
Unit 6 Monetary & Fiscal Policy Test Review
Quiz by Derrick Allen
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23 questions
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- Q1Federal Reserve Tools: Discount Rate, Reserve Requirement, ________ Fiscal Policy Tools: taxing, spending, borrowing What tool is missing from the Federal Reserve's list of tools?Monetary Policydistrict banksBoard of Governorsbuy/sell securities60s
- Q2If the economy is in an inflationary period, what action would Fiscal Policy most likely take?increase spendingdecrease taxesIncrease taxesdecrease the discount rate60s
- Q3If Fiscal Policy is trying to promote stability and economic growth through tax cuts, what type of policy is Fiscal Policy using?Tight Money PolicyRestrictive PolicyEasy Money PolicyExpansionary Policy60s
- Q4If a nation currently has a budget deficit, their income is not covering the cost of running their country. If this budget is not revised, what could be a possible result of this situation?A balanced budgeta budget surplusA mounting debtDiscretionary fiscal policy60s
- Q5Which of the following best describes the goal of Monetary Policy?controlling the money supplycontrolling the national debtcontrolling taxesstopping inflation60s
- Q6If the economy is in a recession, the FED could do all of the following EXCEPTlower taxeslower the discount ratebuy securitieslower the Federal Funds rate60s
- Q7How are Fiscal Policy and the Federal Reserve similar?They both have a Board of GovernorsThey both try to promote economic stabilityThey both use the same tools to fix economic problemsThey always must have Congressional approval before passing60s
- Q8Which of the following would be classified as fiscal policy?The federal government passes tax cuts to encourage firms to reduce air pollutionA state government cuts taxes to help the economy of the stateThe Federal Reserve cuts interest rates to stimulate the economyThe federal government cuts taxes to stimulate the economy60s
- Q9If policymakers are concerned that the economy is in danger of rising inflation because aggregate demand is increasing faster than aggregate supply, the appropriate fiscal policy response is toincrease interest ratesuse expansionary fiscal policydecrease taxesdecrease government spending60s
- Q10To combat a recession with expansionary fiscal policy, Congress and the President shoulddecrease government spending to balance the budgetlower interest rates and increase investment by increasing the money supplydecrease taxes to increase consumer disposable incomeraise taxes on interest and dividends, but not on personal income60s
- Q11Which is NOT a function of the Federal Reserve?loan money to individuals and small businessesclear checksregulate the money supplyprocess checks for the federal government60s
- Q12Who issues U.S. paper currency?the district Federal Reserve Banksthe U.S. Mintthe Treasury Departmentthe U.S. bank examiners60s
- Q13What is the policy used most by the FED to change the money supply?changes in the discount ratechanges in the reserve requirementschanges in the money creation policyopen market operations60s
- Q14In order to increase the money supply, the Federal Open Market Committee canlower the prime rateraise the prime ratepurchase bondssell bonds60s
- Q15Which of the following activities creates money?depositing money into a checking accountwithdrawing money from a checking accountsaving money in a piggy bank at homeprinting new currency to replace worn-out money60s