Fiscal Policy Quiz 18 (20 MCQs)

Quiz Instructions

Select an option to see the correct answer instantly.

1. Stimulus checks, lower interest rates, decrease in the reserve requirement and lower taxes are all examples of

Correct Answer: D) Expansionary Policy.

2. If you deposit $ 6, 000 into a bank that has a required reserve ratio of 0.1, how much of that money is the bank required to keep on hand?

Correct Answer: D) $ 600.

3. The most desirable budget outcome is

Correct Answer: D) One appropriate for current economic conditions.

4. What action would the Federal Reserve take to control inflation?

Correct Answer: D) Increase the discount rate.

5. Taxes that come out of your paycheck include which ones?

Correct Answer: A) Social Security and Medicare taxes.

6. Cash that banks must keep in the vault.

Correct Answer: C) Required reserves.

7. If the Fed wanted to expand monetary policy, which might they do?

Correct Answer: C) Decrease the interest rate.

8. Metallic forms of money such as pennies, nickles, dimes, and quarters.

Correct Answer: C) Coins.

9. The amount of money that banks hold on hand to ensure that it is able to handle sudden withdrawals.

Correct Answer: C) Reserve requirements.

10. When the FOMC engages in buying and selling of US securities it is called .....

Correct Answer: C) Open market operations.

11. Which of the following lessens the impact of Expansionary Fiscal Policy?

Correct Answer: D) Higher interest rates decrease private investment.

12. The actions taken by a central bank to influence the availability and cost of money and credit to help promote national economic goals

Correct Answer: C) Monetary Policy.

13. Fiscal Policy is controlled by .....

Correct Answer: A) The Government.

14. Which of the following is NOT a function of our money

Correct Answer: D) Is in limited supply.

15. If the government implements expansionary fiscal policy, the budget will move towards ..... and the debt will .....

Correct Answer: C) Deficit; increase.

16. This is a period of temporary economic decline during which trade and industrial activity are reduced.

Correct Answer: A) Recession.

17. On the Business Cycle, where would you find the period of time when recovering from a recession?

Correct Answer: C) Recovery.

18. If credit and borrowing are expanding, which of the following is false

Correct Answer: C) Decrease taxes.

19. How many districts are there for the Federal Reserve Banks?

Correct Answer: D) 12.

20. To promote higher economic growth, the best way is to

Correct Answer: C) Increase government spending and decrease taxation.