Economics Unit 5 Macro & Int'l Trade

Finding a recession, the government decides to give citizens a tax rebate check to buy Christmas gifts. What is a possible outcome of this action?

• lower interest rates

• higher rates of inflation

• higher interest rates

• lower rates of inflation

Monetary policy is BEST described as

• benefits received by employees in addition to wages and salaries

• a system that relies on supply & demand to determine the value of one currency to another

• actions by the federal government to use spending & revenue collection to influence the economy

• actions by the Federal Reserve System to expand or contract the money supply

The economy is experiencing rapid inflation, pushing above 9%. Which fiscal policy action should the government implement in an attempt to fix this problem?

• raise taxes

• increase spending

• decrease interest rates

• increase reserve requirements

A short term monetary policy action would MOST LIKELY

• raise unemployment insurance

• lower federal taxes

• lower interest rates

• raise Medicare coverage

The process by which the government manages spending and taxes to influence the direction of the economy is

• trade policy

• tax policy

• fiscal policy

• monetary policy

Established in 1967 in Thailand with more than 500 million members, one of the largest regional markets in the world is

• OPEC

• ASEAN

• NAFTA

• NATO

One of the primary goals of stabilizing the economy is to

• increase income levels

• raise the standard of living

• increase profits and spending

• maintain low unemployment

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

• fiscal policy

• monetary policy

• supply-side economics

• open market operations

All of the following are considered benefits of free trade EXCEPT

• diversity of products

• growth of trade

• protective tariff reduction

• quota reduction

• protection of domestic industries

The economy is experiencing negative GDP growth and high unemployment. Which fiscal policy action should the government implement in an attempt to fix this problem?

• increase reserve requirements

• sell securities

• decrease interest rates

• raise taxes

• increase spending