Monetary and Fiscal Policy

Who does fiscal policy?

• The government

• The Central Bank

• The FED

• The Federal Reserve

Who does monetary policy?

• The Government

• The central bank

• The FED

• The Federal Reserve

Actual output is greater than potential output, the government should

• decrease taxes

• sell bonds

• decrease government spending

• increase government spending

Actual output is greater than potential output, the central bank should

• decrease taxes

• sell bonds

• decrease government spending

• buy bonds

Jonny uses $20 to buy lunch. What function of money does this describe?

• store of value

• medium of exchange

• unit of account

• fiat money

Jonny compares the price of a trip to Australia with the price of buying a used car for his daughter. Which function of money is money serving in this example?

• store of value

• medium of exchange

• unit of account

• Howdy neighbor

Who does open market operations?

• The government

• The Federal Reserve Bank

The economy is experiencing high unemployment and low growth. What should the central bank do in the open market?

• contractionary policy, sell bonds

• expansionary policy, sell bonds

• contractionary policy, buy bonds

• expansionary policy, buy bonds

If there is a recessionary gap, the central wants to __________ money supply so that the interest rate _____________.

• increase , decrease

• increase, increase

• decrease , decrease

• decrease, increase

The money supply curve in the money market is

• horizontal

• upward sloping

• vertical

• downward sloping