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Economics Unit
Economics Unit
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Questions
30
Answers
1
Which of the following is a type of monetary policy?
Unemployment
Contractionary
Expansionary
Interest Rates
2
What is an expansionary policy?
Cost of debt for the borrower and rate of return for the lender
Increases interest rates and limits the outstanding money supply
The action of giving work to someone
Grows economic activity by lowering interest rates which increases spending
3
What is Real-GDP?
Inflation-adjusted measure that reflects value of all goods and services
Market value of all goods and services not adjusted for inflation
Measures total physical movement of merchandise into the United States
Measures total physical movement of merchandise out of the United States
4
What is the Federal Reserve?
The communications sector of the United States.
The central bank of the United States.
The central accounting reporting system.
The water and wastewater systems of the United States.
5
What is a command economic system?
Based on goods, services, and work, all of which follow established trends
Based on a dominant centralized authority – usually the government
Based on the concept of free markets with little government interference
Combine the characteristics of the market and command economic systems
6
What is a peak in the business cycle?
A period when economic output declines
A stage where activity or prices are bottoming
The highest point of a business cycle and is followed by a contraction
An increase in the level of economic activity
7
What is monetary policy?
Used to help us spend money
Used by a nation's central bank to control the money supply
Uses government spending and tax policies to influence economic conditions
Used to help us save money
8
What is demand?
The total amount of a good or service available for consumption.
Reached when supply balances and results in prices becoming stable.
The desire consumers have for a good or service.
An insistent and peremptory request.
9
What is a mixed economic system?
Based on goods, services, and work, all of which follow established trends
Based on a dominant centralized authority – usually the government
Based on the concept of free markets with little government interference
Combine the characteristics of the market and command economic systems
10
What does GDP do?
Used to measure the health of the economy
Measures total physical movement of merchandise out of the United States
Used to measure the income generated by the residents of a country
Measures total physical movement of merchandise into the United States
11
What does the Federal Reserve do?
Supply energy to residential and commercial sectors.
Removes pollutants from domestic and industrial waste.
Promotes the stability of the financial system.
Conducts the nation’s monetary policy.
12
What is a contractionary policy?
Increases interest rates and limits the outstanding money supply
Grows economic activity by lowering interest rates which increases spending
Cost of debt for the borrower and rate of return for the lender
The action of giving work to someone
13
What is a market economic system?
Combine the characteristics of the market and command economic systems
Based on the concept of free markets with little government interference
Based on goods, services, and work, all of which follow established trends
Based on a dominant centralized authority – usually the government
14
What is supply?
If the supply of a good or service exceeds demand for it, prices will fall.
Reached when demand balances and results in prices becoming stable.
The total amount of a good or service available for consumption.
The desire consumers have for a good or service.
15
What is a trough in the business cycle?
A stage where activity or prices are bottoming
The highest point of a business cycle and is followed by a contraction
A period when economic output declines
An increase in the level of economic activity
16
What does the law of supply and demand say?
The desire consumers have for a good or service.
When supply and demand balance each other, prices become stable.
Prices rise for a resource, demand declines; prices fall, demand increases.
Prices are determined by the relationship between supply and demand.
17
What is a traditional economic system?
Based on a dominant centralized authority – usually the government
Combine the characteristics of the market and command economic systems
Based on the concept of free markets with little government interference
Based on goods, services, and work, all of which follow established trends
18
What is Gross Domestic Product (GDP)?
Monetary value of all finished goods and services made within a country
Market value of all goods and services not adjusted for inflation
A cycle of economic expansion and retraction
Inflation-adjusted measure that reflects value of all goods and services
19
Why was the Federal Reserve created?
Created in response to nation's growing need for more sources of energy
To regulate trade
To print the nation's money supply
To address banking panics
20
What is the business cycle?
A cycle of economic expansion and retraction
An increase in the level of economic activity
A stage where activity or prices are bottoming
A period when economic output declines
21
What is inflation?
A widespread breakdown in normal market mechanisms and commerce
A general increase in prices and fall in the purchasing value of money
Reduction of the general level of prices in an economy
Money received on a regular basis for work or through investments
22
Who runs the Federal Reserve?
The Board of Governors
The Vice President
The President of the United States
Congress
23
What is an expansion in the business cycle?
A stage where activity or prices are bottoming
An increase in the level of economic activity
A period when economic output declines
The highest point of a business cycle and is followed by a contraction
24
What is an economic system?
Based on the concept of free markets with little government interference
Based on goods, services, and work, all of which follow established trends
Based on a dominant centralized authority – usually the government
How societies or governments organize and distribute goods and services
25
What is opportunity cost?
Act of making a decision when faced with two or more possibilities
The state of being in short supply
System of production, resource allocation, distribution of goods/ services
Loss of gain from other alternatives when one alternative is chosen
26
What is fiscal policy?
Used by a nation's central bank to control the money supply
Used to help us spend money
Uses government spending and tax policies to influence economic conditions
Used to help us save money
27
What is a contraction in the business cycle?
The highest point of a business cycle and is followed by a contraction
A period when economic output declines
A stage where activity or prices are bottoming
An increase in the level of economic activity
28
What is equilibrium?
A state in which opposing forces or influences are balanced.
If demand exceeds supply, prices will rise.
Reached when supply and demand balance each other, prices become stable.
If the supply of a good or service exceeds demand for it, prices will fall.
29
What is Nominal GDP?
Measures total physical movement of merchandise into the United States
Measures total physical movement of merchandise out of the United States
Market value of all goods and services not adjusted for inflation
Inflation-adjusted measure that reflects value of all goods and services
30
What is scarcity?
Act of making a decision when faced with two or more possibilities.
The state of being in short supply
Loss of gain from other alternatives when one alternative is chosen
System of production, resource allocation, distribution of goods/ services
