This quiz works best with JavaScript enabled. Home > Economics > Fiscal > Policy > Fiscal Policy – Quiz 3 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Fiscal Policy Quiz 3 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Taxes that impose a higher percentage of taxes on lower incomes than on higher incomes A) Regressive. B) Progressive. C) Proportional. D) All of these. Show Answer Correct Answer: A) Regressive. 2. What body of the Federal Reserve oversees the purchase and sale of government securities/bonds? A) Federal Open Market Committee. B) Advisory Council. C) Board of Governors. D) Federal Reserve Bank of Dallas. Show Answer Correct Answer: A) Federal Open Market Committee. 3. ..... must approve the President's annual budget. A) U.S. Supreme Court. B) Cabinet. C) Congress. D) All. Show Answer Correct Answer: C) Congress. 4. Policies meant to slow down the economy. A) Monetary policies. B) Contractionary policies. C) Expansionary policies. D) Fiscal policies. Show Answer Correct Answer: B) Contractionary policies. 5. What is NOT one of the things a gov't might do as part of an Expansionary Fiscal Policy? A) Increase spending. B) Cut spending. C) Lower taxes. D) Issue rebates. Show Answer Correct Answer: B) Cut spending. 6. The interest rate the FED charges banks A) Commercial interest rate. B) Prime rate. C) Federal funds rate. D) Discount rate. Show Answer Correct Answer: D) Discount rate. 7. Fiscal policy can be used to achieve price stability by: A) Increasing government spending and increasing tax. B) Increasing government spending and decreasing tax. C) Decreasing government spending and increasing tax. D) Decreasing government spending and decreasing tax. Show Answer Correct Answer: C) Decreasing government spending and increasing tax. 8. Comparing price tags at different stores is using money as a A) Bartering. B) Medium of exchange. C) Unit of account. D) Store of value. Show Answer Correct Answer: C) Unit of account. 9. Why does the Federal Reserve require banks to keep a percentage of their funds as reserves?[ A) To buy bonds. B) To supply cash withdrawals. C) To balance the budget. D) To fund business investments. Show Answer Correct Answer: B) To supply cash withdrawals. 10. Fiscal policy is ..... A) The policy of states to tax their population. B) Supply and Demand Originators. C) The federal government's attempt to stabilize the economy through taxing and spending. D) An outdated means of using tax revenue. Show Answer Correct Answer: C) The federal government's attempt to stabilize the economy through taxing and spending. 11. Which of the following is primarily responsible for the control of the money supply? A) The Comptroller of the Currency. B) The Federal Deposit Insurance Corporation. C) The United States Treasury. D) The Federal Reserve System. Show Answer Correct Answer: D) The Federal Reserve System. 12. The Federal Reserve System monitors and regulates the US ..... and ..... system. A) Monetary . . . banking. B) Trade . . . commerce. C) Regulation . . . investment. D) Tax . . . spending. Show Answer Correct Answer: A) Monetary . . . banking. 13. Which of the following is NOT a feature of expansionary fiscal policy? A) Decrease aggregate demand. B) Increase government spending. C) Cut taxes. D) Decrease unemployment. Show Answer Correct Answer: A) Decrease aggregate demand. 14. The amount of deposits that banks are required to hold and not lend out are the ..... A) Hold backs. B) Bank balances. C) Reserves. D) Loan rates. Show Answer Correct Answer: C) Reserves. 15. When does a budget surplus occur? A) When a country imports more than it exports. B) When public expenditure exceeds government revenues. C) When government revenues exceed public expenditure. D) When a country exports more than it imports. Show Answer Correct Answer: C) When government revenues exceed public expenditure. 16. ..... occurs when a government deficit drives up the interest rate and leads to reduced investment spending. A) Rate of Return. B) Crowding Out. C) Loanable Funds Market. D) Fisher Effect. Show Answer Correct Answer: B) Crowding Out. 17. The Central Bank of the United States is called the A) Federal Reserve System. B) National Reserve System. C) Government Reserve System. D) State Reserve System. Show Answer Correct Answer: A) Federal Reserve System. 18. Why don't government's use expansionary policies all of the time if they put more money in consumer's pockets? A) Political Pressure. B) No discretionary spending available. C) The infrastructure of the country may suffer. D) Potential Recession. Show Answer Correct Answer: B) No discretionary spending available. 19. The largest category of spending for the federal government is ..... A) Interest on the federal debt. B) The military. C) Entitlement programs such as Social Security and Medicare. D) Education. Show Answer Correct Answer: C) Entitlement programs such as Social Security and Medicare. 20. Using government spending to increase aggregate demand most of the time is an example of A) Supply-side fiscal policy. B) Demand-side fiscal policy. C) Automatic stabilizers. D) Discretionary fiscal policy. Show Answer Correct Answer: B) Demand-side fiscal policy. 21. Which policies counteract (go against) each other A) Increasing taxes and selling bonds. B) Increasing government spending and selling bonds. C) Decreasing taxes and decreasing reserve requirement. D) Decreasing government spending and increasing the reserve requirement. Show Answer Correct Answer: B) Increasing government spending and selling bonds. 22. What would be the most likely reason for the government to enact contractionary fiscal policy ..... to slow down economic growth? A) To lower the unemployment rate. B) To slow down inflation (rising prices). C) To increase imports. D) None of above. Show Answer Correct Answer: B) To slow down inflation (rising prices). 23. In the United States, fiscal policy is made by A) Executive order from the President. B) A process involving different branches of government. C) Central planners working for Congress. D) The actions of consumers and producers in the market. Show Answer Correct Answer: B) A process involving different branches of government. 24. Higher interest rates, increase in the reserve requirement and higher taxes are all examples of A) Monetary Policy. B) Fiscal Policy. C) Contractionary Policy. D) Expansionary Policy. Show Answer Correct Answer: C) Contractionary Policy. 25. During economic crisis, the primary role of the Federal Government is to promote a healthy economy by ..... A) Controlling the budget. B) Setting spending levels. C) Manipulating taxes and government spending. D) Loaning out money. Show Answer Correct Answer: C) Manipulating taxes and government spending. 26. The Federal Reserve System is commonly called ..... A) The "big apple". B) The "big bank". C) The "tax collector". D) The "Fed". Show Answer Correct Answer: D) The "Fed". 27. The Board of Governors consists of A) 6 members who supervise the Fed. B) 7 members who supervise the Fed. C) 9 members who supervise the Fed. D) 8 members who supervise the Fed. Show Answer Correct Answer: B) 7 members who supervise the Fed. 28. Number of federal reserve district banks? A) 12. B) 5. C) 21. D) 10. Show Answer Correct Answer: A) 12. 29. Fiscal policy is defined as: A) The use of government taxing and spending to promote economic stability. B) The policy of laissez-faire. C) A set of government actions designed to increase unemployment over 5%. D) The use of government quotas to decrease GDP and unemployment. Show Answer Correct Answer: A) The use of government taxing and spending to promote economic stability. 30. What do taxes collected under FICA fund? A) Medicaid. B) Defense Spending. C) Social Security and Medicare. D) SNAP and Medicaid. Show Answer Correct Answer: C) Social Security and Medicare. ← PreviousNext →Related QuizzesFiscal QuizzesEconomics QuizzesFiscal Policy Quiz 1Fiscal Policy Quiz 2Fiscal 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