The Economist

Supporters of fiscal policy believe that inflation can be reduced by

• Increasing taxes and/or reducing government spending.

• Increasing the rate of increase of the money supply.

• Cutting taxes and increasing interest rates.

• Cutting social welfare programs and redistributing income.

In determining the GDP,

• A dollar is used as the common measure

• The quantity of items produced is added up

• The quality of goods is considered

• Both new and used goods are included.

The total dollar value of all the nation’s final goods and services produced over the course of a year is called

• Net exports

• Disposable personal income

• national income accounting

• Gross domestic product.

The Federal Reserve System was established to

• Ensure a safe and uniform currency

• Regulate thrift institution

• Establish a gold standard

• Control the amount of money in circulation

When inflation occurs, the purchasing power of the dollar

• goes down

• goes up

• is not affected

• cannot be measured

Which of the following describes what happens when the price level goes up and wages and other costs of production do not?

• Producers will want to supply less to the marketplace.

• Producers will want to supply more to the marketplace

• Overall profits will decrease.

• Profits will not be affected.

The nation is divided into how many Federal Reserve districts?

10 c. 25 12 d. 50

• 10

• 12

• 25

• 50

The best example of a physical flow in the product market is

• a credit card payment

• labor for a factory

• an automobile

• farm land

The best example of an expenditure from government to households would be

Sales tax c. labor force Paycheck d. An unemployment check

• Sales tax

• paycheck

• labor force

• an unemployment check

If the FED lowers the reserve requirement,

• Less money is available to loan

• More money is available to loan

• banks lose business

• Fewer people get credit