WorksheetsLIFE ECONOMICS - Test #3 Study Guie
Total questions: 52
Worksheet time: 3hrs 58mins
What is a business cycle?
Recurring periods of growth and decline in an economy’s real output, or real GDP.
A bike used by a pizza delivery person.
A wave like pattern that shows how employment goes up and down over time.
A cycle of how a business begins to operate.
What are the four phases of the business cycle?
Peak, Mountain, Hill, Valley
Trough, Barrel, Manger, Sack
Recovery, Peak, Recession, Trough
Recovery, Zenith, Reduction, Valley
Why does the federal government attempt to control business cycles?
In order to make the different phases of the cycle less severe.
Because the government is run by the Illuminati, and the Illuminati want control.
Because the president/congress want to be re-elected and don't want to be blamed for a recession.
Because they want to make foreign investors happy.
Who makes up the macroeconomy?
Businesses
Government
Foreign Sector
Households
Illegal Immigrants
What is meant by aggregate spending?
Total combined spending of all units in the economy for new goods and services.
Spending for goods and services on the part of households.
Spending for goods and services on the part of businesses
Spending for goods and services on the part of the government.
What is meant by personal consumption by households?
The amount of municipal solid waste that a household creates.
Household spending on new goods and services.
How much food a household consumes in a given month.
How many pac-man pellets a family consumes in one game.
What’s the difference between income determined and non-income determined spending?
Income determined spending is spending on money you earned. Non-income spending is spending on money you did not earn.
Income determined is spending on money you did not earn. Non-income spending is spending on money you earned.
Income spending is when you spend beyond your income.
Non-Income spending is when you do not spend beyond your income.
Which of the following are injections into the spending stream?
Transfer Payments
Borrowing
The Government Buying Goods/Services
Exports
Imports
Under which circumstances will the economy expand?
When households are spending more than saving
When the government is spending more than it's taking in through taxes
When businesses are borrowing more than they are saving
When households are saving more than spending
Under which circumstances will the economy contract?
When households are saving more than spending
When businesses are saving more than borrowing
When the government is taxing more than spending
When the government is spending more than taxing
When businesses are borrowing more than saving
What are examples of leakages from the spending stream?
Taxes
Imports
Saving
Transfer Payments
Interest Rates
What are imports?
Goods bought from other countries.
Goods sold to other countries.
Important things we need to know.
Imports are a lie created by the Illuminati.
What are exports?
Goods sold to other countries.
Goods bought from other countries.
Exports are a lie created by the Illuminati.
Electronic Sports.
Which of the following does not describe fiscal policy?
It is implemented by Congress
It seeks to change the GDP
It changes the GDP using changes in taxes, government purchases, or transfer payments.
It changes the GDP using changes in interest rates, and the supply of money.
Which of the following does not describe monetary policy?
It's implemented by the Federal Reserve.
It seeks to change the GDP.
It changes the GDP by changing interest rates and the money supply.
It changes the GDP by changing taxes, transfer payments, and the amount of government buying of goods/services.
What is a public good?
The reason Frozone wants his super suit....
Good or service provided for all of society that any citizen can use.
Government-provided good that could be sold in a private market.
An item traded on the public market.
What is a quasi-public good?
A public good sold by a hunchback.
Government-provided good that could be sold in a private market.
Good or service provided for all of society that any citizen can use.
A good that is sold in private markets.
Which of the following count as government expenditures?
Transfer Payments
Interest Payments
Aid to State/Local Governments
Purchases of Goods and Services
Taxes
What is a progressive tax?
Tax reflecting a direct relationship between the percentage of income taxed and the size of the income.
Tax equal to the same percentage of income regardless of the size of the income.
Tax reflecting an inverse relationship between the percentage of income taxes and the size of the income.
A flat tax on goods/services.
What is a Proportional Tax?
Tax equal to the same percentage of income regardless of the size of the income.
Tax reflecting an inverse relationship between the percentage of income taxes and the size of the income.
Tax reflecting a direct relationship between the percentage of income taxed and the size of the income.
Taxes based off of certain fractions/ratios used to calculate how much is paid.
What is a trust fund?
A restricted fund that can only be used by certain people, or for certain purposes.
An amount of money you entrust to a friend.
Money you save in a piggy bank for a rainy day.
A fund your parents entrust you with when you are eighteen years old.
Which of the following can help with demand-pull inflation?
Decreasing government purchases of goods and services
Decreasing transfer payments
Increasing taxes
Decreasing Taxes
Increasing Transfer Payments
Unemployment due to a decline in spending can be helped by which of the following?
Increasing government purchases of goods and services
Increasing transfer payments
Decreasing taxes
Increasing Taxes
Decreasing Transfer Payments
What is discretionary fiscal policy?
Deliberate changes in government expenditures and/or taxes to control unemployment or demand-pull inflation.
Changes in government expenditures and/or taxes that occur automatically as the level of economic activity changes
Fiscal policy that is done with the utmost secrecy and discretion.
Fiscal policy that is controlled by the Illuminati.
What is Automatic Fiscal Policy?
Changes in government expenditures and/or taxes that occur automatically as the level of economic activity changes.
Deliberate changes in government expenditures and/or taxes to control unemployment or demand-pull inflation.
Fiscal Policy that automatically kicks in once the new year starts.
Fiscal Policy that automatically deducts 12 trillion dollars from the U.S Federal Reserve every year.
What makes something a medium of exchange?
It is generally accepted as payment for goods/services.
It holds its color well and doesn't smear on the canvas.
It's something that comes out of grass when you slash it with your sword.
It comes out of a brick block when you hit it with your head.
The government tells you to use it.
How is the value of money measured?
It's measured by the amount of goods/services/resources that money can purchase.
It's measured by the value that the government puts on it.
It's measured by how shiny the coin is.
It's measured by the value the Illuminati put on it.
What is the velocity of money?
Average number of times the money supply is turned over in a year in relationship to GDP.
How fast a dollar bill travels when you fold it into a paper airplane.
How fast money changes hands from person to person in an agrarian market.
How fast money changes hands from person to person in a monopolistic market.
What does it mean when an economy has a paper monetary standard?
The Economy’s money is not backed by anything of tangible value such as gold or silver.
The Economy’s money is backed by something of tangible value such as gold or silver.
The Economy's money is backed by Chuck Norris and his roundhouse kick.
The Economy's money is backed by the IRS.
What does it mean when an economy has a commodity monetary standard?
The Economy’s money is backed by something of tangible value such as gold or silver.
The economy’s money is not backed by something of tangible value such as gold or silver.
The economy's money is backed by alien invaders.
The economy's money is backed by the federal reserve's hidden stash of gold located at Fort Knox, Kentucky.
How is money created/destroyed?
Financial Depository Institutions such as Banks, Savings and Loan Associations, Savings Banks, and Credit Unions create/destroy money.
It's created when you earn it at your job, and destroyed by natural disasters such as fire, tornadoes, etc..
It's created by the U.S Mint and destroyed when it has changed hands too many times.
It's created by the Illuminati, and destroyed by human beings.
What type of budget would be most helpful for the government to have if the U.S was in a recession?
A deficit budget
A balanced budget
A surplus budget
It doesn't matter. The U.S Government isn't going to stick to a budget anyway.
What type of budget would be most helpful for the government to have if the U.S economy needed to contract?
A surplus budget
A deficit budget
A balanced budget
A personal budget.
What type of budget would be best for the government if they wanted to slightly expand the economy?
Balanced Budget
Surplus Budget
Deficit Budget
Immovable Budget
Which of the following are characteristics of money?
It is a medium of exchange.
It is a measure of value.
It is a method of storing wealth and delaying payment.
It's green.
What is the dual banking system?
A system that uses national banks, and state banks.
A system by which banks compete for customers by dueling with each other.
A system that involves two different banks in different states.
A system that involves two different banks from different nations.
Which of the following are objectives of the Federal Reserve System?
It regulates its own members (all national banks).
It's in charge of overseeing the money supply and adjusting its size to meet the needs of the economy.
It imposes some uniform regulations on all commercial banks regardless of membership.
It checks your taxes, and makes sure you're not lying to the government.
What are federal reserve banks?
National banks that are "members" of the Federal Reserve.
Banks that report to the feds if you steal from them.
Banks that only loan to businesses on the part of the government.
Banks that only loan to households on the part of the government.
Which of the following are the purposes of the Federal Reserve Banks?
Supervise & examine member banks
Maintain reserve accounts
Monitor circulation
Clear checks
Maintain the currency and fix any rips/tears in the money.
Which of the following would count as being part of the M1 money supply?
Coins
Paper Money
Traveler's Check
Demand Deposits
Stocks
What is a reserve account?
An account that a bank has with the federal reserve.
An account that one has saved in reserve for emergencies.
An account held by an introverted person.
An account reserved for a person that can be accessed once someone turns 21 years of age.
What happens when you increase the amount of loans available?
The money supply increases/money is created.
The money supply decreases/money is destroyed.
You're never...a-loan. Yeaaaaaaaaaaah!
Banks are forced to close because they have loaned out all of their money.
What are excess reserves?
Actual Reserves – Required Reserve
Deposits x Reserve Requirement
Reserve Account + Vault Cash
Specific percentage of deposits that a financial depository institution must keep as actual reserves.
What do excess reserves allow banks to do?
Depository institutions can make new loans up to the value of their excess reserves.
Depository institutions can not make new loans because they have to keep a certain amount of money in their excess reserves.
It allows banks to add interest to the accounts held by normal everyday citizens.
It allows banks to release captured animals back into protected areas of the wild.
How do you calculate the actual reserves held by a bank?
Reserve Account Cash + Vault Cash
Deposits X Reserve Requirement
Actual Reserves – Required Reserves
10% of the bank's total money that must be held in reserve.
Which of the following are characteristics of an interest rate?
It is a price paid to borrow money.
It's a percentage of the amount borrow.
It can be used to control the money supply.
It's always high and very hard to pay off.
It's only for those who buy cars.
Over the summer, you notice that interest rates have risen, and it's harder for businesses to get a loan. What change happened to the excess reserves that caused this trend?
The excess reserves decreased.
The excess reserves increased.
During the christmas season, you notice that interest rates have been falling, and businesses have been expanding due to new loans. What change happened to the excess reserves that caused this trend?
Excess Reserves increased.
Excess Reserves Decreased.
What is monetary policy?
Changing the money supply to influence the levels of output, employment, and/or prices in the economy.
Policy that only has to do with the circulation of money.
Policy that has to do with changing regulations on businesses.
Policy that has to do with how much a money has to pay in minimum wage.
What is the purpose of a tight money supply?
To contract the economy, increase interest rates, and fight demand-pull inflation.
To tighten the belt of our country and encourage us to pull ourselves up by our bootstraps. 'Merica.
To increase reserves and decrease interest rates, and increase spending.
It slows immigration because it contracts the economy, making immigrants not want to come to America.
What is the purpose of an easy money supply?
To increase reserves, decrease interest rates, and increase spending, which expands the economy.
To contract the economy, increase interest rates, and fight demand-pull inflation.
To make "easy living", like that Billie Holiday song.
To make employment rise.
How might the Federal Reserve stimulate the economy using discount rates?
By lowering the discount rate. This is an attempt to loosen the money supply, which will probably lead to a decrease in interest rates that banks charge to their loan customers.
By raising the discount rate. This is an attempt to tighten the money supply, which will probably lead to an increase in interest rates that banks charge to their loan customers.
They'll encourage banks to buy more items wholesale.
