Chapter 15 and 16 economics test

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question
What would be an example of a contractionary fiscal policy ?
answer
Increasing taxes and decreased government spending
question
Which parts of the federal government put together the federal budget ?
answer
Congress and the White House
question
What would be an example of an expansionary fiscal policy ?
answer
Tax cuts and increased government spending
question
What term describes a budget where revenues exceed expenditures ?
answer
Budget surplus
question
What is the purpose of an expansionary fiscal policy?
answer
Increase aggregate demand,employment and output
question
Why is it difficult for the federal government to increase or decrease spending ?
answer
Because 2/3 of all government spending is on entitlements which the government cannot easily alter
question
What are the major uses of government fiscal policy ?
answer
are to create stability in the economy,to curb inflation and prevent big changes in the level of the GDP
question
What are two major problems associated with a large national debt ?
answer
It reduces the funds for businesses to invest,the government must pay interest on the bonds that make up the national debt
question
What banks must join the Federal Reserve System ?
answer
All nationally chartered banks
question
What does "lender of the last resort" mean with respect to the Federal Reserve ?
answer
It will lend money to a bank in a financial emergency
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How many Federal Reserve Districts are there ?
answer
12
question
In what ways does the Federal Reserve Bank serve the federal government ?
answer
It sells government securities
question
Who appoints the members of the Board of Governors of the Federal Reserve ?
answer
The president
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Who issues U.S. Paper currency ?
answer
The federal reserve
question
What is the function of a bank examiner ?
answer
To make sure banks are obeying laws and regulations
question
How does the Fed encourage banks to loan more money ?
answer
They reduce the cash reserve ratio and interest rates
question
How does a bond sale made by the Fed affect the money supply ?
answer
The sale decreases the money supply
question
What monetary policy tool is used most often by the Fed to change the money supply ?
answer
Open market operations
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What does monetary policy do ?
answer
The actions the federal reserve takes to influence the level of real GDP and the rate of inflation in the economy
question
What actions of the federal government are changed by fiscal policy ?
answer
Raising or cutting taxes, Spending or saving money
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