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- 1. Multiple ChoiceAn example of expansionary fiscal policy would becutting taxes.cutting government spending.cutting production of consumer goods.cutting prices of consumer goods.
- 2. Multiple ChoiceHow could the Federal Reserve encourage banks to lend out more of their reserves?reduce the discount rateraise the required amount of reserveincrease the prime ratereduce the money supply
- 3. Multiple ChoiceOpen market operations arethe processes by which money enters into circulation.reserves greater than the required amountsthe buying and selling of government securities to alter the supply of money.rates of interest banks charge on short-term loans to their best customers.
- 4. Multiple ChoiceThe rate the Fed charges banks for a loanDiscount rateFederal fund ratereserve ratioprime rate
- 5. Multiple ChoiceThe use of taxes and government spending to affect the economyMonetary PolicyFiscal PolicyContractionary PolicyExpansionary Policy
- 6. Multiple Choicea plan to reduce aggregate demand and slow the economyContractionary Fiscal PolicyExpansionary Fiscal PolicyContractionary Monetary PolicyExpansionary Monetary Policy
- 7. Multiple Choicerefers to government revenue, spending, and debtFractional Reserve BankingLegal ReservesFiscalReserve system
- 8. Multiple ChoiceCongress cutting taxes is an example of ....Fiscal PolicyMonetary Policy
- 9. Multiple ChoiceDuring a recession, which of the following is likely to occur?an increase in real wagesan increase in productionand increase in the GDP growth ratean increase in the unemployment rate
- 10. Multiple ChoiceIf the federal government is attempting to encourage spending by consumers and businesses, a fiscal policy BEST serving this purpose would bedecreasing taxes.decreasing government spending.reducing the investment tax credit.balancing the budget.
- 11. Multiple ChoiceA budget deficit occurs when...The government brings in more revenue than it spends for a given yearThe government spends more money than it brings in for a fiscal year
- 12. Multiple ChoiceThe expansion or contraction of the money supply in order to influence the cost and the availability of credit isMonetary PolicyFiscal PolicyContractionary PolicyExpansionary Policy
- 13. Multiple ChoiceStimulus checks, lower interest rates, decrease in the reserve requirement and lower taxes are all examples ofMonetary PolicyFiscal PolicyContractionary PolicyExpansionary Policy
- 14. Multiple ChoiceHigher interest rates, increase in the reserve requirement and higher taxes are all examples ofMonetary PolicyFiscal PolicyContractionary PolicyExpansionary Policy
- 15. Multiple Choicebanks and other financial institutions must keep a fraction of their deposits in the form of legal reservesFractional Reserve BankingLegal ReservesFiscalReserve system
- 16. Multiple ChoiceIf the unemployment rate is too low, the Federal Reserve should __________ the Federal Funds RateIncreaseDescrease
- 17. Multiple ChoiceIf inflation is too high, the Federal Reserve should __________ the federal funds rate.IncreaseDecrease
- 18. Multiple ChoiceThe Federal Reserve changing the Reserve Requirement is an example of .....Fiscal PolicyMonetary Policy
- 19. Multiple ChoiceMonetary Policy is the use of interest rates by the FED to keep the economy stable.tf
- 20. Multiple ChoiceFiscal Policy is the means by which the government keeps the economy stable through taxes and expenditures.tf
- 21. Multiple ChoiceA balanced budget happens in a country when federal spending (expenditures going out) = federal revenue (taxes brought in).tf
- 22. Multiple ChoiceThe central bank in the USA that regulates the monetary systemThe FEDFDICThe IRSSocial Security
- 23. Multiple ChoiceWhen the Federal Reserve buys government securities/bonds on the open market, what effect does this action have on the nation's money supply and aggregate demand?money supply increases; aggregate demand increasesmoney supply increases; aggregate demand decreasesmoney supply decreases; aggregate demand increasesmoney supply decreases; aggregate demand decreases
- 24. Multiple ChoiceMonetary policies the Federal Reserve can adopt include all of the following EXCEPTraising the discount rate.buying government bonds.lowering the reserve requirement.raising personal income tax rates.
- 25. Multiple ChoiceWhich of the following is primarily responsible for the control of the money supply?the United States TreasuryThe Federal Reserve Systemthe Federal Deposit Insurance Corporationthe Comptroller of the Currency
- 26. Multiple ChoiceIf the money supply increases, and the price level is unchanged, interest rates will fallTF
- 27. Multiple ChoiceThe four types of economic systems are:Traditional, Command, Mixed, & MarketTraditional, Command, Combined, & MarketCommunism, Capitalism, Free Market, and MacroeconomicsMicroeconomics, Macroeconomics, Individual, and Traditional.
- 28. Multiple ChoiceThe Federal Reserve would do which of the following in order to expand the economy?sell bondsraise the discount ratebuy bondsraise the reserve requirement
- 29. Multiple ChoiceMoney loses its value when itIt becomes too plentifulbecomes too portabaleis divisibleis durable
- 30. Multiple Choice
Which of the following results should be included where the question mark appears in the illustration?the reserve requirementinterest rateinflationunemployment - 31. Multiple ChoiceWhich of the following results should be included where the question mark appears in the illustration?unemploymentinflationconsumer spendingproduction
- 32. Multiple ChoiceHow does the Federal Reserve regulate the US monetary policy?adjusting the long-term interest ratesadjusting the short-term interest ratesadjusting long-term taxesadjusting short-term taxes
- 33. Multiple ChoiceIf the Federal Reserve raises interest rates to combat rapid inflation, what might be a negative outcome?Unemployment rates would risetaxes will riseThe government would put a freeze on pricesinternational trade would stop
- 34. Multiple ChoiceOpen market sale is thebuying and selling of U.S. government bonds and treasury billsbuying and selling of stock
- 35. Multiple ChoiceWhich of the following is not a Monetary Policy tool?Bond PurchasesBalance AccountsReserve RequirementsDiscount Rate
- 36. Multiple ChoiceTaxes that increase as income increases.ProgressiveSinProportionalEstate
- 37. Multiple ChoiceIf the economy is in a recession, the Fed should do what with the reserve requirement?raiselowerall of the above ;)
- 38. Multiple ChoiceWhich of the following is a monetary policy action used to combat a recession?cutting taxesincreasing the money supplydecreasing the money supplyraising taxes
- 39. Multiple ChoiceThe Federal Reserve wants to reduce the nation's money supply. This could be accomplished by doing all of the following EXCEPTdecreasing the discount rate.increasing the reserve requirement.selling securities on the open market.making banks hold a reserve for all types of deposits.
- 40. Multiple ChoiceWhat is one benefit of these events?A. decreased savingsB. slower inflationC. decreased unemploymentD. lower taxes
- 41. Multiple ChoiceHow would the flows in this diagram MOST likely be affected by higher personal income tax rates?Line 1 would increaseLine 2 would decreaseLine 3 would decrease.Line 4 would increase.
- 42. Multiple ChoiceIf policy makers are concerned about inflation, which fiscal and monetary policies would be MOST effective?lowering taxes and buying bondslowering taxes and raising the reserve requirementincreasing taxes and lowering the discount rateincreasing taxes and selling bonds
- 43. Multiple ChoiceThe U.S. Department of Defense purchases a new fighter plane. Which statement best describes how the circular economic flow will be affected by this action?Revenue for businesses will increase.Wages for workers will increase.Available labor for businesses will decrease.Available products for households will decrease.
- 44. Multiple ChoiceIf the Federal Reserve System wanted to stimulate the U.S. economy and reduce unemployment, it wouldA. cause interest rates to decrease because low interest rates encourage businessgrowth and expansionB. cause interest rates to rise because high interest rates encourage business growthand expansionC. increase the discount rate it charges banks, which would increase the money supplyD. increase consumer spending by reducing the money supply
- 45. Multiple ChoiceIf the Federal reserve and Government are attempting to encourage growth and stimulate the economy, which actions would each take?
(monetary / fiscal)increase the Required reserve / increase government spendingsell government securities / decrease taxesdecrease the interest rate / increase government spendingbuy government securities / decrease government spending - 46. Multiple ChoiceThe percentage of a deposit that a bank must hold on to is called the ______.Excess ReserveInterest RateCreditRequired Reserve
- 47. Multiple ChoiceHow much must the bank keep on hand if the Required Reserve is 10% and there is a deposit of $100.1001109010
- 48. Multiple ChoiceHow much money must the bank keep on hand if the Required Reserve is 20% and there is a deposit of $1000.20502001020
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