econ module 4

three economic goals that are collectively referred to as the Federal Reserve's mandate.

1. economic growth 2. stable prices 3. full employment

According to Hazlitt, which of the following are effects of keeping interest rates artificially low?

1.It encourages highly speculative ventures. 2.It increases the demand for capital. 3.It decreases the supply of real capital.

Which of the following would happen if the Federal Reserve raised the reserve requirement?

1.It would reduce the amount of money banks could lead. 2.It would lead to higher interest rates.

Which of the following Congressional acts established the Securities and Exchange Commission?

1.Securities Exchange Act of 1934 2.Securities Act of 1933

How many economic downturns occurred in the United States from 1855 to 2020?

33

Which presidential candidate issued a universal jobs guarantee during the 2020 Democratic primary?

Bernie Sanders

The worst period of inflation in history occurred in 1946, when prices doubled every 15.6 hours in the nation of ___________.

Hungary

Hazlitt writes, "Even a relatively mild inflation distorts the structure of production." Why does he say this is the case?

Inflation results in the overexpansion of some industries at the expense of others, leading to a misapplication of capital.

Which economist argued that waiting for the economy to self-correct was foolish, saying, "In the long run we're all dead," and instead recommended strong action by the government to jump-start the economy?

John Maynard Keynes

Who popularized the theory of the paradox of thrift?

John Maynard Keynes

The largest stock market in the world is the _______________.

New York Stock Exchange

Which of the following scenarios would likely result in cost-push inflation?

an increase in the minimum wage

Hazlitt argues that "nothing is easier to achieve than full employment" when it's "taken as an end to itself" instead of being tied to the goal of _______________.

full production

What does Hazlitt say is "the special name for the price of [this] loaned capital

interest rate

In one sentence, define the term deflation.

is a decrease in the general level of prices and it decreases the value for tangible assets.

In one sentence, define the term inflation.

is an increase in the general level of prices.

One economic goal of the United States government is stable _______.

prices

Why do consumers reduce their buying after an economic downturn has started?

1.Because prices of goods have already fallen, and they fear a further fall. 2.Because they fear they may lose their jobs.

Which of the following are examples of international economic institutions?

1.International Monetary Fund 2.World Bank

What organizations are responsible for regulating financial markets in the United States?

1.Securities and Exchange Commission 2.Federal Reserve System

According to Hazlitt, many proponents of inflation realize that it will decrease the purchasing power of money and increase the prices of goods and services. What are reasons these proponents of inflation want inflation anyway? (choose all that apply)

1.They believe it will improve the position of creditors as compared with debtors. 2.They believe it will jump-start industry and lead to full employment. 3.They believe it will stimulate imports and discourage exports. 4.They believe it's an essential measure to cure a depression.

Which of the following are examples of supply-side policies the government can use to encourage economic growth and lower unemployment?

1.deregulation 2.job training programs

Which of the following are examples of monetary policy strategies the government can use to encourage economic growth and lower unemployment?

1.lowering interest rates 2.increasing the money supply

Inflation has a negative impact on which of the following groups? (

1.people with a lot of savings 2.people living on a fixed income

Which of the following are services provided by the Federal Reserve?

1.protecting consumers through regulation and education 2.processing checks and electronic payments 3.supplying banks with paper money and coins

Which of the following are main goals of the Securities and Exchange Commission?

1.to ensure that financial markets are fair, orderly, and efficient 2.to protect investors

At the beginning of the year, $100 could buy 100 loaves of bread. By the end of the year, that $100 could only buy 90 loaves of bread. What was the percentage of inflation for that year?

10%

In the United States, the highest level of inflation since the Great Depression occurred in 1979. What was the percentage of inflation in 1979?

13%

At the height of the Great Depression in 1933, the unemployment rate reached a high of ________.

24.9%

What committee is responsible for conducting monetary policy?

Federal Open Market Committee

________ policy refers to changes in federal taxation and spending that are designed to influence the economy.

Fiscal

In one sentence, explain the two primary downsides of supply-side policies.

can take years to make a change and you will not even know in advance what the outcome will be.

Hazlitt writes, "The most obvious . . . error on which the appeal of inflation rests" is _________________.

confusing money with wealth

Hazlitt argues that saving is not a cause of depressions but is instead a(n) __________ of depressions.

consequence

The period of the business cycle where growth slows down and unemployment increases is called the ____________ phase.

contractionary

When businesses raise prices to cover increasing costs, it results in ____________.

cost-push inflation

One potential cause of unemployment is seasonal fluctuations in _________.

demand

When demand for goods and services becomes greater than supply, it results in _________.

demand-pull inflation

Government policies designed to create economic growth by increasing aggregate demand are called ________________.

demand-side policies

The rate of interest that the central bank charges on its loans is called the ____________.

discount rate

Nearly all market economies experience long-term growth because of ___________.

economic incentives

Hazlitt writes that "production is the ________ , employment merely the _______ ."

end, means

The period of the business cycle where economic growth increases and unemployment decreases is called the _____________ phase.

expansionary

Traders can exchange different currencies on the __________.

foreign exchange market

What is usually a downside of lowering taxes and increasing government spending?

increased government borrowing

Which of the following scenarios would likely result in demand-pull inflation?

increased government spending

If someone trades a stock based on confidential, nonpublic knowledge about that stock, they have committed _________.

insider trading

What government economic strategy reduces taxes on businesses who invest in increasing their productivity?

investment tax credits

One argument made against reducing the bureaucracy is that it would hurt the economy by reducing the purchasing power of the dismissed officeholders. Those who make this argument are committing what fallacy?

looking only at the effects on one group, the dismissed officeholders, instead of the effects on everyone

list the two primary fiscal policy strategies used to combat slow growth and high unemployment.

lowering taxes and the other is increasing government spending.

The top of the business cycle is known as the __________.

peak

A long economic contraction, defined by some economists as a contraction lasting more than six months, is called a(n) ____________.

recession

Hazlitt writes that inflation "is a tax not only on every individual's expenditures" but also on every individual's __________________.

savings account and life insurance

Open market operations involve the purchase and sale of government ___________.

securities

In Chapter 9 of Economics in One Lesson, Hazlitt discusses that there is often a fear that there won't be enough jobs for soldiers when they return to the workforce after a war. Hazlitt admits that it may require some time for private industry to provide jobs for all these new workers. He writes that, in the past, the "chiefly remarkable" thing about getting jobs for all the former soldiers has been the _____ with which the process was accomplished.

speed

According to Hazlitt, saving is merely a different form of ___________.

spending

In the story about Milton Friedman visiting an overseas construction site, Friedman suggests that more jobs could be created by taking away the workers' shovels and giving them _______.

spoons

Of the following investments, which has historically had the best performance over the long term but suffers from more volatility?

stocks

Government policies designed to create economic growth by increasing productivity and efficiency are called ____________.

supply-side policies