Business Dynamics mod 2

economic system

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

the fiscal cliff

During a period of grave financial crisis in the United States, Congress is pressurized to raise the limit on the maximum amount of money the government can borrow. Congress increases the limit on the condition that it will implement sharp tax hikes and across-the-board spending cuts to compensate for the raise and to ensure that the overall budget deficit decreases. In this scenario, the measures implemented by Congress will most likely create

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 form 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.