Fiscal and Monetary Policy Test

Front

Fiscal Policy is controlled by...

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The Government

Front

Taxing & spending to help the economy grow is referred to as

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expansionary policy

Front

An example of expansionary fiscal policy would be: cutting taxes., cutting government spending., cutting production of consumer goods., cutting prices of consumer goods.

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cutting taxes.

Front

If the unemployment rate is rising and GDP is falling, what fiscal policy action should the federal government MOST likely follow? Options: decreasing taxes, decreasing spending, decreasing the money supply, decreasing the reserve requirement.

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decreasing taxes.

Front

If an economy experiences a dramatic rise in prices, which fiscal policy action could be taken? Options: Selling securities on the open market, Raising interest rates, Reducing government spending, Raising reserve requirements

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Reducing government spending

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The Federal government is concerned that economic growth is too high, that it is unsustainable, and that inflation is resulting. Which fiscal policy might be enacted to reduce inflation? Options: Increasing taxation, Open market sales, decreasing taxation, Increasing government spending

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Increasing taxation

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Who is in charge of Monetary Policy?

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The Federal Reserve System

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During a recession, the Fed should use...

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an expansionary policy

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During an expansion, the Fed should use...

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a contractionary policy

Front

Monetary Policy relates to decisions about...

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Interest rates & the money supply