Which of the following fiscal policy measures would increase aggregate demand?

#1 The process by which the Federal Reserve controls the supply, availability, and cost of money in order to keep the economy stable is A) monetary policy. B) the interest rate. C) fiscal policy. D) the discount rate.

#2 What would MOST LIKELY happen if the Federal Reserve decided to increase the reserve requirement in banks? A) The amount of federal taxes people owe would decrease. B) The amount of federal taxes people owe would increase. C) The amount of money circulating in the economy would decrease. D) The amount of money circulating in the economy would increase.

#3 If the federal government runs an annual budget deficit, A) the will have a budget surplus. B) the national debt will increase. C) the national debt will decrease. D) they will attain a balanced budget

#4 Which of the following fiscal policy measures would increase aggregate demand? a. Decrease personal income tax b. Increase sales tax c. Increase government spending d. A and c

#5 Assume the economy is described as follows: the federal budget is balanced, there is annual inflation of less than one percent, real GDP has fallen for the last 9 months, and business investment is declining. Which of the following fiscal policy actions would be most appropriate? a. Increase taxes at all levels of income b. Increase government spending and transfer payments c. Decrease federal spending on highway construction d. Urge citizens to save more and spend less

#6 Which of the following represents an automatic fiscal policy in the economy? a. Increasing income tax b. Unemployment benefits c. A law passed by congress decreasing tax rates d. A and C

#7 Who is responsible for fiscal policy? a. The Federal Reserve b. The president and congress c. Bank of America d. Congress and the Judicial Branch

#8 A sales tax is an example of a __________________ tax. a. Progressive b. Regressive c. Proportional d. Excise

#9 Which of the following is not a function of money? a. Standard of account b. Store of value c. Medium of exchange d. Unit of accounting

#10 Money that is backed by gold or silver is called a. Fiat money b. Commodity money c. Real money d. Representative money

#11 Our national system of income tax is also known as a ________________ tax system. a. Progressive b. Regressive c. Proportional d. Excise

#12 Which of the following is primarily in control of the nation’s money supply? a. US Treasury b. Federal Reserve c. Executive Branch d. Legislative branch

#13 Economists believe that an increase in the sales tax affects which of the following the most? a. Hourly workers b. Salaried workers c. People with low incomes d. People with high incomes

#14 The Federal Reserve has kept interest rates very low. Some might argue that this could lead to • Inflation • Deflation • A strong dollar • Higher unemployment

#15 What would MOST LIKELY happen if the Federal Reserve decided to increase the reserve requirement? • The amount of federal taxes people owe would increase • The amount of federal taxes people owe would decrease • The amount of money circulating in the economy would increase • The amount of money circulating in the economy would decrease

#16 If the Federal government wants to encourage consumer and business spending. They will MOST LIKELY • Increase the tax rate • Decrease the tax rate • Increase the reserve requirement • Decrease government spending

#17 The group of people in charge of the Federal Reserve is called ______________. • Board of Governors • FOMC • The president and his cabinet • The district banks

#18 Which of the following is not a monetary tool of the Federal Reserve? • Taxing • Discount rate • Reserve requirement • Buying bonds

#19 Which of the following correctly describes a tool of Monetary Policy being used correctly to fight inflation? • Buying bonds • Increasing Taxes • Decreasing government spending • Increasing the Discount Rate

#20 Which of the following correctly describes a tool of Fiscal Policy being used correctly to fix a recession? • Buying Bonds • Selling Bonds • Decreasing Taxes • Decreasing the Reserve Requirement

Which of the following fiscal policy measures would increase aggregate demand?