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Unit 5 Measuring the Economy

Total questions: 70

Worksheet time: 57mins

Name
Class
Date
1.

The inflation rate is

a)

the ability to buy goods or services

b)

measured in fixed dollars

c)

not an important measure to economists

d)

the percentage change in prices over time

2.

Inflation reduced people's purchasing power because

a)

the same amount of money buys ore goods and services

b)

the same amount of money buys fewer goods and services

c)

the market basket has to be changed every year

d)

there is not enough money in the economy

3.

Is this counted in the GDP of the US?

The federal government purchases a new submarine for the US Navy.

a)

Yes

b)

No

4.

In which part of the GDP calculation does this fit?

You spend $15 at AMC to see the latest Avengers movie.

a)

Consumer spending

b)

Government spending

c)

Investment spending

d)

Net exports

5.

In which part of the GDP calculation does this fit?

The US military spends $5 billion on five new helicopters.

a)

Consumer spending

b)

Government spending

c)

Investment spending

d)

Net exports

6.

In which part of the GDP calculation does this fit?

The local taxi service purchases new vehicles for the

company.

a)

Consumer spending

b)

Government spending

c)

Investment spending

d)

Net exports

7.

In which part of the GDP calculation does this fit?

Australia exported $6 billion worth of goods in 2018, but imported $10 billion in goods.

a)

Consumer spending

b)

Government spending

c)

Investment spending

d)

Net exports

8.

Which of the following would be included in the calculation of GDP?

a)

Final goods

b)

Intermediate goods

c)

Second hand goods

d)

Black market activity

9.

The _______ is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.

a)

Consumer Price Index

b)

Aggregate supply

c)

Producer Price Index

d)

Aggregate demand

10.

According to the wage-price spiral, if a company gives a worker a raise in pay, what must they also do?

a)

Raise the price of their products

b)

go out of business

c)

lower the price of their products

d)

merge with a competitor

11.
What type of GDP is calculated with the current year's prices?
a)
Nominal GDP
b)
Real GDP
c)
GDP per capita
12.
GDP is calculated by
a)
adding up the cost of goods used in producing the item
b)
subtracting all costs from total revenue
c)
adding consumption + investment +government spending+ (exports sold - imports bought)
13.
What does Per Capita Mean?
a)
Per Household
b)
Per Object
c)
Per Worker
d)
Per Person
14.

The Business Cycle measures ___ over time.

a)

wealth

b)

inflation

c)

economic growth

15.

The business cycle rises above the trendline during-

a)

rescessions

b)

expansions

c)

troughs

16.

GDP declines during a(an)

a)

peak

b)

contraction

c)

expansion

17.

Economic recovery begins-

a)

above the trend line

b)

at the end of a recession (trough)

c)

at the "boom" period

18.

When GDP rises faster than the long-run trend then the economy is experiencing-

a)

a recession

b)

an expansion

c)

a recovery

19.

GDP will begin to decline at-

a)

the peak.

b)

the trough.

c)

the contractionary phase.

20.

Inflation measures...

a)

the value of all final goods and services produced

b)

an increase in the general price level

c)

the percentage of people looking for work that can't find it

d)

the economic freedom an economy offers

21.

Which of the following is a peak?

a)

A

b)

B

c)

C

d)

D

22.

Which of the following is a recession, or contraction?

a)

A

b)

B

c)

C

d)

D

23.

Which of the following is a trough?

a)

A

b)

B

c)

C

d)

D

24.

Which of the following is an expansion, or recovery?

a)

A

b)

B

c)

C

d)

D

25.

Nominal GDP - _____ = Real GDP

a)

Inflation

b)

Unemployment

c)

Imports

d)

Exports

26.

The Business Cycle charts...

a)

the ups and downs of an economy

b)

series of stages in the economy as it expands and contracts.

c)

the periodic growth and decline of a nation’s economy, measured mainly by its GDP (Gross Domestic Product).

d)

All of the above

27.

The rate of inflation is most commonly measured by use of

a)

a price deflator

b)

the GDP deflator

c)

the consumer price index

d)

all of the above

28.

What causes inflation?

a)

inflation occurs when there's an increase in production costs OR when demand for products and services increases faster than supply

b)

inflation occurs when there's an increase in production costs OR when demand for products and services increases slower than supply

c)

inflation occurs when there's a slower increase in production costs OR when demand for products and services increases faster than supply

29.

What are the three main causes of inflation?

(a)  

30.
When inflation is high the _______________of the dollar decreases
a)
cost value
b)
purchasing power
c)
importance
d)
validity
31.
What causes demand pull inflation?
a)
rise in price due to a decrease in supply
b)
a rise in price level due to an increase in consumption
c)
a rise in price due to an increase in the cost of production
d)
a decrease in price due to a decrease in supply
32.
According to the wage-price spiral, if a company gives a worker a raise in pay, what must they also do?
a)
 Raise the price of their products
b)
go out of business
c)
lower the price of their products
33.
Fiscal policy is
a)
decisions the government makes to fight inflation
b)
actions the the Federal Reservice takes to control money supply
c)
does not help with inflation
34.
Tax that is flat or fixed for individuals
a)
regressive tax
b)
proportional tax
c)
lending tax
d)
income tax
35.
What causes cost push inflation
a)
An increase in demand for goods and services
b)
An increase in supply
c)
A rise in production costs passed on to consumers
d)
A fall in the price of imports
36.

Who is in charge of Monetary Policy

a)

The Government

b)

The Federal Reserve System

c)

The states

d)

The Department of the Treasury

37.

Monetary Policy is the Federal Reserve Systems attempt to...

a)

control the amount of money in circulation

b)

control the Federal Government's debt

c)

control state governments' spending

d)

none of these answers are correct.

38.
Which of these is NOT a monetary policy tool?
a)
Discount rate
b)
Balance Accounts
c)
Open Market Operation
d)
Reserved Requirements
39.

If the Fed wants to reduce the amount of loans a bank can make, then it should adjust...

a)

Open Market Operations

b)

The Reserve Ratio

c)

The Discount Rate

40.

If the Fed wants to increase the cost of loans, then it should adjust...

a)

Open Market Operations

b)

The Reserve Ratio

c)

The Discount Rate

41.

An expansionary policy means that the Fed is attempting to

a)

increase the size of the nation's money supply

b)

decrease the size of the nation's money supply

42.

A contractionary policy means that the Fed is attempting to

a)

increase the size of the nation's money supply

b)

decrease the size of the nation's money supply

43.
Selling bonds
a)
increases money supply
b)
decreases money supply
44.
Buying bonds
a)
increases money supply
b)
decreases money supply
45.
Which of the following scenarios would cause the nation’s money supply to increase?
a)
Decreasing government spending
b)
Lowering interest rates
c)
Raising interest rates
d)
Selling bonds to investors
46.
What action would the Federal Reserve take to control inflation?
a)
Buy government securities
b)
Decrease the required reserve ratio
c)
Increase taxes
d)
Increase the discount rate
47.
The Fed keeps a certain amount of money out of circulation. This is referred to as....
a)
Reserve requirement
b)
Emergency Fund
c)
Stockpile
d)
Hoard
48.

The tools of fiscal policy are...

a)

Interest rates

b)

Taxes and Government spending

c)

Checks and balances

d)

Open market operations

49.

Fiscal policy is actions taken by ______________ to stabilize the economy.

a)

The federal Reserve

b)

The Air force

c)

the government

d)

Wall street

50.

Expansionary fiscal policies are laws aimed at reducing unemployment. How might Congress use expansionary fiscal policy?

a)

Decrease the discount rate

b)

Increase taxes

c)

Decrease government spending

d)

Increase government spending and decrease taxes

51.

Contractionary fiscal policy are law aimed at reducing inflation. How might Congress use contractionary fiscal policy?

a)

Decrease government spending and increase taxes

b)

Decrease taxes

c)

Send stimulus checks to every person in the economy

d)

Increase government spending

52.

When would Congress most likely use contractionary fiscal policy?

a)

During periods of high unemployment

b)

During periods of high inflation

c)

During periods of low economic production

d)

During periods of peace

53.

Which is an example of expansionary fiscal policy?

a)

The Federal reserve lowers the discount rate

b)

The government raises taxes on all citizens by 5%

c)

The government increases spending by building more infrastructure

d)

The federal reserve increases the reserve requirement

54.

Which is an example of contractionary fiscal policy?

a)

The government increasing taxes on all goods and services by 5%

b)

The president issues an executive order

c)

The federal reserve purchases bonds

d)

Government spending increasing

55.
Which of the following are responsible for making fiscal policy decision? 
a)
The President and Congress
b)
The Federal Reserve System
c)
The National Council of Economic Advisors
d)
The commerce Department
56.

The federal government's overall approach to spending and taxes is called

a)

Physical Policy

b)

Fiscal Policy

c)

вежба

d)

Monetary Policy

57.

"The Fed refers to the Federal Reserve System, the Central Bank of the United States. The FOMC is the Federal Open Market Committee, the group responsible for implementing monetary policy."

a)

Fiscal policy

b)

Monetary policy

58.

"In February, lawmakers set themselves up to reach a more permanent spending agreement by the end of March. Congress agreed to increases to domestic and defense spending over the next two years, raising funding for domestic programs by $128 billion and hiking defense budgets by $160 billion. But they didn’t actually decide where the money would go."

a)

Fiscal policy

b)

Monetary policy

59.

"The U.S. Federal Reserve is almost certain to hike interest rates Wednesday to the highest level in a decade: 1.5 to 1.75 percent. "

a)

Fiscal policy

b)

Monetary policy

60.
An example of expansionary fiscal policy would be
a)
cutting taxes.
b)
cutting government spending.
c)
cutting production of consumer goods.
d)
cutting prices of consumer goods.
61.
Taxing & spending to help the economy grow is referred to as
a)
expansionary policy
b)
monetary policy
c)
contractionary policy
d)
budget deficit
62.
Taxing & spending to slow the economy is referred to as 
a)
budget surplus 
b)
monetary policy
c)
contractionary policy
d)
budget deficit
63.
When the government raises taxes, what does it take out of circulation?
a)
Money
b)
Credit
c)
People
d)
Jobs
64.

A system that imposes a greater percentage of taxation on higher income levels, operating on the theory that high-income earners can afford to pay more.

a)

Regressive tax system

b)

Proportional tax system

c)

Progressive tax system

d)

Tax reform

65.

A tax system that applies the same tax rate to all individuals regardless of income.

a)

Progressive tax system

b)

Regressive tax system

c)

Proportional tax system

d)

Efficient tax system

66.

A tax system that levies the same percentage on products or goods purchased regardless of the buyer's income and is thought to be disproportionately difficult on low earners.

a)

Progressive tax system

b)

Regressive tax system

c)

Proportional tax system

d)

Efficient tax system

67.

A form of demand-side economics that encourages government action to increase or decrease demand and output.

a)

Fiscal policy

b)

Keynesian economics

c)

Monetary policy

d)

Supply-side economics

68.

A form of economics focusing on tax cuts to help the economy by raising supply.

a)

Fiscal policy

b)

Keynesian economics

c)

Monetary policy

d)

Supply-side economics

69.

an income level below that which is needed to support families

a)

standard of living

b)

command economy

c)

externality

d)

poverty threshold

70.

The number of unemployed people as a percentage of the labor force

a)

Unemployment rate

b)

GDP

c)

GDP per capita

d)

Inflation

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