This quiz works best with JavaScript enabled. Home > Fiscal > Policy > Fiscal Policy – Quiz 20 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Fiscal Policy Quiz 20 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. This is a paper component of the money supply, today consisting of Federal Reserve notes. A) Coins. B) Currency. C) Both coins and currency. D) Debit cards. Show Answer Correct Answer: B) Currency. 2. The economy is falling into recession and the Federal Reserve Bank decides to lower reserve requirements and the discount rate. What policy is being used? A) Expansionary Fiscal Policy. B) Contractionary Fiscal Policy. C) Expansionary Monetary Policy. D) Contractionary Monetary Policy. Show Answer Correct Answer: C) Expansionary Monetary Policy. 3. Increase Taxes A) R GDP goes up. B) Unemployment goes down. C) Inflation goes down. D) None of above. Show Answer Correct Answer: B) Unemployment goes down. 4. What is the main source of government spending? A) Education. B) Social protection. C) Health. D) Defence. Show Answer Correct Answer: B) Social protection. 5. Which of the following can result in price instability A) Total demand exceeding the capacity to produce goods and services. B) Inflationary shocks such as oil price increases, wars, etc. C) Money supply increasing too rapidly. D) All of these. Show Answer Correct Answer: D) All of these. 6. Which of these is not a government objective that fiscal policy is used to achieve? A) A balance in the balance of payments. B) Price stability. C) Low unemployment. D) Income and wealth distribution. Show Answer Correct Answer: D) Income and wealth distribution. 7. A tax of £10, 000 on all earnings is ..... A) A regressive tax. B) A proportional tax. C) A progressive tax. D) An indirect tax. Show Answer Correct Answer: A) A regressive tax. 8. Which is not a monetary policy measure? A) Changes in foreign exchange rate. B) Changes in interest rate. C) Changes in money supply. D) Changes in tax rates. Show Answer Correct Answer: D) Changes in tax rates. 9. Which of the following is not one of the reasons that the Federal Reserve System was created? A) There were too many bank panics. B) The economy had too many boom and bust periods. C) It was a way to create more jobs in the economy. D) The banking system was very unstable. Show Answer Correct Answer: C) It was a way to create more jobs in the economy. 10. Fiscal Policy has some problems including A) Slides. B) Lags. C) Plugs. D) Sinks. Show Answer Correct Answer: B) Lags. 11. There are ..... Federal Reserve Banks. A) 5. B) 10. C) 12. D) 15. Show Answer Correct Answer: C) 12. 12. Which of the following is not included in fiscal policy? A) Taxing. B) Profit Sharing. C) Government Spending. D) None of above. Show Answer Correct Answer: B) Profit Sharing. 13. Crowding out is caused by A) High interest rates crowd out borrowers who cant afford loans in a boom. B) Housing markets that demand exceeds supply. C) Government borrowing forces out private borrowing in a recession. D) None of above. Show Answer Correct Answer: C) Government borrowing forces out private borrowing in a recession. 14. In the United States, fiscal policy is made by what or whom? A) Executive order from the President. B) A process involving different branches of government. C) Central planners working for Congress. D) The actions of consumers and producers in the market. Show Answer Correct Answer: B) A process involving different branches of government. 15. How are monetary and fiscal policy different? A) Monetary is controlled by the FED. B) Fiscal Policy is controlled by the Government. C) Fiscal policy has very real ramification for the average American in terms of their ability to save and spend. D) All of these. Show Answer Correct Answer: D) All of these. 16. The sale and purchase of marketable federal government securities is known as A) Expansionary policy. B) Federal securities purchase. C) Open market operations. D) Contractionary operations. Show Answer Correct Answer: C) Open market operations. 17. Which of the following is NOT a limitation of fiscal policy? A) Mandatory spending can be changed. B) Lawmakers wait too long to change the policy. C) Lawmakers act in voters' self-interest. D) Federal and state fiscal policies conflict. Show Answer Correct Answer: A) Mandatory spending can be changed. 18. Interest Rate is the fee that A) The member bank must pay the district bank for a loan. B) You and I must pay our bank for a loan. C) The district bank pays the national bank for a loan. D) The FED pays FOMC for services. Show Answer Correct Answer: B) You and I must pay our bank for a loan. 19. The largest and most stable component of aggregate demand is A) C. B) G. C) I. D) None of above. Show Answer Correct Answer: A) C. 20. A budget deficit is a A) Net leakage from the circular flow of income. B) Net injection into the circular flow of income. C) A leakage. D) An injection. Show Answer Correct Answer: B) Net injection into the circular flow of income. ← 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