Fiscal Policy Quiz 4 (20 MCQs)

Quiz Instructions

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1. Which of the following is NOT a way the Fed influences the money supply?

Correct Answer: A) Decreasing taxes.

2. Taxes that impose a higher percentage of taxes on lower incomes than on higher incomes

Correct Answer: A) Regressive.

3. What body of the Federal Reserve oversees the purchase and sale of government securities/bonds?

Correct Answer: A) Federal Open Market Committee.

4. A deficit is

Correct Answer: A) When the government spends more than it collects in taxes and borrows to cover the difference.

5. ..... must approve the President's annual budget.

Correct Answer: C) Congress.

6. Policies meant to slow down the economy.

Correct Answer: C) Contractionary policies.

7. What is NOT one of the things a gov't might do as part of an Expansionary Fiscal Policy?

Correct Answer: D) Cut spending.

8. The interest rate the FED charges banks

Correct Answer: C) Discount rate.

9. Fiscal policy can be used to achieve price stability by:

Correct Answer: C) Decreasing government spending and increasing tax.

10. Comparing price tags at different stores is using money as a

Correct Answer: D) Unit of account.

11. Why does the Federal Reserve require banks to keep a percentage of their funds as reserves?[

Correct Answer: C) To supply cash withdrawals.

12. Fiscal policy is .....

Correct Answer: C) The federal government's attempt to stabilize the economy through taxing and spending.

13. Which of the following is primarily responsible for the control of the money supply?

Correct Answer: B) The Federal Reserve System.

14. The Federal Reserve System monitors and regulates the US ..... and ..... system.

Correct Answer: C) Monetary . . . banking.

15. Which of the following is NOT a feature of expansionary fiscal policy?

Correct Answer: A) Decrease aggregate demand.

16. The amount of deposits that banks are required to hold and not lend out are the .....

Correct Answer: C) Reserves.

17. When does a budget surplus occur?

Correct Answer: C) When government revenues exceed public expenditure.

18. ..... occurs when a government deficit drives up the interest rate and leads to reduced investment spending.

Correct Answer: A) Crowding Out.

19. The Central Bank of the United States is called the

Correct Answer: A) Federal Reserve System.

20. Why don't government's use expansionary policies all of the time if they put more money in consumer's pockets?

Correct Answer: C) No discretionary spending available.