Macroeconomics - Final Review

When the government spends more money than they take in each year is called a _________?

• Debt
• Deficit
• Surplus
• Expansionary

what is the purpose of Monetary Policy?

• contribute to economic growth and stability

• keep rich people from getting too rich

• Functions like Fiscal Policy

• give Congress and the political parties more control of the economy

The primary role of the Bank of England is to steer the economy by

• controlling the budget
• setting spending levels.
• controlling the money supply.
• loaning out money.

Which of the following scenarios would cause the nation’s money supply to increase?

• Decreasing government spending
• Lowering interest rates
• Raising interest rates
• Selling bonds to investors

Inflation is measured by...

• Consumer Price Index (CPI).
• Gross National Product (GNP).
• Gross Domestic Product (GDP).
• Securities & Exchange Commission (SEC).

To much money in our economy leads to 

• Inflation
• Recession

Fiscal policy aims to influence the economic activity through the use of

• money supply and interest rate.

• exchange rate.

• government spending and taxation.

• direct and indirect taxation.

How does a budget deficit relate to the national debt?

• They are the same thing.
• Budget deficits are more than the national debt.
• Budget deficits reduce the size of the national debt.
• Budget deficits create the national debt.

To promote higher economic growth, the best way is to

• decrease government spending and increase taxation.

• decrease government spending and decrease taxation.

• increase government spending and decrease taxation.

• increase government spending and increase taxation.

Supporters of Keynesian economics believe that

• government should be used as a tool to increase demand for goods.
• demand for goods increases when prices rise.
• taxes have a strong negative influence on economic output.
• the government should have a limited role in regulating the economy.