FISCAL & MONETARY POLICY

Match the terms regarding fiscal & monetary policy

• Contractionary policy

• Budget Deficit

• The gov't spent more money than it received in taxes

• Easy Money policy

• the Central bank of the USA

• Budget Surplus

• the gov't received more tax revenue than it spent

• Tight Money policy

• Expansionary policy

• The Federal Reserve

Economic growth is important because it

• helps maintain a higher standard of living

• helps the US be more competitive in global markets

• provides the resources to deal with domestic problems

• All of the above

Which of the following is NOT a goal for

government spending and fiscal policy?

• create a budget deficit

• reduce unemployment

• increase employment opportunities

• increase aggregate demand

Which of the following occurs when

government revenues are less than

government expenditures in a given year?

• budget surplus

• balanced budget

• budget deficit

• inflation

Which of the following are elements of an

expansionary fiscal policy?

• increase taxes, increase gov't spending

• decrease taxes, decrease gov't spending

• decrease taxes, increase gov't spending

• increased taxes, decrease gov't spending

The Federal Reserve does all of the

following, EXCEPT...

• hold cash reserves

• make loans to the US gov't and other banks

• provides financial planning services to individuals

• sets interest rates

Easy-money (expansionary) policy is best used to help an

economy during a period of:

• Expansion

• Peak

• Inflation

• Recession

What is the goal of monetary policy?

• create a national deficit

• stabilize the economy

• increase trade restrictions

• increase consumer credit

Restrictive or contractionary fiscal policy:

• increases taxes and/or reduces gov't spending

• stimulates business activity

• increases aggregate demand

• increases people's disposable income

US income tax takes a larger percentage

from a high-income wage earner than from a

low-income wage earner which is known as a:

• descending tax

• regressive tax

• progressive tax

• flat tax