Economics Ch5 study guide
an example of a transfer method is
a Social security retirement benefit
in the circular flow diagram, households demand____ and supply___
goods and services; labor
stagflation occurs when the economy's inflation rate is high and..
the unemployment rate is high
the unemployment rate equals...
(labor force - employed)/labor force
If 20 million workers are unemployed and 180 million workers are employed, then the unemployment rate is
10%
if the labor force is 500 and employment is 450, then unemployment rate is...
10%
the concept of "market clearing" is adopted and defended by..
Classical economists
the _________ can change the quantity of money in the economy
Federal Reserve
John Maynard Keynes' most notable published work is entitled
The General Theory of Employment, Interest, and Money
the government wants to encourage consumer spending through cutting income taxes. this is an example of...
a fiscal policy
what is a topic study in macroeconomics?
aggregate behavior of households and industries
unemployment means...
at the going wage rate, there are people who want to work but cannot find work
According to the Classical model, unemployment...
could not persist because wages would fall to eliminate the excess supply of labor
to get the economy out of a slump, Keynes believed that the government should....
decrease taxes and/or increase government spending
a prolonged and deep recession is called...
depression
government policies regarding taxes and expenditures are called..
fiscal policy
a period of very rapid increase in the overall price level is known as
hyperinflation
to bring the economy out of an inflation period, Keynes argued that the government should
increase taxes and/or decrease government spending
suppose the economy suffers a high rate of unemployment. according to Keynesian economists, the government should increase employment by...
increasing government spending
an increase in the overall price level is known as....
inflation
according ti the classical economists, the economy...
is self-correcting
policies designed to affect the quantity of money are...
monetary policies
if the central bank decreases the money supply, it is conducting..
monetary policy
the Federal Reserve affecting the supply of money is known as the...
monetary policy
according to classical models, the level of employment is determined by
prices and wages
According to Classical economists, if the quantity of labor demanded exceeds the quantity supplied, there is a
shortage of labor and wages will rise
Prices that don't always adjust rapidly to maintain equality between quantity supplied and quantity demanded are...
sticky prices
the government implements fiscal policy when it changes
taxes and/or spending
deflation occurs when...
the average price level declines
according to Keynes, the level of employment is determined by...
the level of aggregate demand for goods and services
what market are funds demanded and supplied?
the money market
unemployment implies that in the labor market
there is an excess supply of labor
what is an assumption used by Classical economists?
wages adjust both upward and downward
