taxes and reducing government 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.
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
9.
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

10.
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
11.

Monetary Policy is controlled by

a)

The Fed

b)

The President and Congress

c)

The states

d)

local government

12.
Which of the following is not a tool of fiscal policy?
a)
Taxing
b)
Spending
c)
Interest Rates
d)
All of these options are tools of fiscal policy.
13.
When the government raises taxes, what does it take out of circulation?
a)
Money
b)
Credit
c)
People
d)
Jobs
14.
True or False-- the Federal Reserve helps with fiscal policy
a)
True
b)
False
15.

The two "tools" of Fiscal Policy are (pick the correct two choices)

a)

the power to tax

b)

the power to spend

c)

the power to borrow money

d)

the power to print money

16.

During an economic expansion, the Federal Government should use...

a)

an expansionary fiscal policy

b)

a contractionary fiscal policy

17.

During a contraction / recession, the Federal Government should use

a)

an expansionary fiscal policy

b)

a contractionary fiscal policy

18.
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.
19.

If an 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

20.

Which of the following statements is true?

a)

Contractionary monetary policy would increase government revenue & slow down the economy.

b)

Contractionary fiscal policy would decrease the reserve requirement & slow down the economy.

c)

Contractionary fiscal policy would lead to an increase in the national debt.

d)

Contractionary monetary policy is where the Fed buys bonds

21.

What makes up the largest area of government spending?

a)

Food Stamps

b)

Medicare

c)

Social Security

d)

Interest payments

22.
Which of the following is an example of expansionary policy?
a)
The Fed sells bonds
b)
the Fed raises reserve requirements
c)
the Fed buys bonds
d)
the Fed raises the Fed funds rate
23.
Money loses its value when it
a)
It becomes too plentiful
b)
becomes too portabale
c)
is divisible
d)
is durable
24.
If the Federal Reserve raises interest rates to combat rapid inflation, what might be a negative outcome?
a)
Unemployment rates would rise
b)
taxes will rise 
c)
The government would put a freeze on prices
d)
international trade would stop 
25.
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
26.
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.

27.
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 business growth and expansion

b)

B. cause interest rates to rise because high interest rates encourage business growth and 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

28.
If the Federal reserve and Government are attempting to encourage growth and stimulate the economy, which actions would each take? 
(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
29.
"The Fed" refers to the....
a)
Federal Bureau of Investigation
b)
Federal Government
c)
Federal Reserve System
d)
Federal Income Tax
30.
The central bank in the USA that regulates the monetary system
a)
The FED
b)
FDIC
c)
The IRS
d)
Social Security
31.
There are _______ Regional Federal Reserve Banks, and one Federal Reserve Board of Governors.
a)
50
b)
4
c)
12
d)
52
32.

what is the purpose of Monetary Policy?

a)

Help control the money supply

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

33.

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.

34.

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

35.
Cash that banks must keep in the vault.
a)
excess reserves
b)
fiscal policy
c)
required reserves
d)
crowding out effect
36.

Which of the following would the FED use to increase the money supply?

a)

raise the discount rate

b)

raise the required reserves

c)

buy bonds/securities

d)

print more money

37.
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
38.

____________ is the price paid for the use of money.

a)

Gold

b)

Monetary policy

c)

Fiscal policy

d)

The interest rate

39.
Which of these is NOT a monetary policy tool?
a)
Discount rate
b)
Balance Accounts
c)
Open Market Operation
d)
Reserved Requirements
40.

If the Fed wants to reduce the amount of loans a bank can make, then it should adjust...

a)

Open Market Operations

b)

The Reserve Ratio

c)

Taxes

d)

Government Spending

41.

Money taken in by the government through taxes, lotteries, bonds, etc.

a)

Revenue

b)

Unemployment

c)

The Fed

d)

Jerome Powell

42.

One who thinks that people should pay the taxes for the things they use, such as through excise taxes, would support the

a)

Open Market Operations

b)

Ability-To-Pay Principle

c)

Benefits-Received Principle

d)

Fiscal Policy

43.

An excise tax is a tax on

a)

businesses

b)

a specific good

c)

individual income

d)

Medicare

44.

This kind of tax places a higher percentage tax on those with larger incomes

a)

Regressive

b)

Property

c)

Progressive

d)

Proportional

45.

Everyone pays the same sales tax in New York State; however, this can be considered a ___________ tax because it takes up a greater percentage of a poor individual's income.

a)

proportional

b)

regressive

c)

flat

d)

progressive

46.

If demand for a good is elastic, and taxes increase on input costs, what will the supplier do?

a)

Pass the price onto consumers so that the supplier doesn't lose a profit

b)

Eat the cost because demand for the good will decrease if the supplier passes on the cost to consumers

c)

Ask the government to decreases taxes and increase spending

d)

all of these

47.

A sin tax is a tax on

a)

Houses and real estate transaction

b)

5th Set Economics Class

c)

Goods to be encouraged

d)

Goods to be discouraged

48.

A tax on inheritance (more than $12.92 million)

a)

Property

b)

Gift

c)

Estate

d)

Excise

49.

Money that the federal government has to spend every year

a)

Monetary

b)

Fiscal

c)

Discretionary

d)

Mandatory

50.

Largest part of the federal budget

a)

Military

b)

Interest on National Debt

c)

Social Programs

d)

Education

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