This quiz works best with JavaScript enabled. Home > Fiscal > Policy > Fiscal Policy – Quiz 10 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Fiscal Policy Quiz 10 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Which of the following is contractionary policy? A) Buying bonds. B) Increasing fed fund rate. C) Decreasing discount rate. D) Decreasing required reserves. Show Answer Correct Answer: B) Increasing fed fund rate. 2. Which is an example of representative money? A) Diamonds. B) Checks. C) A $ 50 bill. D) A fur coat. Show Answer Correct Answer: B) Checks. 3. If and economy experiences a dramatic rise in prices, which fiscal policy action could be taken? A) Selling securities on the open market. B) Raising interest rates. C) Reducing government spending. D) Raising reserve requirements. Show Answer Correct Answer: C) Reducing government spending. 4. Defense, Education, Health Care, Welfare, Transportation, and Pension Sending is A) US Monetary Policy for 2012. B) Categories of Discretionary Spending. C) Federal Expenditures in the US. D) Major SOources of Federal Revenue. Show Answer Correct Answer: C) Federal Expenditures in the US. 5. What is an expansionary monetary policy? A) A decrease in the interest rate. B) A decrease in the rate of value added tax. C) An increase in the power of trade unions. D) An increase in the standard rate of income tax. Show Answer Correct Answer: A) A decrease in the interest rate. 6. Lower Income = Lower Taxes A) Regressive. B) Progressive. C) Proportional. D) None of above. Show Answer Correct Answer: B) Progressive. 7. Given that the reserve ratio is 2, 5%, the size of the credit multiplier is A) 4. B) 2, 5. C) 25. D) 40. Show Answer Correct Answer: D) 40. 8. Tax avoidance is ..... A) Legal but frowned upon. B) Illegal. C) When low earners do not have to pay tax. D) When you miss the self-assessment deadline. Show Answer Correct Answer: A) Legal but frowned upon. 9. This is a tax that where you pay more the more money you make A) Regressive. B) Proportional. C) Progressive. D) Flat. Show Answer Correct Answer: C) Progressive. 10. The government can use a ..... to reduce its debt. A) Shortage. B) Surplus. C) Deficit. D) Loan. Show Answer Correct Answer: B) Surplus. 11. Fiscal policy can be used to achieve economic growth 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: B) Increasing government spending and decreasing tax. 12. Why might using contractionary fiscal or monetary policy be risky? A) It can cause inflation. B) It could lower taxes. C) It could create a recession. D) It could raise aggregate demand too much. Show Answer Correct Answer: C) It could create a recession. 13. Government policies to try and increase the output of the economy in times of recession/contraction by decreasing taxes or increasing spending. A) Expansionary Fiscal Policy. B) Contractionary Fiscal Policy. C) Demand-Side Economics. D) Supply-Side Economics. Show Answer Correct Answer: A) Expansionary Fiscal Policy. 14. Which is an example of expansionary fiscal policy? A) The Federal reserve lowers the discount rate. B) The government raises taxes on all citizens by 5%. C) The government increases spending by building more infrastructure. D) The federal reserve increases the reserve requirement. Show Answer Correct Answer: C) The government increases spending by building more infrastructure. 15. The organization responsible for the monetary policy of the United States is A) Congress. B) Federal Reserve. C) Treasury Department. D) Executive Department. Show Answer Correct Answer: B) Federal Reserve. 16. A proportional tax ..... A) Has the same rate of tax on all income levels. B) Is proportionately smaller for low income earners. C) Is small in proportion to a regressive tax. D) Is always more effective than other taxes. Show Answer Correct Answer: A) Has the same rate of tax on all income levels. 17. Which answer below is something that the FED does NOT do? Remember, the FED has three main fiscal tools to impact money supply. A) Buy/sell bonds. B) Increase/decrease discount rate. C) Increase/decrease income tax rates. D) Increase/decrease reserve requirement. Show Answer Correct Answer: C) Increase/decrease income tax rates. 18. What is NOT a consequence of expansionary fiscal policy? A) AD shifts Right. B) Increased Price levels. C) Increased output. D) Increased unemployment. Show Answer Correct Answer: D) Increased unemployment. 19. A tax cut is likely to be less effective in helping the poor because A) It causes inflation. B) It causes the lorenz curve to shift to the right. C) Low income people are less likely to have the benefit of a marginal tax cut. D) None of above. Show Answer Correct Answer: C) Low income people are less likely to have the benefit of a marginal tax cut. 20. Which of the following best defines "gift tax" ? A) Tax on donation of money or wealth. B) Tax on people's earnings. C) Tax on the manufacture or sale of certain items. D) Tax on the transfer of property when someone dies. Show Answer Correct Answer: A) Tax on donation of money or wealth. ← PreviousNext →Related QuizzesFiscal QuizzesFiscal Policy Quiz 1Fiscal Policy Quiz 2Fiscal 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