Econ Unit 4: Fiscal and Monetary Policy

Fiscal policy involves laws and actions that the government takes regarding:

• interest rates and money supply

• taxing and spending

• foreign and domestic issues

• trade exports and imports

Monetary policy involves: (check all that apply)

• adjusting interest rates

• adjusting the amount of money in circulation

• adjusting income taxes

• adjusting the federal budget

Who makes monetary policy decisions?

• The Federal Reserve Bank

• Congress

• The President

• The House of Representatives

What are the responsibilities of the Federal Reserve Bank? (Check all that apply)

• Regulate other banks

• Enact monetary policy

• Serve as the central bank of the United States government

• Issue loans to citizens and foreign companies

The federal government raises the majority of the revenue for its budget through:

• taxation

• loans

• selling assets

• investments

When the government runs out of revenue, how does it pay for things in the budget?

• It raises income and capital gains taxes

• It borrows money from individuals and other countries

• It sells off assets like property and equipment

• It shuts down until the next fiscal year starts

As your income increases, the rate of your taxes also increases. This is an example of what kind of taxation?

• progressive

• regressive

• proportional

• flat tax

This type of tax typically affects people with lower incomes more, usually through sales taxes and excise taxes.

• progressive

• regressive

• proportional

• flat tax

This type of tax is also know as the "flat tax," because everyone is taxed at the same rate no matter how high or low their income is.

• progressive

• regressive

• proportional

• excise

Which two areas make up the majority of the federal budget? (Check all that are correct)

• social welfare programs

• defense

• police and fire fighters

• infrastructure and roads