Short Macroeconomics Review

Which component of the Federal Reserve System holds the most influence in regards to the direction of monetary policy?

• The Federal Open Market Committee

• The 12 District Banks

• The Board of Governors

• Congress and the President

How could the Federal Reserve increase employment with monetary policy?

• The Fed could increase the discount rate.

• The Fed could decrease government spending.

• The Fed could decrease the discount rate.

• The Fed could increase government spending.

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?

• Calculating Gross Domestic Product

• To compile a price index to measure inflation

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

• For calculating unemployment

Yesenia stopped at her favorite pizza place and ordered a slice of pizza. She paid the cashier $2.50 for the pizza and sat down to eat it. What role did money serve in this situation?

• It was a medium of exchange.

• It was a store of value.

• It was a standard of value.

• It was a unit of account.

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

• unemployment will automatically decrease

• the purchasing power of the dollar increases

• exports to other countries increases

• the consumer price index has increased

Which of the following represents a case of structural unemployment?

• There has been increasingly heavy competition for jobs in sectors affected by automation.

• The rate of hiring by large companies fell considerably during the last economic recession.

• A large restaurant laid off the new servers it hired to work during the busy tourist season.

• There are a large number of job opportunities in the technology sector that call for rare skills.

If the economy was in a recession and Congress and the Federal Reserve Bank BOTH wanted to correct it quickly, which policy combination would be best?

• cut taxes, buy treasury bonds

• increase government spending, sell treasury bonds

• raise taxes, buy treasury bonds

• cut taxes, sell treasury bonds

A recent high school graduate has never searched for a job before. She does not know what she is qualified to do. She turns down a job at a factory, hoping for better-paying work. What kind of unemployment is she experiencing?

• cyclical

• frictional

• structural

• seasonal

If an economy is currently experiencing a contraction or a recession, which stage of the business cycle will they experience next?

• expansion

• peak

• cyclical

• trough

Porsche, a German automaker, produces cars at a plant in Hapeville, GA. What is included in the GDP for the U.S.?

• All cars produced by the plant.

• Only cars produced by the plant and sold to Americans.

• The value of the American-made parts used to put the cars together.

• Nothing.