NO MISSING DATA 2 If the economy is in an inflationary period, what action would Fiscal Policy most likely take a)Decrease taxes b)Decrease the discount rate c)Increase taxes d)Increase spending 3 If GDP is raising and the unemployment rate is decreasing, what actions would Monetary Policy and Fiscal Policy take to try to fix this economic situation Federal ReserveFiscal Policy a raise the Discount ratelower taxes b lower the Federal Funds rateraise taxes c lower the Discount ratedecrease spending d raise the Federal Funds ratedecrease spending 4 If Fiscal Policy is trying to promote stability and economic growth through tax cuts, what type of policy is Fiscal policy using a)Expansionary Fiscal Policy b)Restrictive Fiscal Policy c)Easy Money Policy d)Tight Money Policy If 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)A budget surplus b)A balanced budget c)A mounting debt d)Discretionary fiscal policy 6 Which of the following best describes the goal of Monetary Policy a)Controlling taxes b)Controlling the national debt c)Controlling the money supply d)Stopping inflation 7 If the Federal Reserve is trying to promote economic stability by lowering the Federal Funds rate, what action would Fiscal Policy take a)Lowering taxes b)Increasing taxes c)Decreasing spending d)Decreasing borrowing 8 A consumer is at the store and purchases a new vacuum cleaner At checkout, that consumer will have to pay an additional tax on that purchase a sales tax What type of tax is a sales tax a)Progress tax b)Proportional tax c)Keynesian Tax d)Personal Income tax 9 If the economy is in a recession, the Fed could do all of the following EXCEPT a)Lower taxes b)Lower the Discount rate c)Lower the Federal Funds rate d)Buy securities 10 How are Fiscal Policy and the Federal Reserve similar a)They both use the same tools to fix economic problems b)They both try to promote economic stability c)They always must have Congressional approval before passing d)They both have a Board of Governors 11 If you are a classical economist, which statement would you support a)Let the economy work out its own problems b)The more the government spends to improve the economy, the better c)The government should be involved to help during recessions d)The government is the key to economic success 12 If the primary goal is to reduce inflation, which of the following fiscal policy actions would be appropriate during a rapidly increasing consumer price index I Reduce government expenditures for defense and space research II Increase transfer payments to those most severely affected by the rising price index III Increase personal income tax rates a I only b II only c III only d I and III only e II and III only 13 Assume there is an decrease in aggregate demand in an economy How would this affect inflation and unemployment a Prices will rise Unemployment will fall b Prices will fall Unemployment will rise c Prices will rise Unemployment will rise d Prices will fall Unemployment will fall 14 Which of the following will occur as a result of an improvement in technology a The aggregate demand curve will shift to the right b The aggregate demand curve will shift to the left c The aggregate supply curve will shift to the right d The aggregate supply curve will shift to the left e The production possibilities curve will shift inward 15 Which of the following best describes the relationship between government budget deficits and the national debt a Budget deficits lead to a decrease in the national debt b Budget deficits lead to an increase in the national debt c A national debt makes budget deficits less likely d As the national debt expands, budget deficits are reduced significantly 16 Who uses fiscal policy Fed Government Public Firms 17 What is the primary purpose of taxation To annoy the public To save money To support the government To help the Fed 18 Which of the following does not involve government spending Jim purchases a new car Sally receives social security Scott is in the navy Joey works for a defense contractor 19 Which of the following is the key to taxation The government does not affect the public's money The government takes money from the public The government gives money to the public None of the above 20 Which of the following is the key to government spending The government does not affect the public's money The government takes money from the public The government gives money to the public None of the above 21 What is the equation for output or national income Y C(Y I) T G NX Y C(Y G) I T NX Y C(Y NX) I G T Y C(Y T) I G NX 22 What does the term C(Y T) represent in the equation for output or national income Disposable income Spendable income Disposable savings Spendable savings 23 What does expansionary fiscal policy do to output Does not affect it Increases it Decreases it It depends 24 What does contractionary fiscal policy do to output Does not affect it Increases it Decreases it It depends 25 What is the effect of expansionary fiscal policy on the money supply It depends Does not affect it Decreases it Increases it 26 What is the effect of fiscal policy on the money supply It depends Does not affect it Decreases it Increases it 27 What is the effect of stable fiscal policies on the money supply It depends Does not affect it Decreases it Increases it 28 What is the effect of contractionary fiscal policy on the money supply It depends Does not affect it Decreases it Increases it 29 The number that expresses the total effect a fiscal policy has on output is called a factor rate sum multiplier 30 What do you call the number that tells how much a change in tax policy affects total output Tax multiplier Fiscal policy multiplier Tax factor Fiscal policy factor 31 What do you call the number that tells how much a change in government spending policy affects total output Government spending factor Government spending multiplier Fiscal policy factor Fiscal policy multiplier 32 What is the basis of both the tax multiplier and the government spending multiplier Interest rate Total consumption Marginal propensity to consume Marginal output 33 What equation shows the total change in output resulting from a change in tax policy (change in taxes) MPC (1 MPC) (change in taxes) MPC (MPC) (change in taxes) MPC (change in taxes) MPC (1 MPC) 34 Which of the following does fiscal policy directly affect Unemployment rate Interest rate Birth rate Reserve requirement rate 35 Which of the following is not affected by fiscal policy Savings rate Interest rate Population growth rate Federal funds interest rate 36 What is the effect of expansionary fiscal policy on the interest rate Decreases it It depends Does not effect it Increases it 37 What is the effect of contractionary fiscal policy on the interest rate Decreases it It depends Does not effect it Increases it 38 Which of the following is the best definition of the money supply Currency Currency and demand deposits Demand deposits Money 39 Who carries out monetary policy Banks President The Fed Government 40 What is it called when the Fed takes actions that result in an increase in the money supply Contractionary fiscal policy Expansionary fiscal policy Contractionary monetary policy Expansionary monetary policy 41 What is it called when the Fed takes actions that result in a decrease in the money supply Contractionary monetary policy Expansionary monetary policy Contractionary fiscal policy Expansionary fiscal policy 42 What is the effect of expansionary monetary policy on output No effect It depends It decreases It increases 43 What is the effect of contractionary monetary policy on output No effect It depends It decreases It increases 44 Which of the following is not a way that the Fed can affect the money supply Open market operations Taxes Federal funds interest rate Reserve requirement

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Question: NO MISSING DATA !!! 2.If the economy is in an inflationary period, what action would Fiscal Policy most likely take? a)Decrease taxes b)Decrease the discount

NO MISSING DATA !!!

2.If the economy is in an inflationary period, what action would Fiscal Policy most likely take?

a)Decrease taxes

b)Decrease the discount rate

c)Increase taxes

d)Increase spending

3.If GDP is raising and the unemployment rate is decreasing, what actions would Monetary Policy and Fiscal Policy take to try to fix this economic situation?

Federal ReserveFiscal Policy

a.raise the Discount ratelower taxes

b.lower the Federal Funds rateraise taxes

c.lower the Discount ratedecrease spending

d.raise the Federal Funds ratedecrease spending

4.If Fiscal Policy is trying to promote stability and economic growth through tax cuts, what type of policy is Fiscal policy using?

a)Expansionary Fiscal Policy

b)Restrictive Fiscal Policy

c)Easy Money Policy

d)Tight Money Policy

If 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)A budget surplus

b)A balanced budget

c)A mounting debt

d)Discretionary fiscal policy

6.Which of the following best describes the goal of Monetary Policy?

a)Controlling taxes

b)Controlling the national debt

c)Controlling the money supply

d)Stopping inflation

7.If the Federal Reserve is trying to promote economic stability by lowering the Federal Funds rate, what action would Fiscal Policy take?

a)Lowering taxes

b)Increasing taxes

c)Decreasing spending

d)Decreasing borrowing

8.A consumer is at the store and purchases a new vacuum cleaner.At checkout, that consumer will have to pay an additional tax on that purchase; a sales tax.What type of tax is a sales tax?

a)Progress tax

b)Proportional tax

c)Keynesian Tax

d)Personal Income tax

9.If the economy is in a recession, the Fed could do all of the following EXCEPT

a)Lower taxes

b)Lower the Discount rate

c)Lower the Federal Funds rate

d)Buy securities

10.How are Fiscal Policy and the Federal Reserve similar?

a)They both use the same tools to fix economic problems

b)They both try to promote economic stability

c)They always must have Congressional approval before passing

d)They both have a Board of Governors

11.If you are a classical economist, which statement would you support?

a)Let the economy work out its own problems

b)The more the government spends to improve the economy, the better

c)The government should be involved to help during recessions

d)The government is the key to economic success

12. If the primary goal is to reduce inflation, which of the following fiscal policy actions would be appropriate during a rapidly increasing consumer price index?

I. Reduce government expenditures for defense and space research.

II. Increase transfer payments to those most severely affected by the rising price index.

III. Increase personal income tax rates.

a. I only

b. II only

c. III only

d. I and III only e. II and III only

13. Assume there is an decrease in aggregate demand in an economy. How would this affect inflation and unemployment?

a. Prices will rise; Unemployment will fall.

b. Prices will fall; Unemployment will rise.

c. Prices will rise; Unemployment will rise.

d. Prices will fall. Unemployment will fall.

14. Which of the following will occur as a result of an improvement in technology?

a. The aggregate demand curve will shift to the right.

b. The aggregate demand curve will shift to the left.

c. The aggregate supply curve will shift to the right.

d. The aggregate supply curve will shift to the left.

e. The production possibilities curve will shift inward.

15. Which of the following best describes the relationship between government budget deficits and the national debt?

a. Budget deficits lead to a decrease in the national debt.

b. Budget deficits lead to an increase in the national debt.

c. A national debt makes budget deficits less likely.

d. As the national debt expands, budget deficits are reduced significantly.

16. Who uses fiscal policy?

Fed
Government
Public
Firms

17. What is the primary purpose of taxation?

To annoy the public
To save money
To support the government
To help the Fed

18. Which of the following does not involve government spending?

Jim purchases a new car.
Sally receives social security.
Scott is in the navy.
Joey works for a defense contractor.

19. Which of the following is the key to taxation?

The government does not affect the public's money.
The government takes money from the public
The government gives money to the public.
None of the above.

20. Which of the following is the key to government spending?

The government does not affect the public's money.
The government takes money from the public.
The government gives money to the public.
None of the above

21. What is the equation for output or national income?

Y = C(Y - I) + T + G + NX
Y = C(Y - G) + I + T + NX
Y = C(Y - NX) + I + G + T
Y = C(Y - T) + I + G + NX

22. What does the term C(Y - T) represent in the equation for output or national income?

Disposable income
Spendable income
Disposable savings
Spendable savings

23. What does expansionary fiscal policy do to output?

Does not affect it
Increases it
Decreases it
It depends

24. What does contractionary fiscal policy do to output?

Does not affect it
Increases it
Decreases it
It depends

25. What is the effect of expansionary fiscal policy on the money supply?

It depends
Does not affect it
Decreases it
Increases it

26. What is the effect of fiscal policy on the money supply?

It depends
Does not affect it
Decreases it
Increases it

27. What is the effect of stable fiscal policies on the money supply?

It depends
Does not affect it
Decreases it
Increases it

28. What is the effect of contractionary fiscal policy on the money supply?

It depends
Does not affect it
Decreases it
Increases it

29. The number that expresses the total effect a fiscal policy has on output is called a

factor.
rate.
sum.
multiplier.

30. What do you call the number that tells how much a change in tax policy affects total output?

Tax multiplier
Fiscal policy multiplier
Tax factor
Fiscal policy factor

31. What do you call the number that tells how much a change in government spending policy affects total output?

Government spending factor
Government spending multiplier
Fiscal policy factor
Fiscal policy multiplier

32. What is the basis of both the tax multiplier and the government spending multiplier?

Interest rate
Total consumption
Marginal propensity to consume
Marginal output

33. What equation shows the total change in output resulting from a change in tax policy?

[(change in taxes) * MPC] / (1 - MPC)
[(change in taxes) * -MPC] / (MPC)
[(change in taxes) * MPC]
[(change in taxes) * -MPC] / (1 - MPC)

34. Which of the following does fiscal policy directly affect?

Unemployment rate
Interest rate
Birth rate
Reserve requirement rate

35. Which of the following is not affected by fiscal policy?

Savings rate
Interest rate
Population growth rate
Federal funds interest rate

36. What is the effect of expansionary fiscal policy on the interest rate?

Decreases it
It depends
Does not effect it
Increases it

37. What is the effect of contractionary fiscal policy on the interest rate?

Decreases it
It depends
Does not effect it
Increases it

38. Which of the following is the best definition of the money supply?

Currency
Currency and demand deposits
Demand deposits
Money

39. Who carries out monetary policy?

Banks
President
The Fed
Government

40. What is it called when the Fed takes actions that result in an increase in the money supply?

Contractionary fiscal policy
Expansionary fiscal policy
Contractionary monetary policy
Expansionary monetary policy

41. What is it called when the Fed takes actions that result in a decrease in the money supply?

Contractionary monetary policy
Expansionary monetary policy
Contractionary fiscal policy
Expansionary fiscal policy

42. What is the effect of expansionary monetary policy on output?

No effect
It depends
It decreases
It increases

43. What is the effect of contractionary monetary policy on output?

No effect
It depends
It decreases
It increases

44. Which of the following is not a way that the Fed can affect the money supply?

Open market operations
Taxes
Federal funds interest rate
Reserve requirement

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