Reaganomics

A person or organization that uses a product or service is a(n):

• Consumer

• Economist

• Loan shark

• Debtor

What term refers to a good that comes into a country?

• Trade
• Migration
• Export
• Import

Importing more than exporting leads to what?

• A trade surplus.

• A trade deficit.

• A balance of trade.

• A balance of payment.

The value of all the final goods and services produced within a nation in a given year.

• Gross Domestic Product

• Consumer Price Index

• Inflation

• Housing Starts

How does comparing the Consumer Price Index (CPI) over time help economists measure inflation?

• The increase in prices without changes to production suggests a decline in purchasing power.

• The decline in prices without changes to production suggests an increase in purchasing power.

• Consumer confidence in the economy can predict the rise of inflation.

• Consumer uncertainty in the economy can predict the rise of inflation.

Which of the following is true when it comes to using the Stock Market, like the S&P 500, to evaluate economic well-being?

• A declining stock market indicates reduced corporate profits, which could a worsening economy.

• Because stock prices can be based on speculation, the stock market should not be used on its own.

• Rapid fluctuations in stock prices can reflect economic uncertainty among stockholders and consumers.

• Stock splits always prove detrimental to investors in the long term.

"Net worth of families earning between $20,000 and $50,000 annually grew by 27% "

How can this statistic promoting the success of Reaganomics be better evaluated?

• Adjust for possible inflation or deflation.

• Review the employment of the families (single vs. dual income)

• Compare stock market performance in 1980 with 1988.

• Measure the number of homes built during this period.

In addition to volunteers and those who are self-employed or own a private business, what other workers are not included in the Current Employment Statistics (CES)?

Many economists complain that using the Money Supply delays the Fed’s response to inflation/deflation.

What is another shortcoming of the Money Supply as a tool for addressing inflation/deflation?

• Most people no longer use cash.

• High yield savings accounts (HYSA) ignore this data anyway.

• The information it gathers typically conflicts with Housing Starts.

• Stock investments and money in foreign accounts are not included in this measurement.

"The Debt-to-GDP ratio increased from 40.33 in 1981 to 60.15 in 1988."

How can this statistic challenging the success of Reaganomics be better evaluated?

• Determine whether this data takes into account inflation/deflation.

• Measure this in conjunction with the Money Supply.

• Review stock market performance since stocks aren't part of GDP unless bought/sold.

• Adjust for fluctuating employment rates and consumer confidence.