Unit 4.1 Pitstop

What is the primary purpose of the circular flow model?

• To show only government spending
• To demonstrate how money and resources move through an economy
• To illustrate international trade exclusively
• To calculate GDP growth rates

Which economic sector is responsible for consuming goods and services and providing labor?

• Government agencies
• International markets
• Households
• Firms

What is a key characteristic of a market-driven economy?

• Complete government control
• Private ownership and supply-demand pricing
• Centralized economic planning
• State-owned enterprises

Who is responsible for managing fiscal policy?

• Federal Reserve
• State governments
• Congress and the President
• International banks

What is a primary tool of fiscal policy?

• Setting interest rates
• Controlling money supply
• Government spending
• Bank reserve requirements

What is the main purpose of monetary policy?

• Managing tax rates
• Managing government spending
• Managing foreign trade
• Managing money supply and interest rates

Which institution controls monetary policy in the United States?

• Congress
• The Federal Reserve
• The Treasury Department
• The White House

How does fiscal policy impact the economy during a recession?

• By reducing money supply
• By increasing interest rates
• By stimulating economic growth
• By restricting trade

How does government influence economic activity?

• Only through tax collection
• Through policy implementation
• Only through international trade
• Only through household regulation

What is an example of seasonal unemployment?

• A factory worker replaced by automation
• A recent graduate looking for their first job
• A retail worker laid off after Christmas season
• A worker laid off during an economic recession