GFL Strand 1, Standard 1: Basic Economic Principles

Who are the main participants in the economy?

• Businesses, households, and the government.

• Only businesses and their owners.

• The government and large companies.

• Local stores and community groups.

What does GDP stand for?

• General Data Product.

• Gross Domestic Product.

• Government Development Program.

• Global Domestic Policy.

Why is GDP important?

• It shows the total value of all goods and services in a country.

• It tracks only the profits of big businesses.

• It tells how much money people save.

• It measures how much the government spends.

What is inflation?

• The rise in prices of goods and services over time.

• A decrease in the cost of living.

• A rise in the number of businesses.

• A drop in the economy’s total output.

How does inflation affect your money?

• It increases the buying power of your money.

• It decreases how much your money can buy.

• It has no effect on spending or savings.

• It makes goods and services cheaper.

What is an economic expansion?

• A period when the economy grows and businesses thrive.

• A time when the economy slows down.

• A sharp drop in jobs and economic activity.

• The shutdown of major industries.

What is a recession?

• A time when prices rise very quickly.

• A period of declining economic activity.

• A sharp increase in the economy’s growth.

• A time when there are too many jobs available.

What does fiscal policy involve?

• How the government uses taxes and spending.

• Setting the interest rates for banks.

• Regulating local businesses and industries.

• Managing the stock market.

What is the role of the Federal Reserve in monetary policy?

• Controlling government spending.

• Managing the supply of money and interest rates.

• Making new tax laws for businesses.

• Overseeing international trade.

What is the law of supply and demand?

• Prices are set based on government regulations.

• Supply increases as demand goes down, lowering prices.

• Prices are always the same, regardless of demand.

• Demand decreases when there is a lot of supply.