Unit 3: Econ Study Guide

If the government is spending more money on building roads and improving interstate transportation, this leads us to believe that the US is currently in what phase of the business cycle?

• trough

• peak

• expansion

• recession

Which of the following best describes fiscal policy?

• tools used by the Federal Open Market Committee to stabilize the economy

• the government’s control over interest rates to increase economic growth

• the supervision of banks to ensure the financial system’s security

• government’s use government spending & taxation changes to influence economic activity

During recessions, which type of unemployment increases?

• structural unemployment

• seasonal unemployment

• frictional unemployment

• cyclical unemployment

In which sector of GDP would the salary of a public school teacher be included?

• Consumer Spending

• Business Investments

• Government Spending

• Net Exports

Which statement describes economic activity in a recession?

• consumer spending declines

• business production increases

• unemployment rate decreases

• government regulations increases

Which phase of the business cycle is characterized by economic growth and rising Real GDP?

• Trough

• Expansion

• Contraction

• Recession

If a nation currently has a budget deficit, what could be a possible result of this situation?

• Budget Surplus

• Increasing National Debt

• Balanced Budget

• Discretionary Fiscal Spending

Which type of tax generates revenue to help pay for local public schools?

• sales tax

• excise tax

• personal income tax

• property tax

When inflation occurs, the purchasing power of the dollar would

• increase

• decrease

• remain stable

• not be affected

Economists determine the US has reached the goal of full employment when

• everyone has a job

• no one in unemployed

• unemployment rate is less than 1%

• unemployment rate is around 4%