This quiz works best with JavaScript enabled. Home > Economics > Fiscal > Policy > Fiscal Policy – Quiz 5 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Fiscal Policy Quiz 5 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Which combination of fiscal and monetary policy would increase GDP growth? A) Decrease taxes; decrease discount rate. B) Increase spending; increase interest on reserves. C) Decrease spending; sell bonds via open market operations. D) Increase taxes; decrease reserve requirement. Show Answer Correct Answer: A) Decrease taxes; decrease discount rate. 2. In institution that accepts deposits and makes loans is defined as A) Insurance. B) Gambling. C) A bank. D) A loan shark. Show Answer Correct Answer: C) A bank. 3. If the economy is in an inflationary period, what action would Fiscal Policy most likely take? A) Increase spending. B) Decrease taxes. C) Increase taxes. D) Decrease the discount rate. Show Answer Correct Answer: C) Increase taxes. 4. Louis's dad pays a tax to the federal government each year based off the money he earns from his lawn mowing business. What type of tax does Louis's dad pay each year? A) Income Tax. B) Payroll Tax. C) Property Tax. D) Sales Tax. Show Answer Correct Answer: A) Income Tax. 5. On your paycheck stub, net income is ..... A) Not usually disclosed to you. B) The same as take-home pay. C) The total amount earned. D) The amount taken out of your paycheck. Show Answer Correct Answer: B) The same as take-home pay. 6. In which phase of the business cycle would the Federal Reserve implement Easy Money Policy? A) Expansion. B) Contraction. C) Trough. D) Peak. Show Answer Correct Answer: B) Contraction. 7. Fee charged by the Federal Reserve Bank for other member banks to borrow money from the FED through the discount window? A) Reserve requirement. B) Inflation. C) Discount rate. D) Interest. Show Answer Correct Answer: C) Discount rate. 8. If the economy is in a recession, the Fed should do what with the reserve requirement? A) Raise. B) Lower. C) All of the above ;). D) None of above. Show Answer Correct Answer: B) Lower. 9. Fiscal policy is actions taken by ..... to stabilize the economy. A) The federal Reserve. B) The Air force. C) The government. D) Wall street. Show Answer Correct Answer: C) The government. 10. Which does NOT describe a role of the Federal Reserve? A) Supplies the economy with currency. B) Determines whether to raise or lower taxes. C) Controls the money supply. D) Supervises member banks. Show Answer Correct Answer: B) Determines whether to raise or lower taxes. 11. The goal of monetary policy is to A) Sell bonds. B) Reduce unemployment. C) Prevent inflationary and recessionary economic periods. D) Increase tariffs on foreign countries. Show Answer Correct Answer: C) Prevent inflationary and recessionary economic periods. 12. Roman coins are an example of which characteristic of money? A) Acceptability. B) Divisibility. C) Uniformity. D) Durability. Show Answer Correct Answer: D) Durability. 13. When the government raises taxes, what does it take out of circulation? A) People. B) Credit. C) Money. D) Jobs. Show Answer Correct Answer: C) Money. 14. Banks and other financial institutions must keep a fraction of their deposits in the form of legal reserves A) Reserve system. B) Fiscal. C) Fractional Reserve Banking. D) Legal Reserves. Show Answer Correct Answer: C) Fractional Reserve Banking. 15. Expansionary monetary policy is sometimes called A) Easy money policy. B) Money flow policy. C) Circulation money policy. D) Lending money policy. Show Answer Correct Answer: A) Easy money policy. 16. Monetary Policy is used to regulate spending by increasing/decreasing A) Supply. B) Aggregate supply. C) Demand. D) Aggregate demand. Show Answer Correct Answer: D) Aggregate demand. 17. Policies involving decreased government spending and increased taxes to decrease the level of aggregate demand. A) Monetary Policy. B) Expansionary Policy. C) Contractionary Policy. D) Fiscal Policy. Show Answer Correct Answer: C) Contractionary Policy. 18. Franklin D. Roosevelt's New Deal, in which the government increased spending to create jobs, would be an example of A) Expansionary monetary policy. B) Contractionary monetary policy. C) Expansionary fiscal policy. D) Contractionary fiscal policy. Show Answer Correct Answer: C) Expansionary fiscal policy. 19. Which of these are examples of government revenue A) Income tax. B) Credit. C) Pensions. D) Work for the dole. Show Answer Correct Answer: A) Income tax. 20. Occurs when the government takes in more than it spends A) Budget surplus. B) Treasury notes. C) National debt. D) None of above. Show Answer Correct Answer: A) Budget surplus. 21. These are rules used by federal agencies (run by executive) to protect consumers from harm or to protect businesses from unfair competition from bigger, stronger competitors. A) Regulations. B) Political Pressure. C) Discretionary Spending. D) Entitlements. Show Answer Correct Answer: A) Regulations. 22. Which is a goal of the Federal Reserve? A) Print currency for American citizens. B) Develop fiscal policy for the United States. C) Create a high level of inflation. D) Create price stability in the economy. Show Answer Correct Answer: D) Create price stability in the economy. 23. A problem with redistributive fiscal policy is ..... A) It can disincentivise people from working. B) Businesses will invest more. C) That it is unconstitutional. D) People are less likely to save. Show Answer Correct Answer: A) It can disincentivise people from working. 24. Who is responsible for fiscal policy? A) The president. B) The House of Representatives. C) The Senate. D) All of the above. Show Answer Correct Answer: D) All of the above. 25. Which is an example of automatic stabilizer? A) Stimulus checks that congress had to vote on. B) A paycheck from your employer. C) Interest on your savings account. D) Unemployment Insurance. Show Answer Correct Answer: D) Unemployment Insurance. 26. Expansionary fiscal policies lead to ..... spending. A) Debt. B) Decreased. C) Bad. D) Deficit. Show Answer Correct Answer: D) Deficit. 27. Which of the following is a benefit of government regulations? A) Consumers protected from harm. B) Decreased profits for corporations. C) More rainbows, unicorns, and narwhals. D) More money in consumer's pockets. Show Answer Correct Answer: A) Consumers protected from harm. 28. When would Congress want to use expansionary fiscal policy? A) When the economy hits the peak of the business cycle. B) During an election. C) During periods of high unemployment. D) During periods of high inflation. Show Answer Correct Answer: C) During periods of high unemployment. 29. Which fiscal policy is the government likely to adopt during a contraction? A) Tight Money. B) Expansionary. C) Contractionary. D) Easy Money. Show Answer Correct Answer: B) Expansionary. 30. During inflation, Congress should ..... taxes and ..... spending A) Reduce / reduce. B) Reduce / increase. C) Increase / reduce. D) Increase / increase. Show Answer Correct Answer: C) Increase / reduce. ← PreviousNext →Related QuizzesFiscal QuizzesEconomics QuizzesFiscal Policy Quiz 1Fiscal Policy Quiz 2Fiscal Policy Quiz 3Fiscal Policy Quiz 4Fiscal Policy Quiz 6Fiscal Policy Quiz 7Fiscal Policy Quiz 8Fiscal Policy Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books