This quiz works best with JavaScript enabled. Home > Economics > Fiscal > Policy > Fiscal Policy – Quiz 8 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Fiscal Policy Quiz 8 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Contractionary fiscal policy would be implemented during a (n) ..... order to ..... the money supply and make money more ..... A) Inflationary Period; Decrease; Valuable. B) Recessionary Period; Increase; Available. C) Government Shut-Down; Increase; Valuable. D) None of above. Show Answer Correct Answer: A) Inflationary Period; Decrease; Valuable. 2. During a recession the Fed will ..... the money supply by ..... government securities. A) Increase . . . buying. B) Decrease . . . selling. C) Decrease . . . buying. D) Increase . . . selling. Show Answer Correct Answer: A) Increase . . . buying. 3. Which of the following would be an expansionary monetary policy (increase in economic growth)? A) Lowering government spending. B) Lowering interest rates. C) Raising wages of prison staff. D) Raising interest rates. Show Answer Correct Answer: B) Lowering interest rates. 4. Which monetary policy tool would be expansionary? A) Selling bonds via open market operations. B) Increase interest paid on reserves. C) Decrease reserve requirement. D) Increase discount rate. Show Answer Correct Answer: C) Decrease reserve requirement. 5. Central bank of the U.S. that oversees monetary policy A) Central Intelligence Agency. B) Internal Revenue Service. C) Federal Reserve. D) Federal Bureau of Investigations. Show Answer Correct Answer: C) Federal Reserve. 6. What is the most likely reason Contractionary Fiscal Policy is not often implemented? A) It works too quickly. B) It takes too long to work. C) It is unpopular to raise people's taxes. D) It leads to increases in the national debt. Show Answer Correct Answer: C) It is unpopular to raise people's taxes. 7. Which is NOT one of government's role in the economy? A) Protecting property rights. B) Maintaining competition. C) Protecting consumers, savers, and investors. D) Protecting monopolistic corporations. Show Answer Correct Answer: D) Protecting monopolistic corporations. 8. Fiscal Policy is the A) Use of taxing and interest rates to influence the economy. B) Use of money supply and interest rates to influence the economy. C) Use of taxing and govt. spending to influence the economy. D) Use of govt. spending and money supply to influence the economy. Show Answer Correct Answer: C) Use of taxing and govt. spending to influence the economy. 9. How much must the commercial bank keep on hand if the required reserve is 10% and there is a deposit of R100? A) 110. B) 90. C) 10. D) 100. Show Answer Correct Answer: C) 10. 10. Efficiency loss is another term for ..... A) Consumer surplus. B) Elasticity. C) Deadweight loss. D) Producer surplus. Show Answer Correct Answer: C) Deadweight loss. 11. Which answer below is something that the FED does NOT do? Remember, the FED has three tools to impact money supply. A) Increase/decrease income tax rates. B) Buy/sell bonds. C) Increase/decrease discount rate. D) Increase/decrease reserve requirement. Show Answer Correct Answer: A) Increase/decrease income tax rates. 12. When would Congress do expansionary policy A) Borrowing is up, and many loans are being made. B) Many businesses are closing down. C) Unemployment is in the normal 4-5% range. D) Inflation has doubled in the last two quarters. Show Answer Correct Answer: B) Many businesses are closing down. 13. The school of economic thought that says that free markets will self-correct and do not need government intervention is ..... A) Monetarism. B) Keynesian economics. C) Economics for the people. D) Classical economics. Show Answer Correct Answer: D) Classical economics. 14. To implement contractionary 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: D) Increase taxes and cut spending. 15. If the federal government is attempting to encourage spending by consumers and businesses, a fiscal policy BEST serving this purpose would be A) Decreasing government spending. B) Decreasing taxes. C) Balancing the budget. D) Reducing the investment tax credit. Show Answer Correct Answer: B) Decreasing taxes. 16. When would Congress most likely use contractionary fiscal policy? A) During periods of low economic production. B) During periods of high unemployment. C) During periods of high inflation. D) During periods of peace. Show Answer Correct Answer: C) During periods of high inflation. 17. FICA includes taxes to pay for ..... A) Social Security and Medicare. B) Social Security and Unemployment. C) Unemployment and Medicare. D) Medicare and Workers Compensation. Show Answer Correct Answer: A) Social Security and Medicare. 18. Buying or selling of government securities (bonds). Buying increases money supply, selling decreases money supply A) Inflation. B) Open Market Operations. C) Discount Rate. D) Reserve Requirement. Show Answer Correct Answer: B) Open Market Operations. 19. If the unemployment rate increases, the FED should A) Increase government spending. B) Buy bonds. C) Increase discount rate. D) Lower taxes. Show Answer Correct Answer: B) Buy bonds. 20. Bond or other type of debt obligation that is issued by a government with a promise of repayment upon the security's maturity date A) Reserve requirement. B) Government securities. C) Discount rate. D) Interest rate. Show Answer Correct Answer: B) Government securities. 21. The goals of moneytary policy do NOT include the promotion of ..... A) Low taxes. B) Moderate long-term interest rates. C) Stable prices. D) Maximum employment. Show Answer Correct Answer: A) Low taxes. 22. Fiscal Policy refers to A) Increases in taxes to fight recessions. B) Decreases in taxes to fight inflation. C) Changes in spending and taxes. D) Federal deficits. Show Answer Correct Answer: C) Changes in spending and taxes. 23. Decisions made by the Federal Reserve that focus on the money supply, reserve requirements, & interest rates. A) Fiscal policy. B) Monetary policy. C) Discretionary spending. D) Mandatory spending. Show Answer Correct Answer: B) Monetary policy. 24. The goals of all monetary supply is ..... A) Lower prices and reduced employment. B) Price stability and maximum employment. C) Better roads and better military. D) All of the these. Show Answer Correct Answer: B) Price stability and maximum employment. 25. How does a government decide what to spend money on? A) Supreme Court decision. B) Budget. C) Speech. D) Executive Order. Show Answer Correct Answer: B) Budget. 26. Which is not a form of government revenue? A) Indirect Taxes. B) Foreign Taxes. C) Local Taxes. D) Direct Taxes. Show Answer Correct Answer: B) Foreign Taxes. 27. Pollution caused by automobiles is an example of A) An innefficient allocation of resources. B) A positive externality. C) A negative externality. D) The public sector. Show Answer Correct Answer: C) A negative externality. 28. A certificate of indebtedness issued by a government A) Stock. B) Bond. C) Type of money. D) None of above. Show Answer Correct Answer: B) Bond. 29. Inside lag takes at least A) 1 quarter. B) 3 quarters. C) 6 months. D) 3 months. Show Answer Correct Answer: C) 6 months. 30. How much must the bank keep on hand if the Required Reserve is 10% and there is a deposit of $ 100. A) 100. B) 110. C) 90. D) 10. Show Answer Correct Answer: D) 10. ← 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 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books