Fiscal, Limited Monetary, & Ample Monetary Policies

Organize these options into the right categories

Groups:

(a) Fiscal policy tools

,

(b) Limited Monetary tools

,

(c) Ample Monetary Tools

• government spending

• RRR

• IORB

• taxes

• discount rate

• open market operations

• ON RRP

• administered rates

Organize these options into the right categories

Groups:

(a) Expansionary fiscal

,

(b) Contractionary fiscal policy

,

(c) Expansionary Limited Monetary

,

(d) Contractionary Limited Monetary

• decrease taxes

• increase RRR

• decrease govt. spending

• lower RRR

• increase govt. spending

• increase taxes

• sell bonds

• increase discount rate

• buy bonds

• lower discount rate

Organize these options into the right categories

Groups:

(a) Expansionary lmited montary

,

(b) Contractionary limited monetary

,

(c) Expansionary Ample monetary

,

(d) Contractionary Ample monetary

• raise IORB

• lower RRR

• lower discount rate

• raise ON RRP

• lower IORB

• sell bonds

• lower administered rates

• raise RRR

• lower ON RRP

• raise discount rate

• buy bonds

• raise administered rates

Match the following

• fight recession

• expansionary policy

• high unemployment

• inflation

• high prices

• contractionary policy

• fight inflation

• recession

Prices of everyday goods are rising rapidly. The central bank raises interest rates (ample) to cool off consumer borrowing and spending. What economic condition is being described and what policy is best suited to fight it?

• recession, fiscal policy

• inflation, monetary policy

• inflation, fiscal policy

• recession, monetary policy

Unemployment is rising, consumer spending has dropped significantly, and businesses are reducing production. The government is considering increasing infrastructure spending to stimulate demand. What economic condition is being described and what policy is best suited to fight it?

• inflation, fiscal policy

• recession, monetary policy

• recession, fiscal policy

• inflation, monetary policy

Match the following

• portion of deposit banks keep

• overnight reverse repurchase agreement (ON RRP)

• Fed pays interest on accounts at Fed

• Open Market Operations

• sell bonds to Fed and buy back next day

• Interest on reserve balances (IORB)

• buy/sell bonds

• Discount rate

• interest rate Fed charges on loans

• Required reserve ratio (RRR)

Which graph is this?

• Reserves graph

• Money Market Graph

• AD/AS graph

• Phillips Curve Graph

Which graph is this?

• Reserve graph

• Money Market graph

• AD/AS graph

• Phillips Curve graph

Which of the following best describes the difference between fiscal policy and monetary policy?

• fiscal policy involves changing interest rates, while monetary policy controls govt spending and taxation

• fiscal policy is managed by the central bank; while monetary policy is managed by legislative branch

• fiscal policy uses govt spending and taxation to influence the economy, while monetary policy uses interest rates and/or money supply control

• fiscal and monetary policies are both tools exclusively used by the president to control inflation