Unit 6 test

Who conducts monetary policy?

• Congress and the President
• The World Bank
• The Federal Reserve
• The Treasury Department

What is the purpose of tight money policy?

• To fight inflation
• To decrease government spending
• To increase unemployment
• To fight recession

What is expansionary fiscal policy?

• Decrease taxes and increase spending
• Increase taxes and decrease spending
• Decrease reserve requirement and increase discount rate
• Buy bonds and sell bonds

What is the crowding-out effect of expansionary fiscal policy?

• Increases government spending
• Increases inflation
• Decreases availability of loanable funds due to government borrowing

• Decreases interest rates

How is contractionary fiscal policy conducted?

• Decrease interest rates and increase reserve requirements
• Decrease taxes and/or increase government spending
• Increase taxes and/or decrease government spending
• Increase interest rates and decrease reserve requirements

Who conducts fiscal policy?

• Congress and the President
• The Federal Reserve
• The World Bank
• The Treasury Department

What is the definition of structural unemployment?

• Unemployment caused by a business cycle contraction
• Unemployment that occurs when workers' skills do not match the jobs that are available or technology
• Unemployment caused by workers that are 'between' jobs
• Unemployment caused by seasonal changes in the demand for certain kinds of labor

What are the tools of fiscal policy?

• Interest rates and reserve requirements
• Inflation and unemployment
• Taxes and government spending
• Open market operations and discount rate

What is the definition of a recession?

• A decline in real GDP lasting at least two quarters
• A long-term economic state characterized by unemployment and low prices
• A period of economic growth as measured by a rise in real GDP
• A period of high economic growth and high unemployment

If there is a recession, what can the Federal Reserve do and what can the government do?

• Increase the discount rate, decrease government spending
• Decrease the discount rate, decrease government spending
• Increase the discount rate, increase government spending
• Decrease the discount rate, increase government spending