Chapter 2 Economics and Finance Quiz

What does the Consumer Price Index (CPI) measure?

• The value of exports

• Average changes in consumer prices over time

• Stock market performance

• Interest rate changes

Which term describes the natural fluctuation of the economy between growth and recession?

• Fiscal policy

• Economic indicators

• Economic cycle

• Currency valuation

Gross Domestic Product (GDP) measures:

• Inflation rates only

• Total value of goods and services produced in a country

• Interest rates

• Trade deficits

Which of the following is a leading economic indicator?

• GDP

• Unemployment rate

• Stock market performance

• CPI

Currency valuation is primarily affected by:

• Bank fees

• Monetary donations

• Trade balances and interest rates

• Stock prices

A country with more imports than exports has a:

• Trade surplus

• Trade deficit

• Balanced budget

• Balanced trade

Supply-side economics encourages growth by:

• Increasing consumer demand

• Cutting taxes and deregulation

• Reducing interest rates

• Raising tariffs

Keynesian economics suggests the government should:

• Cut taxes for corporations only

• Reduce spending during recessions

• Spend more during economic downturns

• Only monitor inflation

Which institution controls the U.S. money supply?

• U.S. Treasury

• Congress

• Federal Reserve

• SEC

What does the FOMC primarily do?

• Regulate taxes

• Control the money supply through open market operations

• Manage fiscal policy

• Handle consumer price reporting