Unit 5 Test Review

The top trade-off (our second choice) is called our...

• Trade-off

• Cost Benefit Analysis

• Opportunity Cost

• Lost Cause

Which of the following defines a "command economy"?

• market determines economic decisions according to the laws of supply and demand

• government controls all economic decisions

• market determines economic decisions according to the laws of supply and demand

• Resources are owned by individuals

The Consumer Price Index measures:

• Rise or decline in overall prices (inflation)

• The value of everything produced in an economy in a year

• The percentage of people looking for work who can’t find jobs

Who proposes a budget to Congress?

• The Supreme Court

• The President

• The Governor

• The General Assembly

How can the federal government use fiscal policy to help slow the economy (when prices are too high)?

• By raising taxes

• By Increasing the Interest Rate

• By Buying Bonds

• By increasing spending

How can the federal government use fiscal policy to help grow the economy (when UR is too high)?

• raise taxes

• lower taxes

• increase interest rate

• buy bonds

An increase in government spending would mean which of the following for the U.S. economy:

• lower inflation

• more loans

• lower interest rates

• more jobs

Who is in charge of monetary policy?

• The Federal Reserve (The FED)

• The President

• The Senate

• State Banks

Which of the following is NOT a goal of monetary policy:

• maintain economic growth

• decrease taxes

• keep unemployment rates low

• keep prices stable/control inflation

To help the economy grow, the Federal Reserve bank can...

• increase the reserve requirement

• decrease the interest rate

• sell bonds

• raise taxes