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