EPF Exam Review

Which goal will be achieved through a tight monetary policy?

• Inflation controlled

• Economy expands

• More small businesses open

• Consumers have more money

How can the Federal Reserve implement expansionary monetary policy?

• Reduce aggregate demand

• Increasing money in circulation

• Increase government spending

• Trying to generate a budget surplus

How does the Federal Deposit Insurance Corporation(FDIC) protect consumers?

• It insures consumer deposits even if a banking system fails

• It ensures that banks make a profit for investors

• It guarantees consumers a livable income

• It grants credit to consumers in need

How can taking a training course at a community college benefit someone who is unemployed?

• It guarantees a new job

• It provides admission into a degree program

• It provides more opportunities for work

• It guarantees tax reductions for the individual

Which of these can have a negative impact on someone's financial goals?

• Dropping out of high school

• Getting a low-interest loan for a car

• Using credit cards to build a good credit score

• Getting a full-time job while attending college

The Federal Reserve would try to implement an expansionary monetary policy through which measure?

• Reducing aggregate demand

• Increasing currency in circulation

• Increasing government spending

• Trying to generate a budget surplus

How does increasing minimum wage affect the economy overt time?

• It will cause prices to decrease over time

• It will cause prices to increase over time

• It will cause an increase in poverty rates

• It will cause a decrease in employee productivity

How can reducing interest rates during a recession affect a country's economic growth?

• It decreases the supply of money in the economy

• It increases the supply of money in the economy

• It encourages consumers to save money

• It discourages consumers from earning money

How does inflation affect fiscal policy?

• It encourages the Federal Reserve to increase money supply to encourage spending

• It encourages the Federal Reserve to decrease the reserve requirement to encourage banks to grant loans

• It encourages the Federal Reserve to increase interest rates on loans to slow down the economy

• It encourages the Federal Reserve to increase the money supply so consumers do not have to borrow money

Why is it important to monitor the GDP? (Gross Domestic Product)

• It prevents one industry from being too strong

• It create new job market for the unempployed

• It helps consumers choose how to invest money

• It allows consumers to compare the worth of goods and services