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Measuring And Managing The Economy Review
Test Description: A test dealing with fiscal and monetary policy
Instructions: Answer all questions to get your test result.
1) What is the inflation?
A
a decrease in all price
B
an increase in the average price level
C
an increase in all prices
D
a decrease in the average price level
2) If economic activity in the country is decreasing, which action would you recommend?
A
the Fed should decrease the money supply
B
The government should increase the amount of money it spends
C
The Government should increase taxes
D
The Fed should elect new members
3) If Real GDP is increasing, what does that generally mean for a country?
A
the government is increasing taxes
B
consumers are saving more so business will fire more people
C
people's wages are decreasing
D
consumer spending is increasing and businessess are expanding
4) What is the business cycle?
A
the cyclical periods of increased and decreased economic activity
B
the ups and downs of the deficit and debt
C
the regular periods of high tax and low tax
D
the regular movement of people geting and then losing a job
5) The Fed just announced that they are adopting an easy-money, what is the most likely result of that policy?
A
taxes decrease
B
loans become more expensive
C
taxes increase
D
loans become cheaper
6) The Federal Reserve system is...
A
a system that ensure the government balances the budget every year
B
controlled by the President of the U.S.
C
an section of congress that controls fiscal policy
D
the central bank of the U.S. that controls monetary policy
7) How do banks create money?
A
they give people interest on their savings accounts
B
they sell bonds
C
they loan out people's deposits
D
the operate government funded printing presses
8) Which statement best describes the current unemployment rate?
A
it is historically very low but slowly rising
B
It is high but it has been going down recently
C
it has remained steady at 3% for a few months
D
it is high and has been increasing over the last few months
9) Country A: Real GDP is decreasing and unemployment is increasing. Leaders should
A
increase taxes and increase governemnt spending
B
decrease the money supply and increase governemnt spending
C
shrink the money supply and increase governemnt spending
D
cut taxes and increase the money supply
10) Why is high inflation a problem?
A
it never creates a recession
B
it always creates a recession
C
a person's purchasing power decreases
D
a person's purchasing pwer increases
*select an answer for all questions
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