Macroeconomics Review

How will price levels and employment MOST LIKELY be affected by increases in government spending?

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A recent high school graduate begins searching for a job. He is offered a job at a factory, but he turns it down hoping for better-paying work. What kind of unemployment is he experiencing?

• cyclical

• frictional

• structural

• seasonal

Which monetary policy decision is meant to increase the U.S. money supply?

• Congress passes a bill to reduce personal income taxes.

• The FOMC raises the target federal funds rate.

• Congress passes a bill to reduce regulations on business monopolies.

• The FOMC lowers the target federal funds rate.

Select 2 answers.

• Scenario 1

• Scenario 2

• Scenario 3

• Scenario 4

• Scenario 5

The actions of the Federal Reserve that control and regulate the amount of money in the economy are referred to as

• monetary policy

• fiscal policy

• international trade

• opportunity costs

To calculate the unemployment rate an economist would need the total number of unemployed people and which other number?

• the inflation rate

• the total number of transactions in the resource market

• the total number of discouraged workers

• the number of people in the labor force

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

• raise taxes

• raise the target Federal Funds rate

• lower the target Federal Funds rate

• lower taxes

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

• consumption, interest rates, government, net exports

• consumption, investment, government spending, net exports

• consumption, investment, government, business revenues

• consumption, interest rates, global spending, net exports

When there is inflation in an economy which is ALWAYS true?

• the purchasing power of the dollar increases

• unemployment will automatically decrease

• exports to other countries increase

• the consumer price index has increased

If the economy was in experiencing high inflation and Congress and the Federal Reserve BOTH wanted to correct it quickly, which policy combination would be best?

• raise taxes, lower the target Federal Funds rate

• raise taxes, raise target Federal Funds rate

• cut taxes, lower the target Federal Funds rate

• cut taxes, raise the target Federal Funds rate.