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WorksheetsMonetary and Fiscal Policy
Total questions: 18
Worksheet time: 19mins
What is the primary task of the Federal Reserve System?
Controlling inflation
Encouraging full employment
Regulating the amount of money in circulation
Setting interest rates
What is the main way the Federal Reserve controls the money supply?
Clearing checks
Supplying actual currency
Setting interest rates
Loan money to other banks
What is the interest rate called that the Federal Reserve sets?
Discount rate
Federal funds rate
Prime rate
Libor rate
What is the purpose of the bank reserve requirement?
To prevent catastrophic bank runs
To control inflation
To encourage full employment
To regulate interest rates
How does the Federal Reserve influence the amount of money in circulation through interest rates?
By charging high interest rates to encourage borrowing
By charging low interest rates to discourage borrowing
By setting interest rates for banks to lend money
By buying and selling government debt
What is the term used for the process of the Federal Reserve buying and selling government debt?
Quantitative easing
Open market operations
Monetary policy
Fiscal policy
What is one of the causes of inflation?
Increase in government spending
Decrease in money supply
Decrease in consumer spending
Increase in interest rates
What is the primary reason why the Federal Reserve is an independent body?
To regulate interest rates
To control inflation
To encourage full employment
To avoid political influence
What is fiscal policy?
The government's ability to regulate interest rates
The government's ability to control inflation
The government's ability to raise taxes and spend money
The government's ability to set monetary policy
What is the main reason why Americans have been reluctant to raise taxes?
To encourage economic growth
To reduce government spending
To stimulate consumer spending
To adhere to supply side economics
Which item in the federal budget is considered an uncontrollable?
Defense spending
Department of Education spending
Interest payments on federal debt
Medicaid spending
What is the largest chunk of government spending?
Defense
Healthcare for the poor
Education
Social Security
What is the primary reason why Social Security and Medicare spending is unlikely to go down?
Aging population
Decrease in demand
Political support
Budget constraints
What is the major lever of broad-based macroeconomic policy in the United States?
Monetary policy
Fiscal policy
Supply side economics
Interest rate manipulation
Compare and contrast monetary and fiscal policies, according to their use in real world situations.
What is the role of the Federal Reserve in influencing the amount of money in circulation?
By charging high interest rates to encourage borrowing
By charging low interest rates to discourage borrowing
By setting interest rates for banks to lend money
By buying and selling government debt
What is the name of the interest rate set by the Federal Reserve?
Discount rate
Federal funds rate
Prime rate
Libor rate
What is the term used for the Federal Reserve's activity of buying and selling government debt?
Quantitative easing
Open market operations
Monetary policy
Fiscal policy
