Intro to Macroeconomics

Which of these is the BEST definition of GDP?

• a description of the quality of life in a nation
• average value of production of intermediate goods
• a collection of all government assets that could earn money
• market value of all goods and services produced in a country

Which result occurs when federal government expenditures are greater than the federal government's total receipts?

• reduced net exports
  
• increased excise taxes
  
• a federal budget surplus
  
• a federal budget deficit

The federal government uses government spending and tax rates to help control recessions and encourage economic activity. This is called

• fiscal policy
• monetary policy
• supply-side economics.
• open market operations.

The process by which the Federal Reserve controls the supply, availability, and cost of money in order to keep the economy stable is

• fiscal policy
• monetary policy
• interest rate
• reserve requirement

What is the name of the "central bank" of the United States?

• Bank of the U.S.
  
• The Federal Reserve
  
• U.S. Congressional Bank
  
• The Federal Bank of America

· setting the discount and interest rates
· establishing reserve requirements for banks
· buying and selling US government securities

All of these are ways in which the Federal Reserve system can

• control the stock market.
  
• regulate the money supply.
  
• decrease consumer spending.
  
• challenge Presidential power.

The Federal Reserve wants to increase the money supply in the United States. What is the Federal Reserve likely to do to accomplish this?

• reduce the discount rate
  
• sell securities on the open market
  
• increase the reserve requirement for banks
  
• require banks to hold a reserve for all types of deposits

If the federal government wants to encourage businesses and consumers to spend more money, it would MOST LIKELY

• increase the tax rate.
  
• decrease the tax rate.
  
• increase the reserve requirement.
  
• decrease government spending on goods and services.

What is the difference between real and nominal GDP?

• Real GDP = adjusted for inflation; Nominal GDP = not adjusted for inflation

• Nominal GDP = adjusted for inflation; Real GDP = not adjusted for inflation

• They are the same thing

A recession is....

• A short term downfall of economic activity

• A long term downfall of economic activity

• A general increase in economic activity