Measuring And Managing The Economy Review: Question Preview (ID: 15183)

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What is the inflation?
a) an increase in all prices
b) a decrease in the average price level
c) an increase in the average price level
d) a decrease in all price

If economic activity in the country is decreasing, which action would you recommend?
a) the Fed should decrease the money supply
b) The Fed should elect new members
c) The government should increase the amount of money it spends
d) The Government should increase taxes

If Real GDP is increasing, what does that generally mean for a country?
a) consumers are saving more so business will fire more people
b) consumer spending is increasing and businessess are expanding
c) the government is increasing taxes
d) people's wages are decreasing

What is the business cycle?
a) the cyclical periods of increased and decreased economic activity
b) the regular movement of people geting and then losing a job
c) the ups and downs of the deficit and debt
d) the regular periods of high tax and low tax

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) taxes decrease
c) taxes increase
d) loans become more expensive

The Federal Reserve system is...
a) controlled by the President of the U.S.
b) the central bank of the U.S. that controls monetary policy
c) a system that ensure the government balances the budget every year
d) an section of congress that controls fiscal policy

How do banks create money?
a) the operate government funded printing presses
b) they loan out people's deposits
c) they sell bonds
d) they give people interest on their savings accounts

Which statement best describes the current unemployment rate?
a) It is high but it has been going down recently
b) it is historically very low but slowly rising
c) it has remained steady at 3% for a few months
d) it is high and has been increasing over the last few months

Country A: Real GDP is decreasing and unemployment is increasing. Leaders should
a) decrease the money supply and increase governemnt spending
b) cut taxes and increase the money supply
c) shrink the money supply and increase governemnt spending
d) increase taxes and increase governemnt spending

Why is high inflation a problem?
a) a person's purchasing pwer increases
b) a person's purchasing power decreases
c) it always creates a recession
d) it never creates a recession

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