Fiscal Policy Quiz 12 (20 MCQs)

Quiz Instructions

Select an option to see the correct answer instantly.

1. How much must the commercial bank keep on hand if the required reserve is 10% and there is a deposit of R100?

Correct Answer: D) 10.

2. Efficiency loss is another term for .....

Correct Answer: A) Deadweight loss.

3. Which answer below is something that the FED does NOT do? Remember, the FED has three tools to impact money supply.

Correct Answer: C) Increase/decrease income tax rates.

4. When would Congress do expansionary policy

Correct Answer: B) Many businesses are closing down.

5. The school of economic thought that says that free markets will self-correct and do not need government intervention is .....

Correct Answer: C) Classical economics.

6. To implement contractionary fiscal policy, the government is likely to

Correct Answer: D) Increase taxes and cut spending.

7. If the federal government is attempting to encourage spending by consumers and businesses, a fiscal policy BEST serving this purpose would be

Correct Answer: A) Decreasing taxes.

8. When would Congress most likely use contractionary fiscal policy?

Correct Answer: B) During periods of high inflation.

9. Decrease Taxes

Correct Answer: A) R GDP Goes up.

10. FICA includes taxes to pay for .....

Correct Answer: A) Social Security and Medicare.

11. Buying or selling of government securities (bonds). Buying increases money supply, selling decreases money supply

Correct Answer: C) Open Market Operations.

12. If the unemployment rate increases, the FED should

Correct Answer: C) Buy bonds.

13. Bond or other type of debt obligation that is issued by a government with a promise of repayment upon the security's maturity date

Correct Answer: D) Government securities.

14. The goals of moneytary policy do NOT include the promotion of .....

Correct Answer: D) Low taxes.

15. Fiscal Policy refers to

Correct Answer: C) Changes in spending and taxes.

16. Decisions made by the Federal Reserve that focus on the money supply, reserve requirements, & interest rates.

Correct Answer: B) Monetary policy.

17. The goals of all monetary supply is .....

Correct Answer: B) Price stability and maximum employment.

18. How does a government decide what to spend money on?

Correct Answer: A) Budget.

19. Which is not a form of government revenue?

Correct Answer: D) Foreign Taxes.

20. Pollution caused by automobiles is an example of

Correct Answer: C) A negative externality.