This quiz works best with JavaScript enabled. Home > Economics > Fiscal > Policy > Fiscal Policy – Quiz 10 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Fiscal Policy Quiz 10 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Government plans to spend exactly the same amount as its income A) Budget Constraint. B) Budget Surplus. C) Budget Deficit. D) Balanced Budget. Show Answer Correct Answer: D) Balanced Budget. 2. Which of the following IS NOT a monetary policy tool of the Federal Reserve? A) Discount rate. B) Buying & selling US Securities. C) Required reserve ratio. D) Decreasing government spending. Show Answer Correct Answer: D) Decreasing government spending. 3. The formula used to calculate the amount a bank needs to keep on reserve at the Federal Reserve is known as A) Excess reserves. B) Discount rate. C) Prime rate. D) Reserve requirement. Show Answer Correct Answer: D) Reserve requirement. 4. Decisions made by Congress & the White House that focused on the taxes and government spending. A) Fiscal policy. B) Monetary policy. C) Discretionary spending. D) Mandatory spending. Show Answer Correct Answer: A) Fiscal policy. 5. ..... is a rate that a bank pays customers for keeping their money A) Collateral. B) Interest. C) Deposit. D) Currency. Show Answer Correct Answer: B) Interest. 6. Expansionary Fiscal Policy is usually characterized by: A) Deficit Spending. B) Budget Surplusses. C) A balanced budget. D) None of above. Show Answer Correct Answer: A) Deficit Spending. 7. A period of time when recovering from a recession? A) Trough. B) Expansion. C) Trend line. D) Peak. Show Answer Correct Answer: B) Expansion. 8. Taxes that increase as income increases. A) Proportional. B) Sin. C) Progressive. D) Estate. Show Answer Correct Answer: C) Progressive. 9. This is the branch of economic theory focused on the economy as a whole and decision making by large units, sudh as governments and unions. A) Microeconomics. B) Macroeconomics. C) Keynesian economics. D) None of above. Show Answer Correct Answer: B) Macroeconomics. 10. The amount of money (based on a percentage) that is repaid on money borrowed. A) Interest rates. B) Reserve requirements. C) Debt. D) Inflation. Show Answer Correct Answer: A) Interest rates. 11. FOMC, the policy making body of the Fed, stands for- A) Federal Open Market Committee. B) Final Organized Money Company. C) Financial Options Management Corporation. D) Fiscal Operating Money Committee. Show Answer Correct Answer: A) Federal Open Market Committee. 12. Which is NOT a characteristic of expansionary fiscal policy? A) Buying bonds. B) Deregulating the mortgage industry. C) Increasing road construction projects. D) Decreasing FICA tax. Show Answer Correct Answer: A) Buying bonds. 13. Which of the following will most likely create an "expansion" to occur in the economy. A) Contractionary fiscal policy. B) Cutting government spending. C) Cutting taxes. D) Increasing the discount rate. Show Answer Correct Answer: C) Cutting taxes. 14. This group is responsible for implementing fiscal policy A) Federal Reserve Board. B) Council of Economic Advisors. C) U.S. President. D) U.S. Congress. Show Answer Correct Answer: D) U.S. Congress. 15. Which is an example of contractionary fiscal policy? A) The government increasing taxes on all goods and services by 5%. B) The president issues an executive order. C) The federal reserve purchases bonds. D) Government spending increasing. Show Answer Correct Answer: A) The government increasing taxes on all goods and services by 5%. 16. Spending required by law A) Discretionary spending. B) Mandatory spending. C) Federal spending. D) Surplus spending. Show Answer Correct Answer: B) Mandatory spending. 17. The theory of the Laffer curve was used to argue for ..... A) Increasing government revenue. B) Cutting income tax rates. C) Raising income tax rates. D) Decreasing aggregate demand. Show Answer Correct Answer: B) Cutting income tax rates. 18. Providing incentives to producers to increase aggregate supply is the main focus of A) Automatic stabilizers. B) Demand-side fiscal policy. C) Discretionary fiscal policy. D) Supply-side fiscal policy. Show Answer Correct Answer: D) Supply-side fiscal policy. 19. What is it called when the government takes in more in revenue than it appropriates? A) Defecit. B) Revenue. C) Surplus. D) Appropriations. Show Answer Correct Answer: C) Surplus. 20. When Alison, a college math professor, leaves her job at a small rural college and starts looking for a job at large urban university, she is A) Structurally unemployed. B) Cyclical unemployed. C) Season unemployed. D) Frictional unemployed. Show Answer Correct Answer: D) Frictional unemployed. 21. One drawback of using Fiscal Policy to close a recessionary gap is that A) Government spending will have to be cut. B) Unemployment will rise. C) Taxes will have to raise. D) Equilibrium price wil rise. Show Answer Correct Answer: D) Equilibrium price wil rise. 22. The Tools of Fiscal Policy A) OMO and DR. B) G and RR. C) K and T. D) G and T. Show Answer Correct Answer: D) G and T. 23. Higher direct taxes can ..... A) Make work more attractive. B) Only work if unemployment is high. C) Reduce the incentive to work. D) Not redistribute wealth. Show Answer Correct Answer: C) Reduce the incentive to work. 24. To solve recession gap implement ..... discretionary fiscal policy and to solve inflation gap implement ..... discretionary fiscal policy. A) Contractionary ; contractionary. B) Expansionary ; contractionary. C) Contractionary ; expansionary. D) None of above. Show Answer Correct Answer: B) Expansionary ; contractionary. 25. When the Federal Reserve increases the reserve requirement, what type of policy are they practicing? A) Expansionary Fiscal Policy. B) Expansionary Monetary Policy. C) Contractionary Monetary Policy. D) Contractionary Fiscal Policy. Show Answer Correct Answer: C) Contractionary Monetary Policy. 26. Which is an example of proportional tax? A) Corporate income tax. B) Death tax. C) Federal income tax. D) Sales tax. Show Answer Correct Answer: D) Sales tax. 27. This is the yearly plan for how the US Government will spend the money it takes from taxes and borrowing A) Federal budget. B) The task. C) Discretionary spending. D) Mandatory spending. Show Answer Correct Answer: A) Federal budget. 28. If the U.S. economy moves into recession due to a decline in consumer confidence, which of the following do we not expect? A) The U.S. dollar will depreciate. B) The U.S. interest rate will fall. C) GDP in other countries will expand. D) None of above. Show Answer Correct Answer: C) GDP in other countries will expand. 29. The interest rate the Fed charges banks for loans is called A) Discount rate. B) Monetary policy. C) Contractionary policy. D) Required reserve ratio. Show Answer Correct Answer: A) Discount rate. 30. A direct tax is ..... A) A tax on income or wealth. B) A tax on goods and services. C) A tax paid by consumers. D) A tax paid by producers. Show Answer Correct Answer: A) A tax on income or wealth. ← PreviousNext →Related QuizzesFiscal QuizzesEconomics QuizzesFiscal Policy Quiz 1Fiscal Policy Quiz 2Fiscal Policy Quiz 3Fiscal Policy Quiz 4Fiscal Policy Quiz 5Fiscal Policy Quiz 6Fiscal Policy Quiz 7Fiscal Policy Quiz 8 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books