Economics Review Part 2

If the economy is in a recession, what will the Federal Reserve Board most likely do to initiate recovery?

• Raise taxes

• Lower interest rates

• Wait for the economy to improve

• Eliminate government jobs

What economic policy would a supporter of laissez-faire economics support?

• Antitrust

• Business regulation

• Free enterprise

• Taxation

What is the likely result of an industrial plant closing?

• Unemployment in the area increases

• The local economy grows

• The local government collects more taxes

• Some former employees receive increases in salary

Which is most likely the result of high unemployment?

• An increase in consumer spending

• A decrease in consumer spending

• An increase in sales tax

• A decrease in the need for social services

In the US, how are public goods paid for?

• Private firms collect fees from their employees

• Non-profit organizations collect charitable donations from people

• The government collects tax revenues from individuals and firms

• Corporations make profits from selling goods and services

What would you conclude about an economy characterized by increasing real gross domestic product (GDP), low unemployment, and increasing inflationary pressures?

• This economy is in a slowdown

• The government needs to address the unemployment problem

• This economy is in the expansion phase of a business cycle

• The Federal Reserve should expand the money supply

Armand is a skilled carpenter who lives in Minnesota. He builds homes in April to November. Which of the following has the greatest impact on why Armand’s company shuts down for the winter?

• Economic slowdown from December to March

• Extreme weather conditions

• Cost of building materials

• Shortage of labor

Which of the following is primarily responsible for the control of the money supply?

• United States Treasury

• Federal Reserve System

• Federal Deposit Insurance Corporation

• Comptroller of the Currency

When the value of money was based on its silver content, new discoveries of silver were frequently followed by periods of

• Recession

• Recovery

• Shortage

• Inflation

Which of the following is not a type of unemployment?

• Seasonal

• Peak

• Frictional

• Cyclical