What is the main purpose of taxation?

to have revenue for government programs and operations

What banking behavior is the government encouraging when it implements a tight monetary policy?

The government wants to encourage fewer loans.

Which statement describes the role of the Federal Reserve System?

to regulate the U.S. financial system

Why is it difficult for the federal government to make large cuts in spending?

The largest part of they government spending is fixed

Which example is a fiscal policy?

The central government increases income tax rates.

Which statement best describes the primary role of the Federal Reserve?

It is the central bank of the United States.

Why might lawmakers increase taxes and decrease government spending?

to decrease the level of demand

What is one way the Federal Reserve System regulates economic activity?

regulating the amount of money in circulation

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American Government - Unit 6 - Government and the Economy - MODIFIED

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Review over the Federal Reserve and spending policies of the United States government

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Questions 16

Answers

1
Which type of policy is being enforced when the supply of money in the economy increases?
loose money policy
tight money policy
proportional money policy
regressive money policy
2
What is the purpose of the reserve requirement?
It gives traditional banks more revenue.
It gives traditional banks more power.
It controls government spending.
It protects public deposits.
3
Which loan conditions would result in higher monthly payments?
higher fixed cost
higher sales tax
higher discount rates
higher interest rates
4
What is the main purpose of taxation?
to have revenue for government programs and operations
to have a reserve of money available if needed
to promote economic equality among citizens
to stimulate the economy and encourage spending
5
What banking behavior is the government encouraging when it implements a tight monetary policy?
The government wants to encourage more spending.
The government wants to encourage lower interest rates.
The government wants to encourage more loans.
The government wants to encourage fewer loans.
6
What kind of tax do all have to pay? • individuals  • corporations  • legal entities
excise tax
income tax
inheritance/estate tax
value added tax
7
Which statement describes the role of the Federal Reserve System?
to monitor politicians and make recommendations
to regulate U.S. unemployment cycles
to regulate the U.S. financial system
to monitor labor cycles and regulate resources
8
Why is it difficult for the federal government to make large cuts in spending?
Most of the government's costs are for wages for employees
The largest part of they government spending is fixed
A Constitutional amendment has limited the size of cuts
Most people oppose cuts for programs like foreign aid
9
Which example is a fiscal policy?
The central government increases income tax rates.
The central bank increases the money supply.
The Federal Reserve controls open market operations.
The Federal Reserve decreases the money supply.
10
Which is a tool used by the Federal Reserve to influence the volume of money in the economy?
reserve requirement
personal income tax
loose money policy
open market operations
11
Which statement best describes the primary role of the Federal Reserve?
It is an electronic market of stocks in the United States.
It is the central bank of the United States.
It is a nonprofit cooperatives money-lending institution.
It is a private investment company in government projects.
12
Why might lawmakers increase taxes and decrease government spending?
to increase consumer spending
to encourage corporate spending
to reduce unemployment
to decrease the level of demand
13
By limiting the instability of inflation, the Federal Reserve Board attempts to achieve
low unemployment.
economic growth.
economic stability.
higher tax returns.
14
What is one way the Federal Reserve System regulates economic activity?
regulating spending by the federal government
regulating the amount of money in circulation
regulating production of consumer goods
regulating tariff rates on foreign imports
15
Its main functions are to regulate the national money supply - Which organization is described?
Federal Reserve System
Office of Management and Budget
Central Intelligence Agency
Office of U.S. Trade
16
Would you rather take the AIR Government test in 1 Day (3 hours) or 2 Days (1.5 hours a day)
1 Day
2 Days

American Government - Unit 6 - Government and the Economy - MODIFIED Flashcards | StudBud