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Unit 4 Part 2 Test Review Flashcards | StudBud
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Unit 4 Part 2 Test Review
Unit 4 Part 2 Test Review
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Questions
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Answers
1
Decreasing taxes and increasing government spending is what kind of policy?
expansionary monetary policy
contractionary monetary policy
contractionary fiscal policy
expansionary fiscal policy
2
What does the government do when their budget has them spending more than the bring in?
increase interest rates
borrow money
decrease taxes
3
The government raises Social Security taxes. Expansionary or contractionary fiscal policy?
Expansionary
Contractionary
4
Which is the policy most used by the Federal Reserve?
open market operations
reserve requirement
discount rate
5
The normal rate of unemployment in the US is
2-3%
4-6%
0-2%
7-8%
6
How many Federal Reserve Districts are there?
10
50
12
14
7
Which line show a more stable economy with well-timed fiscal and monetary policy?
B
A
8
What is fiscal policy?
a change in the money supply by the Fed
a change in the government's budget
9
What is the largest source of government revenue?
personal income taxes
Borrowing money
corporate taxes
10
What is the GDP formula?
GDP= L+I+O+N
GDP= NX+MX+C+M
GDP= C+M+I+G
GDP= C+I+G+(X-M)
11
Which of the following is NOT considered an "automatic stabilizer"?
A progressive tax system
Welfare programs
Unemployment compensation
A stimulus bill
12
"Every 1$ change in the economy will be magnified" is called
discretionary fiscal policies
automatic stabilizers
multiplier effect
13
Contractionary policies are meant to
speed up the economy
slow down the economy
14
When would expansionary policies be implemented?
In a recession
When the economy is expanding too fast
When the economy is stable
15
Which of the following is NOT a Federal Reserve tool for Monetary Policy?
Change in the Discount Rate
Open Market Operations
Changing the government's budget
Change of the Reserve Requirement
16
The goal of a nation is to have 0% unemployment.
False
True
17
What is monetary policy
a change in the government's budget
a change in the money supply by the Fed
18
What does it mean when there is a budget surplus?
The government spent the same as what it collected
The government spent more than what it collected
The government spent less than what it collected
19
Which of the following is NOT a way government determines the health of their economy?
supply and demand trends
Unemployment rate
GDP
Inflation rate
20
Increasing taxes and decreasing government spending is
contractionary monetary policy
expansionary monetary policy
contractionary fiscal policy
expansionary fiscal policy
21
The Fed can change the reserve requirement for banks. What is the reserve requirement?
the amount banks are charged to loan to other banks
selling and buying of govt bonds
the amount of money banks are required to keep at the bank
22
The government launches a new major space program to explore Mars. Expansionary or contractionary fiscal policy?
contractionary
expansionary
23
Inflation is defined as the general rising of prices in a market economy over time
True
False
24
If inflation is rising too fast, the Fed will implement policies that will effectively
increase interest rates
decrease interest rates
25
Who mainly advises the President on making his/her budget?
The Federal Reserve
The Vice President
The Office of Management and Budget
Congress
26
What happens if the Government and the Fed poorly time their Fiscal or Monetary Policy decisions?
It will still help a lot
It can make the problem worse
