Macro Part 2: Fiscal Policy A

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Who controls fiscal policy?

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The Federal Government

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What is the purpose of Fiscal Policy?

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contribute to economic growth and stability

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During economic crisis, the primary role of the Federal Government is to promote a healthy economy by...

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manipulating taxes and government spending

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During a recession, the Federal Government should use...

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Expansionary Policy

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Increasing Government Spending...

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increases money supply

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Which of the following scenarios would cause the nation’s money supply to increase? Decreasing government spending, Raising interest rates, Selling bonds to investors, Decreasing Taxes

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Decreasing Taxes

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An increase in government spending leads to...

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An increase in public goods and services

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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.

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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.

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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