Structural unemployment:

available jobs do not match skills

What is the main purpose of monetary policies?

controlling the supply of money in the economy

Who will be MOST negatively affected by unanticipated inflation?

a bank that has recently extended a large loan at a fixed rate

How might monetary policy be used to combat inflation fears?

The Federal Reserve might raise interest rates

Who will benefit if the inflation rate over a thirty year period is higher than expected?

borrowers who took out thirty-year mortgageloans

Which macroeconomic goal do investments in human capital and capital goods contribute to?

Contribute to economic growth by increasing Economic Productivity

What item would represent I or Business Investment in the Output Expenditure Model?

the value of the new machinery and the value of twenty cars

When does the US government operate with a budget surplus?

when the government spends less than it generates in revenue

If the Federal Reserve wanted to fight inflation, how would it use its tools of Monetary Policy?

Increase the RR, Increase the Discount Rate, Sell Bonds

The US govt is worried that unemployment is increasing. How might monetary policy be used to increase the money supply?

The Federal Reserve could purchase government bonds

Frictional unemployment:

recent college grads waiting for better job opportunities

A sustained increase in the average price level over time

Which of the following BEST defines aggregate demand?

demand for all economic output at a given time

Why might the Federal Reserve change the discount rate?

to prompt financial institutions to alter theirlending activity

defined as expansion/contractions of the economy over time

Are prices likely to be more stable in a pure command economy or a pure market economy?

a command economy bc the govt can regulate and control prices

If policy makers are concerned about inflation which fiscal and monetary policies would be best

increasing taxes and selling bonds

Local businesses would MOST likely oppose tax increases because new taxes could

leave consumers less money to spend

Which example BEST describes a policy that promotes economic stability?

Congress extends time period for people to get unemployment

Which would most closely reflect the strategy of price stability of the Federal Reserve?

An inflation rate that remains steady at 2 percent

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Economics IA2 Review Quiz

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Questions 46

Answers

1
Structural unemployment:
available jobs do not match skills
only type of unemployment eligible for unemployment benefits
unemployment associated with individuals who seeking better
is unemployment associated with a downturn in the economy.
2
The interest rate Reserve Banks charge commercial banks for short-term loans is the
Prime rate
Subprime rate
Discount rate
Federal funds rate
3
What is the main purpose of monetary policies?
controlling the supply of money in the economy
controlling the production of goods in theeconomy
reducing government intervention in theeconomy
reducing government spending in the economy
4
Which economic indicator is used to measure economic growth?
The Unemployment Rate
Consumer Price Index (CPI)
Gross Domestic Product (GDP)
5
What does the Output Expenditure Model for GDP look like?
I+G+X+C
C+B+xn
C+I+G+xn
X+G+C
6
Who will be MOST negatively affected by unanticipated inflation?
a bank that has recently allowed many new customers to open savings accts
a bank that has recently extended a large loan at a fixed rate
a person who has recently taken a new job
a person who has recently sold a business
7
Intermediate goods, such as tires on a car, are part of what is counted in GDP.
true
false
8
When a robot replaces a person
Structurally unemployed.
Frictionally unemployed.
Not part of the labor force
Cyclically unemployed
9
How might monetary policy be used to combat inflation fears?
The Federal Reserve might raise interest rates
The Federal Reserve might raise taxes
The Federal Reserve might lower taxes
The Federal Reserve might lower interest rates
10
Which of the following is a final good produced by a bakery?
butter
cake
flour
sugar
11
What is the Federal Reserve's chief body for monetary policy?
Reserve Banks
FOMC
The U.S. Department of the Treasury
Board of Governors
12
True or False: CPI is used to measure inflation
False
True
13
Who will benefit if the inflation rate over a thirty year period is higher than expected?
people who sold their homes to a buyer with amortgage loan
lenders who provided thirty-year mortgage loans
people who purchased their homes without amortgage loan
borrowers who took out thirty-year mortgageloans
14
Which macroeconomic goal do investments in human capital and capital goods contribute to?
Contribute to price stability by increasing consumer spending
Contribute to economic growth by increasing government spending
Contribute to price stability by increasing economic production
Contribute to economic growth by increasing Economic Productivity
15
What is one way the government CANNOT influence income redistribution?
Public Pensions
Open Market Policy
Earned Income Tax Credit
Personal Income Taxes
16
The total amount of debt owed by the government to bond holders and other creditors
Budget Surplus
National Debt
Budget Deficit
Total Debt
17
In the United States, monetary policy is determined by which of the following?
the Federal Reserve
Congress
the stock market
the president
18
The leaders of a small country decide that they need to enact a contractionary fiscal policy.
reduce taxes
reduce government spending
lower its discount rate
lower the price of securities
19
What item would represent I or Business Investment in the Output Expenditure Model?
the value of the new machinery and the value of twenty cars
Military Spending
$1 billion worth of gas purchased from another country
A haircut
20
When does the US government operate with a budget surplus?
when the United States exports more goods and services than it imports
when the government spends less than it generates in revenue
when the government spends more than it generates in revenue
when the United States imports more goods and services than it exports
21
Which of the following is not one of the three responsibilities of the Federal Reserve System?
Supervising banks
Lending money to consumers
Providing financial services
Conducting monetary policy
22
If the Federal Reserve wanted to fight inflation, how would it use its tools of Monetary Policy?
Decrease taxes, increase spending, buy bonds & decrease the RRR
Increase Taxes, Decrease Spending
Increase the RR, Increase the Discount Rate, Sell Bonds
Decrease the RR, buy bonds, Decrease the Discount Rate
23
Rapid improvements in technology MOST often contribute to which type of unemployment?
cyclical unemployment
frictional unemployment
classical unemployment
structural unemployment
24
What is the MOST likely result of a policy intended to stimulate economic growth?
Economic equity will increase
Unemployment will rise
Inflation will rise
Economic efficiency will increase
25
The US govt is worried that unemployment is increasing. How might monetary policy be used to increase the money supply?
The Federal Reserve could increase the interest on reserves
The Federal Reserve could raise the discount rate.
The Federal Reserve could decrease the corporate tax rates.
The Federal Reserve could purchase government bonds
26
Frictional unemployment:
downturn in the economy
skills no longer match available jobs
recent college grads waiting for better job opportunities
27
When was the Federal Reserve established?
1913
1776
1933
1907
28
Inflation is:
A sustained decrease in GDP over time
A sustained decrease in the average price level over time
A sustained increase in GDP over time
A sustained increase in the average price level over time
29
Which of the following BEST defines aggregate demand?
total demand for a given good or service over aspan of time
demand by a given party over a given span of time
demand for all economic output at a given time
total demand for a given good or service at a given time
30
Why might the Federal Reserve change the discount rate?
to convince financial institutions to decreasetheir cash on deposit
to signal financial institutions to purchasegovernment securities
to prompt financial institutions to alter theirlending activity
to encourage financial institutions to hold excessreserves for profit
31
If the gov wants to encourage businesses and consumers to spend more money, it would MOST LIKELY
increase the reserve requirement.
decrease the tax rate
increase the tax rate
decrease government spending on goods and services
32
The business cycle
captures fluctuations in interest rates over the year
measures year over year changes in unemployment
defined as expansion/contractions of the economy over time
measures monthly changes in GDP.
33
Are prices likely to be more stable in a pure command economy or a pure market economy?
a command economy bc businesses are able to control prices
a command economy bc the govt can regulate and control prices
a market economy bc a central authority can regulate to avoid inflation
a market economy bc market forces will cause business reach equilibrium
34
A government announces major cuts to individual and corporate taxes. What is the government likely seeking to achieve?
to promote full employment
to reduce the level of inflation
to increase export activity
to improve productive efficiency
35
Which of the following is NOT a component of GDP?
Investment
Net Exchange Rates
Government Expenditures
Consumption
36
If policy makers are concerned about inflation which fiscal and monetary policies would be best
lowering taxes and buying bonds
increasing taxes and lowering the discount rate
lowering taxes and raising the reserve requirement
increasing taxes and selling bonds
37
Local businesses would MOST likely oppose tax increases because new taxes could
attract outside businesses
increase infrastructure spending
reduce worker productivity
leave consumers less money to spend
38
True or False: A national debt will occur if the government spends more than it collects in revenue
False
True
39
Which example BEST describes a policy that promotes economic stability?
Congress extends time period for people to get unemployment
City govt requests bids
President promotes tax credit to first time home buyers
State govt increases sales tax to fund highway improvements
40
Cyclical unemployment
skills do not match jobs
waiting for better job
occurs during different times in a year
Downturn in the economy
41
LaToya recently earned a degree in microbiology. How would you classify LaToya?
Frictionally unemployed.
Underemployed
Cyclically unemployed
Structurally unemployed
42
Gross Domestic Product (or GDP) is a basic measure of:
money supply
overall price levels
output from the government sector only
national economic output.
43
When the economy contracts, this is known as:
an expansion
a recession
economic growth
stagnation
44
Which would most closely reflect the strategy of price stability of the Federal Reserve?
An inflation rate that is steady at 7 percent
An inflation rate that remains steady at 0 percent
An inflation rate that remains steady at 2 percent
An inflation rate that remains steady at -2 percent
45
Which of the following is not a monetary policy tool used by the Federal Reserve?
Open market operations
Prime rate
Reserve requirements
Discount rate
46
The process by which the government manages spending and taxes to change the money supply is?
tax policy
monetary policy
trade policy
fiscal policy

Economics IA2 Review Quiz Flashcards | StudBud