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Econ unit 4 right an
| Question | Answer |
|---|---|
| When does the Fed use an easy money policy? | to end a recession |
| How do technological advances affect aggregate supply? | they cause the AS to shift to the right |
| Which of the following instruments is NOT used by the Federal Reserve to change the money supply? | federal taxes |
| what is the difference between a recession and a depression? | a depression is a particularly deep long-lasting recession with high levels of unemployment |
| You own a factory and pay for 2 of your workers to obtain master's degrees in chemical engineering. Which part of the GDP formula would be affected? | I |
| Choose the most likely consequence: because of low unemployment rates in the country of Lavernia, employers offer higher wages. To meet their higher payroll costs and maintain profit, they charge consumers more for goods and services. | cost-push inflation |
| What is the Consumer Price Index? | an index compiled by the Bureau of Labor Statistics using the "market basket" that is the key measure of inflation. |
| what effect would an increase in the discount rate have on the money supply? | It would cause the money supply to decrease |
| The "market basket" that is used by the Bureau of Labor Statistics to calculate prices is made of.... | a typical collection of goods and services that are purchased by most americans |
| When gov't revenues exceed expenditures... | there is a budget surplus |
| If Jackson is paid an interest rate of 10% on his savings, but the inflation rate has risen to 20%, the purchasing power of his savings is | decreased by 10% |
| The lowest point in an economic contraction is called | a trough |
| The best example of a durable good would be | a new recliner sofa |
| An accurate statement about the Great Depression would be that | IT WAS THE MOST SEVERE ECONOMIC DOWNTOUNTURN IN THE HISORY OF INDUSTRIAL CAPITALISM |
| According to the cost-push theory, what is responsible for inflation? | producers raise prices to meet increased costs |
| During a war, the gov't puts pressure on produces for heavy equipment, supplies, and services, making each more valuable. What theory about inflation does this condition represent? | demand-pull |
| Concern about an international crisis has caused consumers to save their money and postpone big purchases. What is the effect on aggregate demand? | aggregate demand will shift to the left, lowering real GDP |
| How is aggregate demand affected by tax cuts? | AD shifts to the right |
| which of the following might cause the inflation rate to spike up sharply? | prices on world oil markets rise steeply due to war in the Middle East. |
| an economy that experiences decreasing real GDP and increasing prices is said to suffer from | stagflation |
| according to demand-pull theory, what is responsible for inflation? | demand for goods and services exceeds existing supply |
| an example of a non-durable good is | a pack of notebook paper |
| which of the following is a component of expansionary fiscal policy? | tax cuts |
| what type of policy dies the Federal Reserve use to counteract an expansion that is causing high inflation? | tight money policy |
| what is the relationship between interest rates and demand for money? | as interest rates decrease, demand for money increases. |
| which part of the GDP formula would represent the value of a haircut? | C |
| how would a decrease in consumer optimism affect aggregate demand? | AD would shift left |
| what does "lender of last resort: mean with respect to the Fed. Reserve? | It will lend money to banks in need. |
| How could the Fed. Reserve encourage banks to lend out more of their reserves? | lower the required reserve ratio |
| In a typical business cycle, what stage immediately follows a peak? | contraction |
| When you buy a US Savings Bond, you | lend money to the gov't |
| To help deal with a recession, the Fed would | reduce the discount rate |
| What leads directly to the crowding out effect? | interest paid on a huge national debt |
| According to quantity theory, what is responsible to inflation? | too much money in circulation |
| GDP would include | income received by a high school teacher |
| GDP adjusted for inflation is called | Real GDP |
| You pay for 2 employees to get advanced degrees, what part of GDP would be affected? | I |
| The Fed would raise the RRR when there is | inflation |
| During recession, a good fiscal policy would | increase gov't spending |
| Who makes the decisions concerning money supply? | The FOMC |
| If the FOMC sells bonds, | the money supply will decrease and reduce inflation |
Created by:
kristikee