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Generation Date: 03/08/2015
Generated By: Stephanie Foy
Title: Monetary and Fiscal Policy
1.
"Its main functions are to regulate the national money supply, set reserve requirements
for members, supervise the printing of currency at the mint, act as a clearing house for
the transfer of funds throughout the banking system and examine member banks to
make sure they meet various regulations."
www.dreyfus.com/content/dr/control
Which organization is described in the passage?
A. Central Intelligence Agency
B. Office of U.S. Trade
C. Office of Management and Budget
D. Federal Reserve System
2. Which is a tool used by the Federal Reserve to influence the volume of money in the economy
by buying and selling government securities?
A. reserve requirement
B. open market operations
C. loose money policy
D. personal income tax
3. Which of these best describes a proportional tax?
A.
an income tax that varies depending on the amount of disposable income within a
household
B. an income tax that takes the same percentage of income regardless of the amount of
income earned
C.
an income tax that is higher for households earning relatively high incomes from both
spouses
D.
an income tax that becomes increasingly lower for those who live below the national
poverty line
4. Which type of policy is being enforced when the supply of money in the economy increases?
A. proportional money policy
B. loose money policy
C. regressive money policy
D. tight money policy
5. Which loan conditions would result in higher monthly payments?
A. higher discount rates
B. higher sales tax
C. higher interest rates
D. higher fixed cost
6. Albert earns $100,000 per year, and his wife earns $30,000 per year. Albert pays 30% in
income tax while his wife pays 15% in income tax. This concept is known as a
A. progressive tax rate.
B. regressive tax rate.
C. proportional tax rate.
D. fixed tax rate.
7. What banking behavior is the central government trying to encourage when it implements a
tight monetary policy?
A. The government wants to encourage fewer loans.
B. The government wants to encourage more spending.
C. The government wants to encourage lower interest rates.
D. The government wants to encourage more loans.
8. What is the purpose of the reserve requirement?
A. It gives traditional banks more power.
B. It gives traditional banks more revenue.
C. It controls government spending.
D. It protects public deposits.
9. Which statement is a common argument against sales tax?
A. It is an excise tax.
B. It is a proportional tax.
C. It is a progressive tax.
D. It is a regressive tax.
10. Which example is a fiscal policy?
A. The central government increases income tax rates.
B. The central bank increases the money supply.
C. The Federal Reserve decreases the money supply.
D. The Federal Reserve controls open market operations.
Answers
1. D
2. B
3. B
4. B
5. C
6. A
7. A
8. D
9. D
10. A