Unit 3 Measuring Economic Activity and Policy

Which of the following is used to measure economic growth?

• Consumer Price Index (CPI)

• Gross Domestic Product (GDP)

• Unemployment Rate

• Federal Funds Rate

What does the Consumer Price Index (CPI) primarily measure?

• Economic growth

• Price stability

• Full employment

• National debt

Which type of unemployment is caused by changes in the seasons or weather?

• Structural unemployment

• Cyclical unemployment

• Frictional unemployment

• Seasonal unemployment

Identify the stage of the business cycle characterized by increasing economic activity and employment.

• Peak

• Contraction

• Trough

• Recovery/Expansion

How many districts are there in the Federal Reserve System?

• 10

• 12

• 14

• 16

What is the primary role of the Federal Open Market Committee (FOMC)?

• Supervising banks

• Setting the federal funds rate

• Processing payments

• Managing national debt

Which tool does the Federal Reserve use to influence the federal funds rate?

• Taxation

• Open market operations

• Government spending

• Budget deficits

What is the dual mandate of the Federal Reserve?

• Price stability and national debt reduction

• Full employment and economic growth

• Price stability and full employment

• Economic growth and tax reduction

Which of the following is a consequence of a government budget deficit?

• Decrease in national debt

• Increase in national debt

• Price stability

• Full employment

What is the effect of government spending on economic growth?

• It decreases economic growth

• It has no effect on economic growth

• It promotes economic growth

• It only affects price stability