Module 2

economic system

A(n) _____ is a structure for allocating limited resources

cut back on the loans they make.

During a period of inflation in the United States, the Federal Reserve sells treasury bonds. Buyers of these bonds write checks to the Fed, and the Fed cashes these checks from banks. Given this information, the banks will most likely:

there will be more loans available

In the context of monetary policy, if the Fed decreases the reserve requirement, _____.

credit becomes tighter

In the context of open market operations, when inflation is a concern, the Fed sells securities to buyers who write checks to the Fed to pay for securities they bought, and the Fed withdraws these funds from banks. With fewer funds, _____.

the gross domestic product of a country.

Macroeconomics involves the study of:

Inflation is a period of rising average prices across the economy, whereas deflation is a period of falling average prices across the economy.

Which of the following is a difference between inflation and deflation?

Inefficiencies and corruption

Which of the following is a negative factor that affects socialist economic systems?

Natural monopolies

_____ are market structures with one company as the supplier of a product because the nature of that product makes a single supplier more efficient than multiple, competing ones

Cyclical

__________is a form of unemployment that involves layoffs during recessions.