Monetary vs. Fiscal Policy
- 1. Economic policy by changes in the taxing and spending of the federal government
A) Monetary Policy
B) Fiscal Policy
- 2. Economic policy under the control of the Federal Reserve System
A) Fiscal Policy
B) Monetary Policy
- 3. Economic policy carried out by the legislative and/or the executive branches of government.
A) Monetary Policy
B) Fiscal Policy
- 4. Running of a budget deficit (difference between govt spending and tax revenues, financed by govt borrowing) is a tool of this economic policy.
A) Monetary Policy
B) Fiscal Policy
- 5. Open market operations (buying and selling of government securities in the open market in order to expand or contract the amount of money in the banking system) is a tool of this economic policy
A) Fiscal Policy
B) Monetary Policy
- 6. Running of a budget surplus (difference between tax revenues and govt spending) is a tool of this economic policy.
A) Fiscal Policy
B) Monetary Policy
- 7. Changes in the reserve requirement (amount of funds that a depository institution must hold in reserve against specified deposit liabilities)is a tool of this economic policy
A) Fiscal Policy
B) Monetary Policy
- 8. Changes in the discount rate (the interest rate charged to commercial banks and other depository institutions on loans they receive from their regional Federal Reserve Bank's lending facility--the discount window) is a tool of this economic policy.
A) Fiscal Policy
B) Monetary Policy
- 9. This type of contractionary policy is when the Fed uses its tools to effect a reduction in the supply of money.
A) Fiscal Policy
B) Monetary Policy
- 10. This type of expansionary policy is when there is an increase in government expenditures and or/a decrease in taxes that causes the government's budget deficit to increase or its budget surplus to decrease.
A) Monetary Policy
B) Fiscal Policy
- 11. This type of contractionary policy is when there is a decrease in government spending and/or an increase in taxes that causes the government's budget deficit to decrease or its budget surplus to increase.
A) Monetary Policy
B) Fiscal Policy
- 12. This type of expansionary policy is when there is an increase in money supply.
A) Monetary Policy
B) Fiscal Policy
- 13. Using complete sentences, define fiscal policy and monetary policy in your own words.
- 14. Describe the differences in the two main economic policies: fiscal and monetary.
- 15. Which economic policy is the most effective in maintaining a strong economy? Your answer should include examples of policy issues (e.g., unemployment, inflation, etc.).
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