Economics Practice Test

20 Questions

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Economics Practice Test

Questions and Answers
  • 1. 
    What is the #1 choice of Monetary Policy enacted by the FED?
    • A. 

      Altering the Reserve Ratio

    • B. 

      Open Market Operations

    • C. 

      Altering the Discount Rate

    • D. 

      None of the Above

  • 2. 
    In the buying/selling of bonds/securities, the FED buys/sells to/from
    • A. 

      Government

    • B. 

      Businesses

    • C. 

      Individuals

    • D. 

      Commercial Banks

  • 3. 
    The long term goal of the FED is economic growth
    • A. 

      True

    • B. 

      False

  • 4. 
    Congress increases taxes on all citizens without increasing spending.Debt: Increase or Decrease?
    • A. 

      Increase

    • B. 

      Decrease

  • 5. 
    Congress increases taxes on all citizens without increasing spending.Budget: Surplus of Deficit?
    • A. 

      Deficit

    • B. 

      Surplus

  • 6. 
    Explain the reasoning behind your previous two questions dealing with the situation:Congress increases taxes on all citizens without increasing spending.
  • 7. 
    The government increases military expenditures.Discretionary fiscal policy or automatic stabilizer?
    • A. 

      Discretionary Fiscal Policy

    • B. 

      Automatic Stabilizer

  • 8. 
    The government increases military expenditures.Economic expansion or contraction?
    • A. 

      Expansion

    • B. 

      Contraction

  • 9. 
    A federal highway is being widened to allow for better traffic flow.Mandatory or Discretionary spending?
    • A. 

      Mandatory

    • B. 

      Discretionary

  • 10. 
    Restrictive Monetary Policy targets ____________
    • A. 

      Unemployment

    • B. 

      Inflation

    • C. 

      Recession

  • 11. 
    Open-Market Operations is the buying/selling of
    • A. 

      Bonds

    • B. 

      Stocks

    • C. 

      Securities

    • D. 

      Trusts

  • 12. 
    Expansionary Monetary Policy Targets ___________ and ____________
    • A. 

      Inflation

    • B. 

      Recession

    • C. 

      Liquidity

    • D. 

      Unemployment

  • 13. 
    What does the CEA do?
  • 14. 
    What is the quote that defines inflation?
  • 15. 
    What does MPC stand for?
  • 16. 
    What does MPS stand for?
  • 17. 
    True or False?The government can avoid bankruptcy by refinancing (pay old bonds and selling new ones) or taxation. Or both.
    • A. 

      True

    • B. 

      False

  • 18. 
    From what is the largest government revenue percentage?
  • 19. 
    What are the three different tax systems?
    • A. 

      Proportional

    • B. 

      Aggressive

    • C. 

      Regressive

    • D. 

      Progressive