This quiz works best with JavaScript enabled. Home > Economics > Fiscal > Policy > Fiscal Policy – Quiz 12 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Fiscal Policy Quiz 12 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. What is the purpose of monetary policy? A) To make people pay more money on their home loans. B) To reduce the amount of debt the government has. C) To increase or lower the taxes on imported goods. D) To change the interest rates depending on the circumstances in the economy. Show Answer Correct Answer: D) To change the interest rates depending on the circumstances in the economy. 2. A plan to reduce aggregate demand and slow the economy A) Contractionary Fiscal Policy. B) Contractionary Monetary Policy. C) Expansionary Monetary Policy. D) Expansionary Fiscal Policy. Show Answer Correct Answer: A) Contractionary Fiscal Policy. 3. Money must be portable. Portable means A) Limited in supply. B) Easy to carry. C) Easily identified. D) Long lasting. Show Answer Correct Answer: B) Easy to carry. 4. A flat tax would be a great example of this A) Sales. B) Proportional. C) Regressive. D) Progressive. Show Answer Correct Answer: B) Proportional. 5. The Fed is ..... A) Owned and controlled by congress. B) Independent of the government. C) Owned and controlled by the banking industry. D) All of these are somewhat correct. Show Answer Correct Answer: B) Independent of the government. 6. Stimulus checks, lower interest rates, decrease in the reserve requirement and lower taxes are all examples of A) Expansionary Policy. B) Contractionary Policy. C) Fiscal Policy. D) Monetary Policy. Show Answer Correct Answer: A) Expansionary Policy. 7. If you deposit $ 6, 000 into a bank that has a required reserve ratio of 0.1, how much of that money is the bank required to keep on hand? A) $ 3, 000. B) $ 1, 800. C) $ 600. D) $ 1, 000. Show Answer Correct Answer: C) $ 600. 8. The most desirable budget outcome is A) A balanced budget. B) One appropriate for current economic conditions. C) A surplus budget. D) A deficit budget. Show Answer Correct Answer: B) One appropriate for current economic conditions. 9. What action would the Federal Reserve take to control inflation? A) Buy government securities. B) Decrease the required reserve ratio. C) Increase taxes. D) Increase the discount rate. Show Answer Correct Answer: D) Increase the discount rate. 10. Taxes that come out of your paycheck include which ones? A) Social Security and Medicare taxes. B) Social Security and Excise taxes. C) Estate taxes and tariffs. D) Sales and progressive taxes. Show Answer Correct Answer: A) Social Security and Medicare taxes. 11. Cash that banks must keep in the vault. A) Required reserves. B) Fiscal policy. C) Crowding out effect. D) Excess reserves. Show Answer Correct Answer: A) Required reserves. 12. If the Fed wanted to expand monetary policy, which might they do? A) Increase the interest rate. B) Decrease the interest rate. C) Increase reserves, limiting what banks can loan. D) Lower taxes. Show Answer Correct Answer: B) Decrease the interest rate. 13. Metallic forms of money such as pennies, nickles, dimes, and quarters. A) Coins and currency. B) Currency. C) Coins. D) Debit cards. Show Answer Correct Answer: C) Coins. 14. The amount of money that banks hold on hand to ensure that it is able to handle sudden withdrawals. A) Discount rates. B) Reserve requirements. C) Interest rates. D) Government securities. Show Answer Correct Answer: B) Reserve requirements. 15. When the FOMC engages in buying and selling of US securities it is called ..... A) Fiscal policy. B) Stock operations. C) Open market operations. D) Tax and spend policy. Show Answer Correct Answer: C) Open market operations. 16. Which of the following lessens the impact of Expansionary Fiscal Policy? A) Increase in MPC. B) Higher interest rates decrease private investment. C) Lower interest rates decrease net exports. D) Higher interest rates increase net exports. Show Answer Correct Answer: B) Higher interest rates decrease private investment. 17. The actions taken by a central bank to influence the availability and cost of money and credit to help promote national economic goals A) Tax Policy. B) Fiscal Policy. C) Welfare Policy. D) Monetary Policy. Show Answer Correct Answer: D) Monetary Policy. 18. Fiscal Policy is controlled by ..... A) The states. B) The Federal Reserve System. C) The Department of Commerce. D) The Government. Show Answer Correct Answer: D) The Government. 19. Which of the following is NOT a function of our money A) Holds value. B) Buys stuff. C) Is in limited supply. D) Gives value to objects. Show Answer Correct Answer: C) Is in limited supply. 20. If the government implements expansionary fiscal policy, the budget will move towards ..... and the debt will ..... A) Surplus; increase. B) Deficit; decrease. C) Deficit; increase. D) Surplus; decrease. Show Answer Correct Answer: C) Deficit; increase. 21. This is a period of temporary economic decline during which trade and industrial activity are reduced. A) Recession. B) Inflation. C) Aggregate Demand. D) Demand. Show Answer Correct Answer: A) Recession. 22. On the Business Cycle, where would you find the period of time when recovering from a recession? A) Trough. B) Trend line. C) Peak. D) Recovery. Show Answer Correct Answer: D) Recovery. 23. If credit and borrowing are expanding, which of the following is false A) Decrease government spending. B) Decrease taxes. C) Sell bonds. D) Want to decrease the money supply. Show Answer Correct Answer: B) Decrease taxes. 24. How many districts are there for the Federal Reserve Banks? A) 12. B) 100. C) 50. D) 15. Show Answer Correct Answer: A) 12. 25. To promote higher economic growth, the best way is to A) Decrease government spending and increase taxation. B) Decrease government spending and decrease taxation. C) Increase government spending and decrease taxation. D) Increase government spending and increase taxation. Show Answer Correct Answer: C) Increase government spending and decrease taxation. 26. The Board that supervises the sale and purchase of government subsidies is called the A) Federal Bond Advisory Committee. B) Federal Open Market Committee. C) Federal Sale and Purchase Committee. D) Federal Securities Committee. Show Answer Correct Answer: B) Federal Open Market Committee. 27. The government uses fiscal policy to try and achieve ..... A) Full employment. B) Stable prices. C) Economic growth. D) All of these. Show Answer Correct Answer: D) All of these. 28. A plan to increase aggregate demand and stimulate the economy by increasing the demand for money A) Contractionary Fiscal Policy. B) Contractionary Monetary Policy. C) Expansionary Fiscal Policy. D) Expansionary Monetary Policy. Show Answer Correct Answer: C) Expansionary Fiscal Policy. 29. Which of the following is NOT a goal of fiscal policy? A) Economic Growth. B) Deficit Growth. C) Stable Prices. D) Full Employment. Show Answer Correct Answer: B) Deficit Growth. 30. Under what circumstances might the government use contractionary fiscal policy? A) When it is trying to increase government spending. B) When it is trying to increase government revenue. C) When it is trying to fight inflation. D) When it is trying to end a recession. Show Answer Correct Answer: C) When it is trying to fight inflation. ← 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