Economics Unit 3 Quiz

What is Aggregate Demand?

• The demand for a specific good or service.

• The total supply of goods and services in an economy.

• The total demand for goods and services within an economy at a given overall price level and in a given time period.

• The demand for goods and services by the government.

What is the role of a Central Bank?

• To manage a country's currency, money supply, and interest rates.

• To set tax rates for individuals and businesses.

• To regulate international trade agreements.

• To provide loans to small businesses.

What does Competition among businesses lead to?

• Increased government intervention.

• Higher prices and less innovation.

• Monopolies and reduced consumer choice.

• Better quality products, lower prices, and innovation.

What is Contractionary Policy intended to do?

• Promote exports.

• Reduce economic growth to control inflation.

• Increase government spending.

• Increase economic growth.

What is Crowding Out?

• A situation where private sector investment is unaffected by interest rates.

• A situation where government spending has no effect on private sector investment.

• A situation where increased government spending leads to a reduction in private sector investment.

• A situation where private sector investment increases due to government spending.

What is Deflation?

• An increase in the general price level of goods and services.

• A decrease in the general price level of goods and services.

• A situation where prices remain constant.

• A temporary increase in prices.

What are Deposits?

• Money spent by the government.

• Money placed into a banking institution for safekeeping and potential interest earnings.

• Money borrowed from a bank.

• Money used for purchasing stocks.

What is Expansionary Policy designed to do?

• Reduce economic growth.

• Stabilize the economy without growth.

• Stimulate economic growth through increased government spending or lower interest rates.

• Increase taxes to reduce inflation.

What are Externalities?

• Direct effects of economic activities on the involved parties.

• Side effects of economic activities that affect other people not directly involved in the transaction.

• The main effects of economic activities on the involved parties.

• Government-imposed regulations on businesses.

What is the Fiscal Multiplier?

• The ratio of imports to exports.

• The ratio of government spending to tax revenue.

• The ratio of a change in national income to the change in government spending that causes it.

• The ratio of inflation to unemployment.