Macroeconomics

An economist is presented with information about the prices of a selection of goods over several years. This information would be MOST useful for which purpose?

• To compile a price index to measure inflation

• Calculating Gross Domestic Product

• For calculating unemployment

• Deciding whether or not to buy bonds on the open market

Which is the Fed MOST likely to do in the event of a recession?

• Raise the discount rate

• Raise interest on reserves

• Buy treasury bonds on the open market

• Sell treasury bonds on the open market

Which term is used to describe a situation where most people who are looking for work are able to find a job?

• Full employment

• Seasonal unemployment

• Frictional unemployment

• Cyclical unemployment

When the Federal Reserve lowers interest rates, hoping to jump-start the employment market, what does it hope it will accomplish with that monetary policy action?

• that the lower interest rates will reduce the money supply to lower inflation

• that people will begin borrowing enough money so that they do not have to work

• that enough people will stop borrowing money and increase spending to raise the GDP

• that businesses will begin increasing investments, which in turn, will cause a need for more employees

Which statement BEST describes monetary and fiscal policy?

• Monetary policy reflects the Federal Reserve's authority to change the money supply; fiscal policy reflects the government's power to influence the economy through taxes, expenditures, and borrowing

• Monetary policy reflects the Federal Reserve's authority to change tax rates; fiscal policy reflects the government's power to influence the money supply by lowering the discount rate for loans to banks

• Monetary policy refers to the Federal Reserve's influence in the economy through borrowing and creating a deficit; fiscal policy refers to the government's authority to increase spending

• Monetary policy refers to the Federal Reserve's authority to increase spending; fiscal policy refers to the government's authority to increase the discount rate for loans to banks.

If a nation currently has a budget deficit, their income is not covering the cost of running their country and cuts may have to occur for public services and social welfare. If this budget is not revised, what could be a possible result of this situation?

• A budget surplus

• A balanced budget

• Growing deficits and debt

• Discretionary fiscal policy

Mr. Skinner has quit his job in order to look for another one. Mr. Skinner

• is cyclically unemployed

• is frictionally unemployed

• is structurally unemployed

• is not counted as part of the labor force

Gross Domestic Product is a method for calculating how much a country produces by adding which four spending categories?

• Wages, Rent, Interest, Dividends

• Consumption, Investment, Government, Business Revenues

• Consumption, Interest Rates, Government, Net Exports

• Consumption, Investment, Government, Net Exports

Finding the amount of Gross Domestic Product produced at all possible levels will determine

• inflation

• growth

• aggregate demand

• aggregate supply

Which of these is MOST LIKELY to occur after the government increases taxes?

• Annual deficits increase

• The national debt increases

• Consumer spending decreases

• Government programs decrease