Monetary and Fiscal policy unit review

Question 1

What is the goal of the government during a contraction period?

Answer 1

To increase consumer’s disposable income

Question 2

Who is the head of the fed?

Answer 2

Jerome Powell

Question 3

What personnel make up the FOMC?

Answer 3

Board of governors and 5 out of the 12 heads of Fed banks

Question 4

Inflation is a sign of which period of the business cycle?

Answer 4

Expansion

Question 5

A regressive income tax is when income _ and the tax rate _

Answer 5

Increase and decrease

Question 6

What are open market operations?

Answer 6

The buying/selling of government securities

Question 7

What is the main role of the FED?

Answer 7

Loan money to banks

Question 8

Who does the FDA and USDA protect?

Answer 8

Consumers

Question 9

How many branch banks of the FED are there?

Answer 9

25

Question 10

How does a bank become a member of the fed?

Answer 10

A charter

Question 11

What are reserve requirements?

Answer 11

The percent of deposits that cannot be loaned out

Question 12

What is the discount rate?

Answer 12

The interest rate the FED charges banks for borrowing money

Question 13

What are the four characteristics of a tax?

Answer 13

Simplicity, efficiency, certainty, equity

Question 14

What are transfer payments?

Answer 14

Money given to improve the quality of life

Question 15

Who carries out the FED’s
Policy?

Answer 15

Federal reserve banks

Question 16

Monopolies destroy

Answer 16

Competition

Question 17

The government gets money to operate from two places. What are those two places?

Answer 17

Taxes and bonds

Question 18

What are the two types of taxes?

Answer 18

Direct and indirect

Question 19

Action through taxes and government spending in the economy is called what?

Answer 19

Keynesian economics

Question 20

_ taxes take a fixed percent of income.

Answer 20

Direct (proportional)

Question 21

When income increases and the tax rate increases, this is called what type of tax?

Answer 21

Progressive (direct)

Question 22

What is another term for indirect taxes?

Answer 22

Excise taxes

Question 23

What is taxed by indirect taxes?

Answer 23

Taxes on good/services

Question 24

When does the fiscal year end?

Answer 24

September 30

Question 25

OSHA and minimum wage laws protect what?

Answer 25

Working conditions

Question 26

What is an example of mandatory spending?

Answer 26

Interest on debt, salaries

Question 27

What is the biggest part of the discretionary budget?

Answer 27

Defense spending

Question 28

The _ _ _ is made up of 7 people who serve 14 year terms

Answer 28

Board of governors

Question 29

What does FOMC stand for?

Answer 29

Federal open market comittee

Question 30

What is the result of a contractionary period on the business cycle?

Answer 30

Deflation

Question 31

The total demand for all goods and services is called what?

Answer 31

Aggregate demand

Question 32

What should the government do to fix inflation?

Answer 32

Increase taxes, decease government spending

Question 33

What should the government do to fix deflation?

Answer 33

Decrease taxes, increase government spending

Question 34

What is the goal of the government during an expansion period?

Answer 34

To decrease consumer’s disposable income