Macroeconomics Unit test
A depression is...
A long term downfall of economic activity
A recession is....
A short term downfall of economic activity
What is the name of laws that attempt to prevent monopolies from forming?
Anti-trust laws
Which of the following BEST DEFINES the underlying principles of the free enterprise system?
Anyone can go into business for himself or herself
The Consumer Price Index (CPI) can be defined as
A measure of inflation based on the cost of a fixed "market basket"
Which of these is NOT a monetary policy tool?
Balance Accounts
Which is the Fed MOST likely to do in the event of a recession?
Buy treasury bonds on the open market
All of these are functions of money EXCEPT
Commodity money
is a way to illustrate how a regular group of goods and services changes over time.
Consumer Price Index
The survey of the price goods and services that is compared to previous years in order to measure inflation
Consumer Price Index (CPI)
Inflation is measured by...
Consumer Price Index (CPI).
Which of these is MOST LIKELY to occur after the government increases taxes?
Consumer spending decreases
Gross Domestic Product is a method for calculating how much a country produces by adding which four spending categories?
Consumption, Investment, Government, Net Exports
The increase in unemployment caused by the recession phase of the business cycle is called
Cyclical unemployment
What kind of tax is placed on gasoline and tobacco?
Excise Tax
In the business cycle, growing G.D.P. and inflation are signs of a recession.
False
Monetary policy is a term used to refer to the actions of central banks to achieve macroeconomic policy objectives such as price stability, full employment, and stable economic growth.The Congress established the statutory objectives for monetary policy—maximum employment, stable prices, and moderate long-term interest rates—in the Federal Reserve Act. FAQs, Board of Governors of the Federal Reserve System Based on the text, which statement explains how federal monetary policy affects economic factors?
Federal monetary policy helps to ensure economic stability in prices, employment, and interest rates.
Congress cutting taxes is an example of ....
Fiscal Policy
an economic system where private businesses compete with each other largely free from government interverence
Free Enterprise
Which term is used to describe a situation where most people who are looking for work are able to find a job?
Full employment
The total value of a nation's output in a given year
Gross Domestic Product (GDP)
Positive externality
Honey bees from one hive pollinating the fruit trees of a farmer that does not own them
Which of the following type of spending do not fall under GDP?
Imports
The general increase in the price of goods and services
Inflation
Money loses its value when it
It becomes too plentiful
Unemployed plus employed
Labor Force
What does the cartoon below hope to convey?
Lawmakers hope that a stimulus bill that combines government spending and tax cuts will move the economy forward
Identify the type of economy featured in the United States.
Market Economy
When the Federal Reserve sells government securities on the open market, what effect does this action have on the nation's money supply and interest rates?
Money Supply - Decreases / Interest Rates - Increase
Negative externality
Noise pollution from trains passing on nearby train tracks
Which of the following statements correctly describes the federal income tax?
People with lower incomes pay a smaller percentage of their income as taxes.
Which of the following is not an economics indicator discussed in class?
Presidential Policy
Goods that are subject to scarcity and therefore value
Private goods
Goods that can be used without reducing their value to others
Public goods
What is the difference between real and nominal GDP?
Real GDP = adjusted for inflation; Nominal GDP = not adjusted for inflation
What would be happening to the number of jobs creating at #4 on the chart? (like at b)
Rising
Unemployment caused by lack of skills or demand
Structural Unemployment
What is the name of the "central bank" of the United States?
The Federal Reserve
Which of the following best describes monetary policy?
The Federal Reserve regulates how much money is in circulation.
Which of the following are responsible for making fiscal policy decision?
The President and Congress
A budget deficit occurs when...
The government spends more money than it brings in for a fiscal year
What is GDP?
The total goods and services made in a country in a year
Imagine America decided to add a fifteen percent import duty on all goods from China. Why would the government likely have imposed such a protective tariff?
To balance the trade deficit.
When the government spends money, what is the short term affect of its purchase?
To stimulate the economy.
During which phase of the business cycle is production the lowest and unemployment the highest?
Trough
How would U.S. consumers most likely react to a large increase in the excise tax on luxury cars imported from Japan?
U.S. consumers would buy more domestic or European luxury cars.
Someone without a job, but looking
Unemployed
the interaction between buyers and sellers where both feel they are better off after a transaction
Voluntary Exchange
Which best defines an oligopoly?
When a market is dominated by a few large sellers of a good.
What is a peak in the business cycle?
When economic activity is strong with businesses working and selling at full capacity
Choose the best definition of Comparative Advantage
When one country can produce a product better (or cheaper) than another country
Monopoly
When one producer can set prices due to a lack of competition
A trough in the business cycle is usually defined as:
When production is at its lowest point and unemployment is very high (NOT SURE)
What is the best definition of an expansion in the business cycle?
When the economy begins to improve after hitting its lowest point
What is a contraction in the business cycle?
When the economy is starting to slow down and people are buying fewer goods and services
Which result occurs when federal government expenditures are greater than the federal government's total receipts?
a federal budget deficit
The situation shown in the cartoon happens because federal law does not require the government to
balance its budget
The economy tends to grow over time, but it does not grow at a constant rate. Which term describes the alternating periods of an economy's growth and decline?
business cycle
How does the Federal Reserve use monetary policy to control inflation and unemployment?
by adjusting interest rates
The primary role of the Federal Reserve Bank is to steer the economy by
controlling the money supply.
If the federal government wants to encourage businesses and consumers to spend more money, it would MOST LIKELY
decrease the tax rate.
If the economy is in a recession, which policy would Congress want to enact to fix the problem?
expansionary fiscal policy
The federal government uses government spending and tax rates to help control recessions and encourage economic activity. This is called
fiscal policy
The government cuts taxes, hoping that having more money will result in people buying more goods and services. Which term best describes this type of policy?
fiscal policy
What economic policy would a supporter of laissez-faire economics support?
free enterprise
What important economic concept is evident when a student wears a shirt made in Malaysia, drives a car made in Germany, and eats fruit produced in Mexico?
global interdependence
Which pairs of operations BEST fit with fiscal policy?
government spending and taxation
Fiscal policy aims to influence the economic activity through the use of
government spending and taxation.
The greatest source of revenue for the federal government is
income taxes
To promote higher economic growth, the best way is to
increase government spending and decrease taxation.
Who is primarily responsible for making economic decisions in a market economy?
individuals
Mr. Skinner has quit his job in order to look for another one. Mr. Skinner
is frictionally unemployed
If the economy is in a recession, what will the Federal Reserve Board most likely do to initiate a recovery.
lower interest rates
Which is MOST LIKELY the result of healthy competition in the market?
lower prices, better quality, greater choice of products
Which of these is the BEST definition of GDP?
market value of all goods and services produced in a country
What term describes two or more companies forming a single business?
merger
The process by which the Federal Reserve controls the supply, availability, and cost of money in order to keep the economy stable is
monetary policy
Which of the following is a correct statement about monopolies?
monopolies occur when a market becomes controlled by a single provider of a good or service
The average output per person of a nation's economy
per capita GDP
The Board of Governors is appointed by the
president
Just as producers in a monopolistic market situation may resort to unfair business practices to limit competition, what behavior are sellers in an oligopolistic market situation likely to use?
price fixing to increase profits
Which term describes a tax rate that is lower for people with lower incomes and higher for people with higher incomes?
progressive
What was the major purpose of the Sherman Antitrust Act (1890) and the Clayton Antitrust Act (1914)?
promoting fair competition between businesses
From which source do local governments receive the greatest amount of money?
property taxes
What term do economists use to describe the part of the business cycle in which a country's output does not grow for at least 6 months?
recession
The Federal Reserve wants to increase the money supply in the United States. What is the Federal Reserve likely to do to accomplish this?
reduce the discount rate
Increasing reserve requirements is used to...
stop inflation.
Which of the following is an example of a trade sanction?
the OPEC Oil Embargo
The ups and downs that the nation's economy goes through are officially referred to as
the business cycle
What is the main purpose of a quota?
to limit the amount of foreign goods imported
The High Point Market is the largest trade show serving the home furnishings marketplace. . . . Over time, it has grown to 12 million square feet of showroom space attracting more than 80,000 people twice a year. The High Point Market is the premier show of its kind in the world and has a regional economic impact of $1.2 billion. . . . The 'furniture cluster' which includes the High Point Market and supporting industries, contributes $8.2 billion to the economy. "Detailed Event Information for High Point Market - Spring 2011" Courtesy of International Trade Administration, U.S. Department of Commerce Based on the excerpt, what is the High Point Market's role in the international furniture industry?
to provide an international furniture market that makes a notable contribution to the state's and the country's economy
Which term describes the condition of a country whose value of the products it imports exceeds the value of products it exports?
trade deficit
What is labeled #3 on this graph? (like d)
trough
What type of exchange is described as buyers and sellers freely and willingly engage in market transactions?
voluntary exchange
Over a three year period, the United States experienced an increase in the real GDP, low inflation, and a declining unemployment rate. For this period, the United States
was in the middle of an economic peak
