Economic Instability

The use of taxes and government spending to affect the economy

• Monetary Policy

• Fiscal Policy

• Contractionary Policy

• Expansionary Policy

a plan to increase aggregate demand and stimulate the economy

• Contractionary Fiscal Policy

• Expansionary Fiscal Policy

• Contractionary Monetary Policy

• Expansionary Monetary Policy

Which of the following is responsible for fiscal policy?

• the Federal Bureau of Investigation

• the Federal Reserve

• Congress & the President

• the Federal Reserve banks

Which of the following are related to adjusting the supply of money and credit? (SELECT 2.)

• monetary policy

• fiscal policy

• adjusting amounts banks may loan out to customers

• decreasing income taxes consumers have to pay

• preparing US budget

Cyclical Unemployment

• when the work available doesn’t match the skill of the available workers

• unemployment that results from natural transitions in life

• from industries that slow or shut down for a season

• based on changing economic conditions, like a recession

There are levels of unemployment. Someone who was looking for work but gave up trying is __

• a high school dropout

• discouraged worker

• underemployed

• a quitter

How are monetary policy and fiscal policy similar?

• They are both done by the President.

• They are both done by the Fed.

• They are both used to keep the economy stable.

• They both use four tools.

When individuals lose jobs due to a decline in the economy (aggregate demand), often during an economic recession.

• Structural Unemployment

• Cyclical Unemployment

• Frictional Unemployment

• Seasonal Unemployment

If the unemployment rate is rising and GDP is falling, the fiscal policy action that the federal government should MOST likely follow is 

• decreasing taxes.

• decreasing spending.

• decreasing the money supply.

• decreasing the reserve requirement.

a plan to reduce aggregate demand and slow the economy

• Contractionary Fiscal Policy

• Expansionary Fiscal Policy

• Contractionary Monetary Policy

• Expansionary Monetary Policy