Fiscal Policy & Monetary Policy Chapter Exam

Exam Instructions:

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

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Question 1 1. The most appropriate countercyclical policy, or stabilization policy, in times of unemployment, according to Classical economists, is for the government to do which of the following?

Question 2 2. If the supply of money decreases, what happens in the money market?

Question 3 3. According to supply-side economists, how are taxes and economic growth related?

Question 4 4. What are the primary goals of fiscal and monetary policy?

Question 5 5. How do automatic stabilizers affect the government's budget during an economic recession?

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Question 6 6. If the economy is suffering from extremely high rates of inflation, how should the government intervene from the standpoint of a classical economist?

Question 7 7. An automatic stabilizer is BEST defined as _____.

Question 8 8. Assume the economy is in a recession and the Federal Reserve takes the appropriate monetary policy actions. Which of the following shows the affect of the monetary policy?

Question 9 9. According to Keynesian economists, if policymakers thought the economy was headed into a recession, what action would be most appropriate?

Question 10 10. When the economy is growing too slowly (recession) or too quickly (high inflation), the two approaches the government can use, according to economists, include which of the following?

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Question 11 11. Which of the following will most likely be favored by a Keynesian economist if the economy is experiencing a recessionary gap?

Question 12 12. In general, because of policy lags, which of the following is true?

Question 13 13. How do automatic stabilizers benefit the economy?

Question 14 14. Which of the following statements is TRUE of expansionary monetary policy during a recession?

Question 15 15. An economy is facing moderate output growth but significantly high inflation rates. Which of the following policy actions can the Federal Reserve use to address this problem?

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Question 16 16. When the Federal Reserve lowers the discount rate, what will happen?

Question 17 17. All other things equal, which of the following monetary policies would be used to increase exports?

Question 18 18. What is fiscal policy?

Question 19 19. Which of the following will a Keynesian economist most likely favor if the economy is operating at point a?

Question 20 20. John Maynard Keynes believed that fiscal policy designed to deal with budgets should _____

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Question 21 21. According to Keynesian economists, what is the most appropriate time for fiscal authorities to attempt to balance the budget?

Question 22 22. Increasing government spending will likely lead to all of the following, EXCEPT:

Question 23 23. If a nation is operating at full employment and the central bank engages in contractionary monetary policy, how will the interest rate and the unemployment rate change?

Question 24 24. What is a progressive tax code?

Question 25 25. How should fiscal policy be used in an inflationary economy?

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Question 26 26. Which of the following will most likely result due to the replacement of some portion of the federal personal income tax with a national sales tax?

Question 27 27. All of the following are examples of fiscal policy to lower unemployment, EXCEPT:

Question 28 28. _____ fiscal policy addresses a _____ economy, while _____ fiscal policy addresses an _____ economy.

Question 29 29. An expansionary fiscal policy would most likely cause which of the following changes in output and interest rates?

Question 30 30. In the case of a proportional tax, individuals are taxed at a rate that is _____.

Fiscal Policy & Monetary Policy Chapter Exam Instructions

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

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