Multiple Choice
Identify the
letter of the choice that best completes the statement or answers the question. Five points
each.
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1.
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Who
is primarily responsible for fiscal policy? a. | President | c. | Council on Economic Advisors | b. | Federal
Reserve | d. | Congress | | | | |
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2.
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Unlike
demand-side economics, supply-side economics a. | advocates reduced government involvement in
business. | b. | advocates increased government involvement in
business. | c. | emphasizes increasing consumer purchasing
power. | d. | urges higher taxes to increase spending on government
programs. | | |
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3.
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If
the economy is experiencing rapid growth and rising prices, what fiscal policy might Congress pursue
to achieve economic stability? a. | increase taxes and decrease government
spending | b. | decrease taxes and increase government
spending | c. | raise the discount rate | d. | lower the
discount rate | | |
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4.
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When
the economy is experiencing a GDP gap, which of the following is true? a. | All resources
are being used efficiently. | c. | Prices are
rising. | b. | Some resources are not being used
fully. | d. | The economy is
growing. | | | | |
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5.
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Some people
believe that a weak economy will result in a. | a higher crime rate. | c. | higher taxes. | b. | increased
production. | d. | expansion of municipal
services. | | | | |
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6.
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Deregulation
is most closely associated with a. | Monetarist economics. | c. | demand-side economics. | b. | Keynesian
economics. | d. | supply-side
economics. | | | | |
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7.
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How
might the Federal Reserve attempt to stimulate a sluggish economy? a. | Decrease taxes
and increase spending. | b. | Increase taxes and decrease spending. | c. | Buy government
securities and lower the discount rate. | d. | Sell government securities and raise the discount
rate. | | |
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8.
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When
the economy is in an expansion, what is likely to happen to “automatically stabilize” the
economy? a. | increased
government spending | c. | increased money
supply | b. | decreased tax rates | d. | decreased government spending | | | | |
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