This quiz works best with JavaScript enabled. Home > Economics > Fiscal > Policy > Fiscal Policy – Quiz 16 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Fiscal Policy Quiz 16 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. During periods of inflation the Fed will ..... the money supply by ..... government securities. A) Increase . . . selling. B) Decrease . . . selling. C) Increase . . . buying. D) Decrease . . . buying. Show Answer Correct Answer: B) Decrease . . . selling. 2. Unemployment rate has doubled, the FED should A) Buy bonds. B) Lower taxes. C) Increase government spending. D) Increase discount rate. Show Answer Correct Answer: A) Buy bonds. 3. Jake wants to purchase a video game for $ 10. Jake hands the cashier a $ 10 bill plus two $ 1 bills for tax. What tax is Jake paying? A) Property Tax. B) Payroll Tax. C) Income Tax. D) Sales Tax. Show Answer Correct Answer: D) Sales Tax. 4. The central bank in the USA that regulates the monetary system is known as A) Social Security. B) The FED. C) FDIC. D) The IRS. Show Answer Correct Answer: B) The FED. 5. Unlike Keynesian economics, this fiscal policy focuses on increasing aggregate supply to stimulate economic growth by giving businesses tax cuts and deregulation. A) Supply side economics. B) Discretionary spending. C) Contractionary fiscal policy. D) Demand pull inflation. Show Answer Correct Answer: A) Supply side economics. 6. When revenues exceed expenditures ..... A) The government is forced to issue bonds. B) There is a budget deficit. C) There is a budget surplus. D) The government must create more money. Show Answer Correct Answer: C) There is a budget surplus. 7. Who is the current Chairman of the Federal Reserve? A) Alan Greenspan. B) Janet Yellen. C) Jerome Powell. D) Paul Ryan. Show Answer Correct Answer: C) Jerome Powell. 8. The branch of the US Treasury in charge of taxes is the ..... A) CIA. B) DNA. C) IRS. D) FBI. Show Answer Correct Answer: C) IRS. 9. If GDP is decreasing and the unemployment rate is increasing, which fiscal policy would the government MOST likely use? A) Increase taxes. B) Decrease spending. C) Increase bank reserves. D) Decrease taxes. Show Answer Correct Answer: D) Decrease taxes. 10. Which economist favored government intervention in the economy? A) Adam Smith. B) Glen Whitman. C) John Maynard Keynes. D) Ben Stein. Show Answer Correct Answer: C) John Maynard Keynes. 11. A transfer payment is when the government A) Pays only for roads. B) Pays for trade with other countries. C) Buys something that get nothing in exchange for. D) Pays only for Medicare. Show Answer Correct Answer: C) Buys something that get nothing in exchange for. 12. The idea that a change in spending increases national income by greater than the amount of initial change is called A) The Fiscal Effect. B) The Lorenz Curve. C) The Laffer Curve. D) The Multiplier Effect. Show Answer Correct Answer: D) The Multiplier Effect. 13. Contractionary Policy will A) Increase G and Increase T. B) Increase G and Decrease T. C) Decrease G and Decrease T. D) Decrease G and Increase T. Show Answer Correct Answer: D) Decrease G and Increase T. 14. What is NOT a consequence of contractionary fiscal policy A) Aggregate demand shifts left. B) Price level increases. C) Unemployment increases. D) Output decreases. Show Answer Correct Answer: B) Price level increases. 15. The amount by which saving changes when disposable income changes A) Marginal propensity to save. B) Expansionary fiscal policy. C) Marginal propensity to consume. D) General savings. Show Answer Correct Answer: A) Marginal propensity to save. 16. To implement expansionary fiscal policy, the government is likely to A) Cut both taxes and spending. B) Increase both taxes and spending. C) Cut taxes and increase spending. D) Increase taxes and cut spending. Show Answer Correct Answer: C) Cut taxes and increase spending. 17. Lower Income = Higher Taxes A) Regressive. B) Progressive. C) Proportional. D) None of above. Show Answer Correct Answer: A) Regressive. 18. This government economic policy is set by the political branches of government. A) Fiscal Policy. B) Open Market Operations. C) Monetary Policy. D) The Reserve Requirement. Show Answer Correct Answer: A) Fiscal Policy. 19. Which is a key characteristic of an automatic stabilizer? A) They take time to be implemented. B) They occur automatically based on the phase of the business cycle we are in. C) They must be paid back to the government. D) Only corporations have access to automatic stabilizers. Show Answer Correct Answer: B) They occur automatically based on the phase of the business cycle we are in. 20. Contractionary fiscal policy are law aimed at reducing inflation. How might Congress use contractionary fiscal policy? A) Decrease government spending and increase taxes. B) Decrease taxes. C) Send stimulus checks to every person in the economy. D) Increase government spending. Show Answer Correct Answer: A) Decrease government spending and increase taxes. 21. The total demand for goods and services within a particular market. A) Aggregate supply. B) Inflation. C) Aggregate demand. D) Interest rates. Show Answer Correct Answer: C) Aggregate demand. 22. Policies involving increased government spending and reduced taxes to increase the level of aggregate demand. A) Expansionary Policy. B) Contractionary Policy. C) Fiscal Policies. D) Monetary Policies. Show Answer Correct Answer: A) Expansionary Policy. 23. All spending that does NOT take place through the appropriations legislation. (fixed spending) A) Discretionary spending. B) Fiscal policy. C) Monetary policy. D) Mandatory spending. Show Answer Correct Answer: D) Mandatory spending. 24. Contractionary fiscal policy includes all of the following EXCEPT ..... A) Physically Destroying Money. B) Raising Taxes. C) Cutting Government Spending. D) None of above. Show Answer Correct Answer: A) Physically Destroying Money. 25. The rate the South African Reserve Bank charges banks for a loan A) Overdraft rate. B) Prime rate. C) Repo rate. D) Reserve ratio. Show Answer Correct Answer: C) Repo rate. 26. A budget deficit means that A) The Government collected more in taxes than it spent. B) The Government spent more money than the Federal Reserve. C) The Government spent more money than it collected in taxes. D) The Federal Reserve spent more money than the government. Show Answer Correct Answer: C) The Government spent more money than it collected in taxes. 27. Contractionary Fiscal Policy involves A) Increase the money supply and increase interest rates. B) Increasing govt. spending and decrease taxes. C) Decrease interest rates decrease money supply. D) Decrease govt. spending and increase taxes. Show Answer Correct Answer: D) Decrease govt. spending and increase taxes. 28. A recession would cause what type of move on the Phillips Curve? A) Movement up the SRPC. B) Movement down the SRPC. C) A shift to the right of the SRPC. D) A shift to the left of the SRPC. Show Answer Correct Answer: B) Movement down the SRPC. 29. If the government wants to stimulate(speed up) the economy the Federal Reserve will A) Collect taxes. B) Lower the discount rate. C) Sell bonds. D) Increase the reserve requirement. Show Answer Correct Answer: B) Lower the discount rate. 30. Which of the following is an example of "supply-side" economics? A) Higher federal taxes. B) Trying to increase aggregate demand. C) More government agencies and oversight. D) Reduced government regulation. Show Answer Correct Answer: D) Reduced government regulation. ← 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