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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
an increase in the average price level
B
an increase in all prices
C
a decrease in all price
D
a decrease in the average price level
2) If economic activity in the country is decreasing, which action would you recommend?
A
The Government should increase taxes
B
the Fed should decrease the money supply
C
The government should increase the amount of money it spends
D
The Fed should elect new members
3) If Real GDP is increasing, what does that generally mean for a country?
A
consumer spending is increasing and businessess are expanding
B
the government is increasing taxes
C
consumers are saving more so business will fire more people
D
people's wages are decreasing
4) What is the business cycle?
A
the regular movement of people geting and then losing a job
B
the ups and downs of the deficit and debt
C
the cyclical periods of increased and decreased economic activity
D
the regular periods of high tax and low tax
5) The Fed just announced that they are adopting an easy-money, what is the most likely result of that policy?
A
loans become cheaper
B
loans become more expensive
C
taxes increase
D
taxes decrease
6) The Federal Reserve system is...
A
a system that ensure the government balances the budget every year
B
an section of congress that controls fiscal policy
C
controlled by the President of the U.S.
D
the central bank of the U.S. that controls monetary policy
7) How do banks create money?
A
they loan out people's deposits
B
they give people interest on their savings accounts
C
the operate government funded printing presses
D
they sell bonds
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
decrease the money supply and increase governemnt spending
B
shrink the money supply and increase governemnt spending
C
increase taxes and increase governemnt spending
D
cut taxes and increase the money supply
10) Why is high inflation a problem?
A
a person's purchasing pwer increases
B
a person's purchasing power decreases
C
it never creates a recession
D
it always creates a recession
*select an answer for all questions
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