How are Fiscal Policy and the Federal Reserve similar?

They both try to promote economic stability

They both have a Board of Governors

They both use the same tools to fix economic problems

They always must have Congressional approval before passing

Which of the following would be classified as fiscal policy?

The federal government cuts taxes to stimulate the economy

The federal government passes tax cuts to encourage firms to reduce air pollution

A state government cuts taxes to help the economy of the state

The Federal Reserve cuts interest rates to stimulate the economy

To combat a recession with expansionary fiscal policy, Congress and the President should

decrease taxes to increase consumer disposable income

decrease government spending to balance the budget

lower interest rates and increase investment by increasing the money supply

raise taxes on interest and dividends, but not on personal income

Which is NOT a function of the Federal Reserve?

loan money to individuals and small businesses

process checks for the federal government

Who issues U.S. paper currency?

the district Federal Reserve Banks

What is the policy used most by the FED to change the money supply?

changes in the reserve requirements

changes in the money creation policy

Which of the following activities creates money?

depositing money into a checking account

withdrawing money from a checking account

saving money in a piggy bank at home

printing new currency to replace worn-out money

Why might the FED decide to lower reserve requirements?

if prices are rising too quickly

if consumers are borrowing too much

What is one action Congress can take if the President vetoes the budget?

override the veto by a two-thirds majority vote

override the veto by a majority vote

ask the Supreme Court to decide

pass appropriation bills anyway

Why does the government sometimes use an expansionary fiscal policy?

to encourage growth and try to stop or prevent a recession

to expand the government's control over non-defense spending

to slow down the economy because fast-growing demand can exceed supply

to control the demand for consumer goods and services

If economists predict that the economy is facing a long recession, what would the FED be most likely to do?

wait for the economy to correct itself

An example of contractionary fiscal policy would be

increasing production of consumer goods

expanding government regulation of private industry

Which of the following best describes the relationship between a budget deficit and the national debt?

every year of budget deficits adds to the national debt

the deficit is a shortfall of cash, while the debt is the loan to cover it

ongoing debt increases the deficit in each year's budget

Unit 6 Monetary & Fiscal Policy Test Review

Unit 6

110.31.b.17.C

Topic: Reading/Vocabulary Development

STAAR English II High School 2014 - Past Paper

110.31.b.1.B

STAAR English I High School 2017 - Past Paper

110.32.b.15.A

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