This quiz works best with JavaScript enabled. Home > Economics > Fiscal > Policy > Fiscal Policy – Quiz 2 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Fiscal Policy Quiz 2 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. The following economic indicator gives the percentage of people who are looking for jobs but cannot find one. A) Consumer price index. B) Employment rate. C) Unemployment rate. D) Inflation rate. Show Answer Correct Answer: C) Unemployment rate. 2. Which economic theorist, the "Father of Modern Economics, " believes in using expansionary fiscal policy to battle recessionary periods? A) Thomas Malthus. B) John Maynard Keynes. C) Adam Smith. D) Karl Marx. Show Answer Correct Answer: B) John Maynard Keynes. 3. The primary risk of expansionary fiscal policy is A) Deflation. B) Increasing unemployment. C) Increasing the national debt. D) Decreasing aggregate demand. Show Answer Correct Answer: C) Increasing the national debt. 4. An example of a contractionary fiscal policy would be if: A) Taxes were increased. B) The government bailed out GM. C) Taxes were cut. D) The Fed decrease the fed funds rate. Show Answer Correct Answer: A) Taxes were increased. 5. Contractionary monetary policy is sometimes called A) Decreasing money policy. B) Saving money policy. C) Tight money policy. D) Slow money policy. Show Answer Correct Answer: C) Tight money policy. 6. Reductions of combined consumer and producer surplus A) Surplus. B) Elasticity. C) Deadweight loss. D) Tax incidence. Show Answer Correct Answer: C) Deadweight loss. 7. Discretionary Fiscal Policy A) Changes in government spending or taxes that destabilize the economy. B) Changes in taxes and government spending made by Congress to stabilize the economy. C) Changes in taxes and transfers that occur as GDP changes. D) Policies that are already in place. Show Answer Correct Answer: B) Changes in taxes and government spending made by Congress to stabilize the economy. 8. Which of the following would be an expansionary fiscal policy (increasing economic growth)? A) Raising the value of £. B) Lowering income tax. C) Printing money. D) Lowering government expenditure (spending). Show Answer Correct Answer: B) Lowering income tax. 9. How does someone become a member of the Board of Governors? A) Appointed by Congress. B) Chosen by the Chairman of the Fed. C) Nominated by President. D) Voted on by American citizens. Show Answer Correct Answer: C) Nominated by President. 10. How does a government make money? A) Taxes. B) Selling goods. C) Profit. D) Producing a product. Show Answer Correct Answer: A) Taxes. 11. What is called when government spending is greater than the government revenue? A) Budget surplus. B) Budget deficit. C) Expansionary policy. D) Open market operations. Show Answer Correct Answer: B) Budget deficit. 12. The exchange of goods and services without using money is known as ..... A) Bartering. B) Double coincidence of wants. C) Fiat money. D) Near money. Show Answer Correct Answer: A) Bartering. 13. Expansionary fiscal policy includes all of the following EXCEPT ..... A) Primting More Money. B) Cutting Taxes. C) Increasing Government Spending. D) None of above. Show Answer Correct Answer: A) Primting More Money. 14. The ..... curve illustrates the relationship between tax rates and total tax revenues. A) Wilson. B) Keynesian. C) Laffer. D) Reagan. Show Answer Correct Answer: C) Laffer. 15. Spending that is subject to the appropriations process, where Congress sets a new funding level every year A) Monetary policy. B) Discretionary spending. C) Mandated spending. D) Interest rates. Show Answer Correct Answer: B) Discretionary spending. 16. The total amount of a good or service available in a particular market. A) Aggregate demand. B) Inflation. C) Interest rates. D) Aggregate supply. Show Answer Correct Answer: D) Aggregate supply. 17. Which policy is the Fed likely to adopt during an expansion? A) Expansionary. B) Easy Money. C) Tight Money. D) Contractionary. Show Answer Correct Answer: C) Tight Money. 18. Keynes argued that recessions are due to a deficiency in: A) Consumption. B) Investment. C) Consumption and Investment. D) Government Spending. Show Answer Correct Answer: C) Consumption and Investment. 19. Who makes sure bank customers do not lose their money if a bank fails A) The FED. B) FDIC. C) President and Congress. D) SEC. Show Answer Correct Answer: B) FDIC. 20. What was NOT a goal of the Federal Reserve? A) Take "politics" out of the money supply. B) Have a steady supply of money across the nation. C) To control inflation through raising and lowering interest rates. D) To give Congress and the president more influences over money issues. Show Answer Correct Answer: D) To give Congress and the president more influences over money issues. 21. Contractionary fiscal policy would most likely be used during ..... A) Recessions. B) Times where economy is operating at full employment. C) Periods of sustained, demand pull inflation. D) Anytime we have a negative GDP gap. Show Answer Correct Answer: C) Periods of sustained, demand pull inflation. 22. Which of the following is not a cause of the national deficit A) National Emergencies. B) Stabilization of the Economy. C) Taxes. D) Role of Government in Society. Show Answer Correct Answer: C) Taxes. 23. A rise in the cost of goods and services A) Inflation. B) Monetary policy. C) Interest. D) Discount rate. Show Answer Correct Answer: A) Inflation. 24. What are the top 3 expenditures for the gov A) Healthcare. B) Public goods. C) Military. D) None of above. Show Answer Correct Answer: A) Healthcare. 25. What means the government has spent more than it has raised A) Appropriations. B) Defecit. C) Surplus. D) Revenue. Show Answer Correct Answer: B) Defecit. 26. This is a tax where you pay less the more money you make A) Progressive. B) Flat. C) Proportional. D) Regressive. Show Answer Correct Answer: D) Regressive. 27. What is it called when government spending is less than government revenue? A) Budget deficit. B) Fiscal policy. C) Budget surplus. D) Open market operations. Show Answer Correct Answer: C) Budget surplus. 28. How could the Federal Reserve encourage banks to lend out more of their reserves? A) Reduce the money supply. B) Raise the required amount of reserve. C) Reduce the discount rate. D) Increase the prime rate. Show Answer Correct Answer: C) Reduce the discount rate. 29. A plan to reduce aggregate demand and slow the economy by raising taxes and decreasing government spending A) Expansionary Monetary Policy. B) Contractionary Fiscal Policy. C) Contractionary Monetary Policy. D) Expansionary Fiscal Policy. Show Answer Correct Answer: B) Contractionary Fiscal Policy. 30. Which of the following is NOT a way the Fed influences the money supply? A) Influencing interest rates. B) Buying or selling government securities. C) Decreasing taxes. D) Changing the reserve ratio. Show Answer Correct Answer: C) Decreasing taxes. ← PreviousNext →Related QuizzesFiscal QuizzesEconomics QuizzesFiscal Policy Quiz 1Fiscal Policy Quiz 3Fiscal Policy Quiz 4Fiscal Policy Quiz 5Fiscal Policy Quiz 6Fiscal Policy Quiz 7Fiscal Policy Quiz 8Fiscal Policy Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books