WorksheetsFiscal & Monetary Policy
Total questions: 12
Worksheet time: 6mins
Who is responsible for making fiscal policy decision?
The President and Congress
The Federal Reserve System
The National Council of Economic Advisors
The Department of Commerce
The federal government's overall approach to spending and taxes is called
Physical Policy
Fiscal Policy
The Federal Reserve
Monetary Policy
Monetary policy decisions are made by:
Congress
Senate
The Fed
President
Which of the following would be an appropriate contractionary fiscal policy measure for the Congress could take to combat inflation?
Increase government spending
increase taxes
decrease taxes
increase reserve requirements
Use this image to answer the following question.
When the economy is operating at point C, the U.S. Congress is most likely to follow __________ by __________.
expansionary fiscal policy; increasing government spending
contractionary fiscal policy; increasing taxes
expansionary monetary policy; increasing reserve requirements
contractionary monetary policy; selling bonds
A reserve requirement of 20 percent (%) means that which of the following is true?
Federal funds rate is 20 percent, which is a very high interest rate
Only 20 percent of a bank’s deposits can be lent out, and they have to keep the rest in the bank as reserves.
Only twenty percent of a bank’s deposits must be kept on reserve, and the rest can be lent out or invested.
Banks charge each other 20 percent interest on funds they loan overnight
If the Federal Reserve adopts an expansionary monetary policy, what is the desired result?
Interest rates rise and credit is tight.
Interest rates rise and credit is abundant.
Interest rates fall and credit is tight and businesses do not expand.
Interest rates fall and credit is abundant and businesses do expand.
Which of the following is an example of expansionary monetary policy for the Federal Reserve where they are combating a recession and unemployment?
decreasing government spending
increasing interest rates
increasing the reserve ratio
decreasing the discount rate
Which of the following would be an appropriate contractionary monetary policy measure for the Federal Reserve should take to combat inflation?
buy bonds
increase taxes
decrease the discount rate
increase reserve requirements
Use this image to answer the following question.
When the economy is operating at point C, the Federal Reserve may decrease the discount rate (the interest rate it charges banks) to
decrease inflation
decrease economic growth
slow the economy
increase economic growth
Use this image to answer the following question.
When the economy is operating at point B, the Fed might sell treasury bills (government bonds) to
increase the money supply
decrease the money supply
increase growth
decrease the national debt
In order to slow the economy, the FED may____________ the reserve requirements and there will be less money to loan out to people.
increase
decrease
spend more
tax more
