Honors Econ: Monetary and Fiscal Policy Questions
Names: ________________
In groups of 2-3 research the internet to answer the following questions:
1. Monetary policy is a control of: 1) the supply of ______ ; 2) availability of ________ ; 3)
interest _____
2. Monetary policy is either e_________ or c___________.
3. __________ policy increases the total money supply in the economy more rapidly than usual.
4. __________ policy expands the money supply more slowly than usual or shrinks it
5. Expansionary policy has been used traditionally to combat __________ in a recession by
(circle one) raising/lowering interest rates.
6. Contractionary policy is intended to (circle one) speed up/slow inflation.
7. The price at which money can be borrowed is known as:
8. All modern nations have a special institution designated with the task of executing the
monetary policy. What is that institution for the U.S.
9. When the economy is poor the Fed will attempt to speed it up by raising or lowering interest
rates?
10. The 3 roles of the Federal Reserve are to 1) grow the ________ 2) keep banks _____; 3)
make _________ secure.
11. Fiscal policy is the use of government _________ and ________ to influence the economy.
12. What is the reserve rate? Who sets it and how does it affect monetary policy?
13. What is M1, M2 & M3 and what do they have to do with liquidity?
14. What is the Laffer curve? Is it fiscal or monetary policy?
Explain the three main stances of fiscal policy and provide an example of each:
15. Neutral fiscal policy:
16. Expansionary fiscal policy:
17. Contractionary fiscal policy:
-These definitions are misleading in that it’s only true, ‘ceteris paribus,’ which means:
18. What is “crowding out” and provide an example:
19. What is the American Taxpayer Relief Act of 2012?
Fiscal or Monetary?
20. Taxes increased in 2013 for the wealthiest Americans.
21. Interest rates were lowered after September 11, 2011.
22. FDR’s New Deal.
23. Interest rates are raised and stock prices fall.
Facts about the Dollar & the Fed
1. The U.S. Bureau of Engraving and Printing will redeem almost all mutilated dollar bills
as long as you still have more than _____ of the note.
2. What lasts longer, bills or coins? What happens to old bills?
3. Scientific research conducted in 2009 found that 90 percent of U.S. bills have been
contaminated by ________.
4. When a dollar bill goes through the laundry it is not ruined like regular paper because
they are made of a combination of __________ and _________.
5. T/F: A $2 bill is actually worth more than $2 because of its rarity.
6. T/F: The U.S. Dollar is backed by the Gold Standard
7. What is fiat money and what does it have to do with the Nixon Shock?
8. Each dollar bill has a number on the left side of it. What does the number represent?
9. How many districts are in the Federal Reserve?
10. What district does the Chicago Fed supervise? Which 5 states are members of this district?
11. What is the cost for the Fed to process a paper check? An electronic check?
12. Why did the name “grand” come from for the U.S. Treasury note of $1,000?
13. 2/3 of the U.S. currency is held ______________.The country that has the most is
____________.