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Chapter 9: Federal Budget

Total questions: 46

Worksheet time: 3hrs 56mins

Name
Class
Date
1.

Fiscal Policy is controlled by...

a)

The Government

b)

The Federal Reserve System

c)

The states

d)

The Department of Commerce

2.

The two "tools" of Fiscal Policy are:

a)

the power to tax

b)

the power to spend

c)

the power to borrow money

d)

the power to print money

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.

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

a)

an expansionary fiscal policy

b)

a contractionary fiscal policy

6.

During a contraction / recession, the Federal Government should use

a)

an expansionary fiscal policy

b)

a contractionary fiscal policy

7.
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.
8.
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.
9.
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
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.
When the government raises taxes, what does it take out of circulation?
a)
Money
b)
Credit
c)
People
d)
Jobs
12.

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 never works

13.

What makes up the largest area of government spending?

a)

Food Stamps

b)

Medicare

c)

Social Security

d)

Interest payments

14.
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
15.
An example of a contractionary fiscal policy would be if:
a)
taxes were cut
b)
the government bailed out GM 
c)
the Fed decrease the fed funds rate
d)
taxes were increased
16.

Who is in charge of Monetary Policy

a)

The Government

b)

The Federal Reserve System

c)

The states

d)

The Department of the Treasury

17.

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.

18.
Which of these is NOT a monetary policy tool?
a)
Discount rate
b)
Balance Accounts
c)
Open Market Operation
d)
Reserved Requirements
19.

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)

The Discount Rate

20.

If the Fed wants to increase the cost of loans, then it should adjust...

a)

Open Market Operations

b)

The Reserve Ratio

c)

The Discount Rate

21.

An expansionary 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

22.

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

23.

Which policy would help fight inflation?

a)

Expansionary

b)

Contractionary

24.

Which policy would help fight unemployment?

a)

Expansionary

b)

Contractionary

25.

During a recession, the Fed should use...

a)

an expansionary policy

b)

a contractionary policy

26.

During an expansion, the Fed should use...

a)

an expansionary policy

b)

a contractionary policy

27.
Selling bonds
a)
increases money supply
b)
decreases money supply
28.
Buying bonds
a)
increases money supply
b)
decreases money supply
29.
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
30.
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
31.
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
32.
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
33.
During a contraction what would you do to stimulate the economy?
a)
Lower the RRR, Lower the DR, Buy Bonds
b)
Raise the RRR, Raise the DR, Sell Bonds
34.
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
35.

The federal government's budget is put together

a)

for Congress to see the previous year's expenses

b)

by Congress

c)

for the President to see the upcoming year's expenses

d)

All of the above

36.

Why is it difficult to put balanced fiscal policy into practice?

a)

Political pressures to get reelected

b)

hard to coordinate the needs of all government agencies

c)

hard to predict future economic issues

d)

All are correct

37.

When revenue is more than expenses it results in

a)

A budget deficit

b)

A budget surplus

38.

When revenue is less than expenses it results in

a)

A budget deficit

b)

A budget surplus

39.

Why is it difficult to put balanced fiscal policy into practice?

a)

Political pressures to get reelected

b)

hard to coordinate the needs of all government agencies

c)

hard to predict future economic issues

d)

All are correct

40.

What problems are associated with high national debt?

a)

Can slow economic growth-lower GDP

b)

Lessens funds available for business investment

c)

More difficult to fund government projects

d)

All are correct

41.

What is the role of the Office of Management and Budget?

a)

Writing the budget-deciding what money is allocated to each government agency

b)

Increasing the national debt

c)

Approves the budget written by Congress

d)

Appointing the Board of Governors of the Federal Reserve System

42.

This is the central bank of the United States. It regulates the economy by controlling the amount of money in circulation throughout the U.S.

a)

Fort Knox

b)

The Federal Reserve

c)

The Chamber of Commerce

d)

Office of Management and Budget

43.

Inflation is...

a)

A general decrease in prices and rise in the purchasing value of money

b)

A general increase in prices and fall in the purchasing value of money

c)

A measure of how much unemployment there is in the country

d)

A decrease in the value of a currency relative to other currencies

44.

the amount of money a bank must keep and not invest or loan out

a)

discount amount

b)

prime requirement

c)

actual amount

d)

reserve requirement

45.

Which of the following fiscal policy tools would decrease the national debt?

a)

increase income taxes

b)

decrease income taxes

c)

increase money supply

d)

decrease money supply

46.

What is "debt ceiling"?

a)

the limit on the amount of national debt allowed by the nation

b)

The largest amount of expenditures the nation can accumulate.

c)

The breaking point in which the stock market crashes.

d)

The highest level of debt allowed by the United Nations.

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