Unit 8 - Monetary & Fiscal Policies

Question 1

President __________________ signed into law the Federal Reserve Act, establishing the U.S. Federal Reserve in December 1913.

Answer 1

Woodrow Wilson

Question 2

Through open market operations, the Federal Reserve controls interest rates by adjusting __________________.

Answer 2

The money supply

Question 3

What are two policy tools utilized in fiscal policy?

Answer 3

government spending and taxation

Question 4

In general, ____________________ interest rates is the preferred government response to spur the economy in the face of a downturn because it tends to be the fastest-acting solution with the greatest degree of flexibility and the least risk.

Answer 4

Lowering

Question 5

What is national debt?

Answer 5

Amount of money owed by the government, including principal and interest

Question 6

What was the United States first attempt at creating currency called?

Answer 6

The continental

Question 7

The U.S. __________________ is the main barrier between the U.S. economy and potential chaos caused by the business cycle.

Answer 7

Federal reserve

Question 8

Bank runs and bank collapses were prevalent during which time period in U.S. History?

Answer 8

the second half of the 1800s

Question 9

In what year did Congress approve the issuance of the United States dollar?

Answer 9

1785

Question 10

On what date did the stock market crash, thrusting America into the Great Depression?

Answer 10

October 24, 1929

Question 11

After the economy plummeted in 1929, most members of the Republican Party thought that it was best not to interfere with the economy, taking the _______________ of classic economics.

Answer 11

laissez-faire approach

Question 12

The __________ borrowing and spending the government does, the __________ it risks an eventual crowding-out effect, where funding for private ventures has to compete against the government, which pays increasingly higher interest rates to pay back its debt.

Answer 12

More; more

Question 13

What is the government’s manipulation of spending, tax collection, incomes, and transfer payments referred to?

Answer 13

Fiscal policy

Question 14

What document authorizes Congress “to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States.”

Answer 14

The constitution

Question 15

As required by law, the ______________ must submit a budget proposal to ____________ every year.

Answer 15

President; congress

Question 16

In 1930, which initiative was enacted that made it almost impossible for foreign countries to sell goods to the United States by raising already-high duties on imports to protect national products?

Answer 16

Smoot-Hawley Tariff Act

Question 17

What two scenarios directly affect national debt?

Answer 17

deficit and surplus

Question 18

The federal government borrows money by selling ________ to individuals and businesses.

Answer 18

Bonds

Question 19

What does the government use in order to entice people to purchase bonds?

Answer 19

Interest rates

Question 20

What are some ways that the government can reduce the national debt?

Answer 20

Achieve a budget surplus, raise income taxes, and reduce spending