Econ

Which of these is MOST LIKELY to occur after the government increases taxes?

Consumer spending decreases

The federal government uses government spending and tax rates to help control recessions and encourage economic activity. This is called...

Fiscal Policy

The process by which the government manages spending and taxes to influence the direction of the economy is

Fiscal Policy

The economy is experiencing negative GDP growth and high unemployment. Which fiscal policy action should the government implement in an attempt to fix this problem?

Increase Spending

When the Federal Reserve sells government securities on the open market, what effect does this action have on the nation's money supply and interest rates?

Money Supply - Decreases / Interest Rates - Increase

The Federal Reserve System controls the size of the...

Money supply

Of the following taxes, what is the name for the taxes that all homeowners must pay?

Property Tax

A sales tax is considered a ___ Tax because it tends to affect those with low incomes more than it does people with higher incomes.

Regressive

A state decides that it wants to implement an excise tax on tobacco products to help fund healthcare for children. The tax will be a 2% tax on all tobacco products sold in the state. What type of tax is this excise tax?

Regressive

-setting the discount and interest rates · establishing reserve requirements for banks · buying and selling US government securities All of these are ways in which the Federal Reserve system can...

Regulate the money supply

Federal program that provides monthly payments (entitlements) to people who are retired or unable to work is called

Social Security.

What is the name of the "central bank" of the United States?

The Federal Reserve

Which of these actions of the Federal Reserve can slow economic growth?

The Federal Reserve increases the discount rate, which causes interest rates to rise and people to save rather than to spend.

How might monetary policy be used to combat inflation fears?

The Federal Reserve might raise interest rates.

What would MOST LIKELY happen if the Federal Reserve decided to increase the reserve requirement in banks?

The amount of money circulating in the economy would decrease.

Monetary policy is BEST described as...

actions by the Federal Reserve System to expand or contract the money supply.

Which action would be a change in the government's fiscal policy?

an increase in taxes

If the federal government wants to encourage businesses and consumers to spend more money, it would MOST LIKELY

decrease the tax rate

What consumer behavior is the Federal Reserve Board trying to encourage when it implements a loose monetary policy?

decreased saving and increase spending

Unemployment insurance, Welfare, Medicare, Medicaid, and Social Security are key components of

fiscal policy.

Which pairs of operations BEST fit with fiscal policy?

government spending and taxation

What should be a future effect upon the economy if a expansionary fiscal policy continues in an economy with an increasing budget deficit and growing national debt?

high inflation

According to monetarists, to prevent recessions, the Federal Reserve should

increase the money supply.

The Federal Reserve has kept interest rates very low. Some might argue that this could lead to

inflation.

What is the term for the situation where more money is available for borrowing and investment?

loose money

The process by which the Federal Reserve controls the supply, availability, and cost of money in order to keep the economy stable

monetary policy.

The federal personal income tax is an example of what kind of tax?

progressive tax

Tax rates in which the percentage of tax is the same regardless of the level of income is MOST LIKELY a

proportional tax.

The leaders of a small country decide that they need to enact a contractionary fiscal policy. Which action is consistent with this fiscal policy?

reduce government spending

The Federal Reserve wants to increase the money supply in the United States. What is the Federal Reserve likely to do to accomplish this?

reduce the discount rate

How will a contractionary fiscal policy affect a budget deficit?

shrink the deficit

Which of these is primarily responsible for the control of the money supply in the United States?

the Federal Reserve