Business Cycle and Fiscal Policy

The HIGHEST Point in business cycle

• Peak
• Trough
• Contraction
• Recession

The lowest point of output in a recession, before a recovery begins

• trade deficit
• depression
• trough
• recovery

An economic contraction is synonymous with 

• economic growth
• a recession
• full employment
• a peak

What term is used to describe an increase in the general price level?

• Deflation
• Monetary policy
• Stagnation
• Inflation

What is the formula for GDP?

• C + I + G + (X-M)
• C + I + G / (X-M)
• C + I + G + (population)
• C + I + G + (M-X)

Taxing & spending to help the economy grow is referred to as

• expansionary policy
• monetary policy
• contractionary policy
• budget deficit

Taxing & spending to slow the economy is referred to as 

• budget surplus 
• monetary policy
• contractionary policy
• budget deficit

The federal government's overall approach to spending and taxes is called

• Physical Policy
• Fiscal Policy
• Money
• Monetary Policy

An example of expansionary fiscal policy would be

• cutting taxes.
• cutting government spending.
• cutting production of consumer goods.
• cutting prices of consumer goods.

If the unemployment rate is rising and GDP is falling, the fiscal policy action that the federal government should MOST likely follow is 

• decreasing taxes.
• decreasing spending.
• decreasing the money supply.
• decreasing the reserve requirement.