Econ Un3 Macroeconomics

Consumer confidence falls, which causes consumers to save their money & postpone big purchases. What is the immediate effect on aggregate demand, price level & aggregate supply?

• AD decreases, price level decreases & unemployment decreases

• AD decreases, lowering both real GDP & the price level

• AS will decrease, raising the price level & lowering real GDP

• AS will increase, price level decreases & real GDP will increase

Which situation below is MOST negatively affected by unanticipated inflation?

• Banks that loaned money at a fixed rate

• Farmers with fixed rate mortgages

• Businesses that profit from credit sales

• Convenience stores that sell staple goods.

Which person below would be considered frictionally unemployed?

• Joe, who has recently entered the labor force

• SuzyQ, whose skills are no longer needed

• Lola, who is a full time college student

• Jim, whose parents shut down the family farm

What is the primary role of money in the economy?

• It helps set interest rates at financial institutions

• It identifies prices in various markets

• It provides a mechanism to assist foreign trade

• It serves as a medium of exchange for goods & services

Which of these tools is an example of monetary policy?

• Borrowing through deficit spending

• Changing reserve requirements

• Increasing government spending

• Reducing income taxes

What would the Federal Reserve do if it wanted to stimulate the U.S. economy & reduce unemployment?

• Cause interest rates to decrease because low interest rates encourage business growth & expansion

• Cause interest rates to rise because high interest rates bring more money into the economy

• Decrease the discount rate it charges banks, which would increase the money supply

• Increase consumer spending by reducing the money supply.

Which of the following is primarily responsible for the control of the money supply?

• Comptroller of the Currency

• Federal Deposit Insurance Corporation

• Federal Reserve System

• United States Treasury

Fiscal policy refers to what power of the federal government?

• Controlling credit

• Printing money

• Regulating interstate commerce

• Taxing and spending

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

• Annual deficit increases

• Consumer spending decreases

• Government programs decrease

• National debt increases

How do government budget deficits impact the national debt?

• Government budget deficits decrease the national debt

• Government budget deficits do not impact either the state or national debt.

• Government budget deficits increase the national debt

• Government budget deficits only impact the state debt.