monetary and fiscal policy worksheet #1 name aiden stock hour __
1. the rate of inflation has increased by 6.8% over the last year. the u.s. government wonders what it can do to help improve this situation
a. should the government use fiscal or monetary policies?
b. should the government use expansionary or contractionary policies?
c. list the expansionary or contractionary policies the government should use.

2. the consumer price index has gone up by 6.8% over the last year. the federal reserve wonders what it can do to help improve this situation.
a. should the fed use fiscal or monetary policies?
b. should the fed use expansionary or contractionary policies?
c. list the expansionary or contractionary policies the fed should use.

3. the economy has slowed over the last three months. ben bernanke discusses this with his advisors and they discuss what policy changes they could make that would help to improve the situation.
a. should the fed use fiscal or monetary policies?
b. should the fed use expansionary or contractionary policies?
c. list the expansionary or contractionary policies the fed should use.

4. the gross domestic product (gdp) which measures production of goods and services in the u.s. has decreased over the last three months. president biden meets with his advisors and they discuss what policy changes they could make that would help to improve the situation.
a. should the government use fiscal or monetary policies?
b. should the government use expansionary or contractionary policies?
c. list the expansionary or contractionary policies the government should use.

Question

monetary and fiscal policy worksheet #1 name aiden stock hour __
1. the rate of inflation has increased by 6.8% over the last year. the u.s. government wonders what it can do to help improve this situation
   a. should the government use fiscal or monetary policies?
   b. should the government use expansionary or contractionary policies?
   c. list the expansionary or contractionary policies the government should use.

2. the consumer price index has gone up by 6.8% over the last year. the federal reserve wonders what it can do to help improve this situation.
   a. should the fed use fiscal or monetary policies?
   b. should the fed use expansionary or contractionary policies?
   c. list the expansionary or contractionary policies the fed should use.

3. the economy has slowed over the last three months. ben bernanke discusses this with his advisors and they discuss what policy changes they could make that would help to improve the situation.
   a. should the fed use fiscal or monetary policies?
   b. should the fed use expansionary or contractionary policies?
   c. list the expansionary or contractionary policies the fed should use.

4. the gross domestic product (gdp) which measures production of goods and services in the u.s. has decreased over the last three months. president biden meets with his advisors and they discuss what policy changes they could make that would help to improve the situation.
   a. should the government use fiscal or monetary policies?
   b. should the government use expansionary or contractionary policies?
   c. list the expansionary or contractionary policies the government should use.

Accepted Answer

### Question 1
#### Part a
# Brief Explanations:
Fiscal policy is used by the government (Congress, President) to influence the economy via taxes and government spending. Since the question is about the U.S. Government's actions, fiscal policy is the realm of the government (monetary is for the Fed).
# Answer:
Fiscal policies

#### Part b
# Brief Explanations:
Inflation (6.8% increase) means the economy is overheating. Contractionary policies reduce spending/aggregate demand to combat inflation.
# Answer:
Contractionary policies

#### Part c
# Brief Explanations:
Contractionary fiscal policies include increasing taxes (so people have less to spend) and decreasing government spending (reducing demand in the economy). These actions lower aggregate demand to fight inflation.
# Answer:
Increase taxes, Decrease government spending

### Question 2
#### Part a
# Brief Explanations:
The Federal Reserve (Fed) is responsible for monetary policy (controlling money supply, interest rates), while fiscal policy is for the government (taxes, spending). So the Fed uses monetary policy.
# Answer:
Monetary policies

#### Part b
# Brief Explanations:
A 6.8% rise in CPI (inflation) means the economy has too much money/too much demand. Contractionary monetary policy reduces money supply to cool inflation.
# Answer:
Contractionary policies

#### Part c
# Brief Explanations:
Contractionary monetary policies: The Fed can sell bonds (open market operations) to reduce money supply, increase the reserve requirement (banks hold more, lend less), or increase the discount rate (makes borrowing from Fed more expensive, so banks lend less). These reduce money supply and raise interest rates, lowering demand.
# Answer:
Sell government bonds (open market operations), Increase reserve requirement, Increase discount rate

### Question 3
#### Part a
# Brief Explanations:
The Fed (Ben Bernanke was a Fed chair) uses monetary policy. Fiscal policy is government - led; monetary is Fed - led (money supply, interest rates).
# Answer:
Monetary policies

#### Part b
# Brief Explanations:
The economy has slowed (recessionary trend). Expansionary policies increase money supply/aggregate demand to stimulate growth.
# Answer:
Expansionary policies

#### Part c
# Brief Explanations:
Expansionary monetary policies: Buy bonds (open market operations) to increase money supply, decrease reserve requirement (banks lend more), or decrease discount rate (cheaper to borrow from Fed, so banks lend more). These increase money supply, lower interest rates, and boost spending/investment.
# Answer:
Buy government bonds (open market operations), Decrease reserve requirement, Decrease discount rate

### Question 4
#### Part a
# Brief Explanations:
The government (President Biden and advisors) uses fiscal policy (taxes, government spending) to influence the economy. Monetary is Fed - led.
# Answer:
Fiscal policies

#### Part b
# Brief Explanations:
GDP decreased (economic slowdown/recession). Expansionary fiscal policy increases spending/aggregate demand to stimulate production and growth.
# Answer:
Expansionary policies

#### Part c
# Brief Explanations:
Expansionary fiscal policies: Decrease taxes (people have more to spend) and increase government spending (directly increases demand for goods/services, creates jobs). These actions boost aggregate demand to reverse the GDP decline.
# Answer:
Decrease taxes, Increase government spending

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Explanation:

Question 1

Part a

Answer:

Part b