This quiz works best with JavaScript enabled. Home > Economics > Fiscal > Policy > Fiscal Policy – Quiz 9 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Fiscal Policy Quiz 9 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Government budget comprises of A) Government spending and income tax only. B) Government revenue and government expenditure. C) Transfer payment and government revenue. D) Government spending and indirect tax. Show Answer Correct Answer: B) Government revenue and government expenditure. 2. This is government spending and taxation policies suggested by an economist to stimulate the economy; synonomous with fiscal policies or demand-side economics. A) Adam Smith economics. B) Keynesian economics. C) Ramsey economics. D) Reaganomics. Show Answer Correct Answer: B) Keynesian economics. 3. Which of the following is an example of expansionary policy? A) The Fed raises the Fed funds rate. B) The Fed buys bonds. C) The Fed raises reserve requirements. D) The Fed sells bonds. Show Answer Correct Answer: B) The Fed buys bonds. 4. If we are in a recession, fiscal policy should A) Postpone highway construction programs. B) Reduce agricultural subsidies. C) Reduce taxes. D) Have a surplus budget. Show Answer Correct Answer: C) Reduce taxes. 5. If inflation reaches 5% which of the following is true A) Decrease reserve requirement. B) Want to increase the money supply. C) Buy bonds. D) Decrease government spending. Show Answer Correct Answer: D) Decrease government spending. 6. The FDIC was established to make sure that A) Banks charge a fair amount of interest on loans. B) Banks do not fail. C) Depositors do not lose money if a bank fails. D) The government has enough gold to cover its expenses. Show Answer Correct Answer: C) Depositors do not lose money if a bank fails. 7. If the economy was going into an inflationary period, what would the Federal government do with government spending? A) Increase it. B) Do nothing. C) Decrease it. D) None of above. Show Answer Correct Answer: C) Decrease it. 8. If Congress raises taxes, the FED should A) Decrease the discount rate. B) Buy bonds. C) Sell bonds. D) Decrease spending. Show Answer Correct Answer: C) Sell bonds. 9. What are the two tools the Fed will use to determine monetary policy? A) Taxing and spending. B) Interest rates and reserve requirements. C) Legislation and enforcement. D) Interest rate and tax rates. Show Answer Correct Answer: B) Interest rates and reserve requirements. 10. When the government spends more money than they take in each year is called a ..... ? A) Expansionary. B) Surplus. C) Deficit. D) Debt. Show Answer Correct Answer: C) Deficit. 11. The ratio of change when both spending and taxes change the real GDP A) Balanced Budget Multiplier. B) Multiplier Effect. C) Tax Multiplier. D) -MPC/MPS. Show Answer Correct Answer: A) Balanced Budget Multiplier. 12. The total demand for final goods and services in an economy at a given time. A) Demand. B) Aggregate Demand. C) Supply. D) Aggregate Supply. Show Answer Correct Answer: B) Aggregate Demand. 13. Progressive tax structure is when A) The tax rate remains the same, regardless of size of income. B) The tax rate declines as income increases. C) The tax rate increases the total volume of consumer expenditures. D) The tax rate increases as income increases. Show Answer Correct Answer: D) The tax rate increases as income increases. 14. Which is a monetary measure that helps to reduce unemployment in the economy? A) A cut in taxes. B) Higher amount of government spending. C) Investment in training and development. D) Lower interest rate. Show Answer Correct Answer: D) Lower interest rate. 15. A plan to increase aggregate demand and stimulate the economy A) Contractionary Fiscal Policy. B) Contractionary Monetary Policy. C) Expansionary Monetary Policy. D) Expansionary Fiscal Policy. Show Answer Correct Answer: D) Expansionary Fiscal Policy. 16. A property tax would be a tax that would go to ..... government A) State. B) Federal. C) School. D) Local. Show Answer Correct Answer: D) Local. 17. The percentage of a deposit that a bank must hold on to is called the ..... A) Credit. B) Required Reserve. C) Excess Reserve. D) Interest Rate. Show Answer Correct Answer: B) Required Reserve. 18. Policies that are put in place to speed up the economy. A) Monetary policies. B) Expansionary policies. C) Contractionary policies. D) Fiscal policies. Show Answer Correct Answer: B) Expansionary policies. 19. What is the most likely reason Contractionary Fiscal Policy, such as raising taxes, is not often implemented? A) It leads to increases in the national debt. B) It takes too long to work. C) It works too quickly. D) It is unpopular to raise people's taxes. Show Answer Correct Answer: D) It is unpopular to raise people's taxes. 20. Government policies to try and decrease the output of the economy in times of excessive inflation by increasing taxes or decreasing spending. A) Supply-Side Economics. B) Demand-Side Economics. C) Contractionary Fiscal Policy. D) Expansionary Fiscal Policy. Show Answer Correct Answer: C) Contractionary Fiscal Policy. 21. When the Federal Reserve Bank is using Open Market Operations, they are ..... A) Raising or lowering reserve requirements. B) Raising or cutting taxes. C) Raising or lowering the discount rate. D) Buying or selling bonds. Show Answer Correct Answer: D) Buying or selling bonds. 22. A plan to increase the amount of money in circulation is called A) Contractionary monetary policy. B) Contractionary fiscal policy. C) Expansionary monetary policy. D) Expansionary fiscal policy. Show Answer Correct Answer: C) Expansionary monetary policy. 23. The Federal Reserve can increase the money supply by- A) Selling gold reserves to the banks. B) Buying government bonds on the open market. C) Borrowing reserves from a foreign government. D) Selling foreign currency holdings. Show Answer Correct Answer: B) Buying government bonds on the open market. 24. Who controls fiscal policy? A) The Federal Government. B) The FBI. C) The Federal Reserve. D) Federal Income Tax. Show Answer Correct Answer: A) The Federal Government. 25. Largest stimulus the US government has given out was known as the A) 2020 Covid Response. B) 2021 Covid Response. C) CARES Act (or the Coronavirus Aid, Relief, and Economic Security Act.). D) New Deal. Show Answer Correct Answer: C) CARES Act (or the Coronavirus Aid, Relief, and Economic Security Act.). 26. Higher Income = Higher Taxes A) Regressive. B) Progressive. C) Proportional. D) None of above. Show Answer Correct Answer: B) Progressive. 27. How does a budget deficit relate to the national debt? A) They are the same thing. B) Budget deficits create the national debt. C) Budget deficits are more than the national debt. D) Budget deficits reduce the size of the national debt. Show Answer Correct Answer: B) Budget deficits create the national debt. 28. Fiscal policy designed to stimulate business sector activity is called: A) Keynesian economics. B) Supply-side economics. C) Stagflation protection economics. D) Demand-side economics. Show Answer Correct Answer: B) Supply-side economics. 29. The function of money as a medium of exchange A) Facilitates transactions by serving as a means of payment. B) Is legal tender that must be accepted everywhere. C) Provides a common measure of value for goods and services. D) Can be saved, stored and retrieved and still have value. Show Answer Correct Answer: A) Facilitates transactions by serving as a means of payment. 30. The manipulation of the money supply in order to influence the cost and the availability of credit is A) Fiscal Policy. B) Spending Policy. C) Monetary Policy. D) Banking Policy. Show Answer Correct Answer: C) Monetary Policy. ← 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 8 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books