Fiscal Policy Quiz 17 (20 MCQs)

Quiz Instructions

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1. A tax on imports is called?

Correct Answer: D) Tariff.

2. The federal budget is the instrument by which the government implements

Correct Answer: A) Fiscal policy.

3. If the economy was going into a recession, what might Congress do?

Correct Answer: D) Increase government spending.

4. The FOMC targets the federal funds rate using this tool

Correct Answer: C) Open market operations.

5. ..... is a tax on the assets of a person who has died

Correct Answer: C) Estate tax.

6. Which is an example of an automatic stabilizer

Correct Answer: C) Progressive tax scheme.

7. If you pay a 6% sales tax on new clothing, this tax is an example of a

Correct Answer: D) Regressive tax.

8. Fiscal policy can be used to create a healthier balance of payments by:

Correct Answer: C) Decreasing government spending and increasing tax.

9. What is the relationship between deficit and debt?

Correct Answer: B) Budget deficits lead to higher debt.

10. Which of these is an example of government expenditure?

Correct Answer: A) Social Security and Benefits.

11. The federal income tax is this category of tax, where your effective rate increases as your income increases.

Correct Answer: D) Progressive.

12. The largest source of federal government revenue (what they bring in) is .....

Correct Answer: A) Personal income taxes.

13. This monetary policy tool is used to determine the amount of deposits that banks must hold

Correct Answer: C) Reserve requirement ratio.

14. The largest source of state and local revenue is .....

Correct Answer: D) Sales taxes.

15. How does the Federal Reserve buying bonds affect the size of the money supply?

Correct Answer: A) It increases the money supply.

16. Which is NOT an example of pork barreling?

Correct Answer: B) $ 2 billion on Veteran's affairs.

17. If Fiscal Policy is trying to promote stability and economic growth through tax cuts, what type of policy is Fiscal policy using?

Correct Answer: B) Expansionary Fiscal Policy.

18. When the Fed buys and sells government securities, they are attempting to influence .....

Correct Answer: D) Federal funds rate.

19. Which of the following is not part of the Fed

Correct Answer: C) Congressional Budget Office.

20. FOMC is made up of ..... and .....

Correct Answer: B) Board of Governors . . . . Five Presidents of the Federal Reserve Banks.