GDP/Monetary Policy/Inflation Review

Prices typically rise for similar goods over time, the economic term for this is______.

• Deflation
• Stagnation
• Inflation
• Recession

Suppose two countries start out with the same GDP. If country A’s GDP grows by 1% each year and Country B’s GDP grows by 2% each year, how much bigger will country B’s GDP be in 70 years?

• Twice as big

• Four times as big

• Eight times as big

• Sixteen times as big

Which GDP measure best approximates the standard of living over time?

• Nominal GDP

• Real GDP

• Nominal GDP per capita

• Real GDP per capita

Imported oranges to the United States from the Dominican Republic are counted towards which country’s GDP?

• The U.S.

• The Dominican Republic

Based on the above graph which shows nominal and real GDP, we can claim that:

• Prices rose in Turkey

• Prices fell in Turkey

When you deposit your money in a bank, where does the majority of that money go?

• 1. Banks store it in a vault.

• 1. Banks send it to headquarters.

• 1. Banks loan it out.

• 1. Banks give it to the government to keep.

• 1. Banks spend it on those pens with little chains.

In the United States, which entity is responsible for monetary policy?

• 1. Congress

• 1. The Federal Government

• 1. The States

• 1. The Federal Reserve

• 1. The Federal Deposit Insurance Corporation

The Federal Deposit Insurance Corporation helps to prevent what?

• 1. Bank runs

• 1. Moral hazard

• 1. Asset bubbles

• 1. Inflation

Which of the following goals is most consistent with contractionary monetary policy?

• 1. Decrease unemployment

• 1. Increase the money supply

• 1. Decrease inflation

• 1. Stimulate the economy

Expansionary monetary policy is most likely associated with:

• 1. Increased interest rates

• 1. Decreased interest rates

• 1. Bank runs

• 1. Tax increases