Monetary and Fiscal Policy EOCT Practice By Jan Calhoun 2009

The way the government conducts spending and taxation is called what? monetary policy economic policy free enterprise policy fiscal policy

The way the government chooses to control the money supply is called what? monetary policy open market operation reserve requirement and discount rate 4.fiscal policy

Fiscal policy is MOST influenced by Congress The “Fed” The federal board of governors 4.Businesses

Congress approves a budget that allocates how much money will be spent on defense, education, social programs, etc. Their plan also calls for an increase in taxes to help pay for all the expenses. This plan defines what? the government’s monetary policy the government’s fiscal policy the government’s revenue the government’s reserve requirement

After much debate in Congress, the House and Senate finally pass a bill calling for a 1% tax decrease and a cut in federal funding to artistic institutions. The president then signs the bill. This is an example of the government’s fiscal policy monetary policy open market operations tight money policy

Which of the following is one of the tasks conducted by the Federal Reserve System? executing fiscal policy printing money preparing the budget of the federal government making loans to commercial banks

Due to inflation, the Federal Reserve decides to decrease the money supply. Which one of the following will the Federal Reserve MOST LIKELY do? Lower the discount rate Implement an “easy money” policy Buy bonds Raise the reserve requirement for banks

The Central Bank of the U. S The Central Bank of the U.S. that sets policies designed to control the money supply is called the Congressional Bank Bank of the united States of America Federal Reserve Bank of US Governors

The Federal Reserve comes to the conclusion that more money must be pumped into the economy in an effort to stimulate economic growth. Which of the following actions could the “Fed” take that would result in increasing the money supply? raise the discount rate raise the reserve requirement sell securities (bonds) buy securities (bonds)

When the Federal Reserve lowers the discount rate interest rates rise interest rates fall as well banks loan less money people save more

What effect does a “tight money” policy have on the reserve requirement and the economy’s money supply? It raises the reserve requirement, thereby increasing the money supply. It lowers the reserve requirement, thereby decreasing the money supply. It raises the reserve requirement, thereby decreasing the money supply. It lowers the reserve requirement, thereby increasing the money supply.

If the Federal Reserve decides to sell bonds, what effect will it have? It will cause the money supply to decrease and inflation to fall. It will cause the money supply to increase and employment to rise. It will guarantee higher taxes. It will extend stagflation.

When the Fed sells securities on the open market, it has which of the following effects? the money supply increases taxes increase money supply decreases tariffs are put in place

The Federal government is concerned that economic growth is too high, that economic growth is too high, that it is unsustainable, and that inflation is resulting. Which of the following fiscal policies might be enacted to reduce inflation? increasing taxation open market sales decreasing taxation increasing government spending

The Federal Reserve can best be described as 1. The most important part of the federal government. 2. The executive branch of government 3. The key actor in setting fiscal policy. 4. A bank for banks.

Which of the following is responsible for the monetary policy of the U Which of the following is responsible for the monetary policy of the U.S.? Congress The president The Senate The Federal Reserve System

If GDP is decreasing and the unemployment rate is increasing, which fiscal policy would the government MOST likely use? increase taxes decrease taxes increase bank reserves decrease spending

If the Federal Reserve decides to sell bonds, what effect will it have? It will cause the money supply to decrease and inflation to fall. It will cause the money supply to increase and employment to rise. It will guarantee higher taxes. 4. It will extend stagflation

If the inflation rate is rising too fast, which fiscal policy would make MOST sense? increase taxes decrease taxes increase spending decrease bank reserves

When the Fed sells securities on the open market, it has which of the following effects? the money supply increases taxes increase money supply decreases tariffs are put in place

The Federal government is concerned that economic growth is too high, that it is unsustainable, and that inflation is resulting. Which of the following fiscal policies might be enacted to reduce inflation? increasing taxation open market sales decreasing taxation increasing government spending

When the Fed sells government securities (bonds) on the open market, what effect does this action have on the economy? increases money supply; increases consumer demand increases money supply; reduces inflation risk decreases money supply; increases consumer demand decreases money supply; reduces inflation risk

Which of the following is a MONETARY policy that might be used to reduce inflation? Decreasing taxation Decreasing the discount rate Open market sales Increasing government spending