Fiscal and Monetary Policy Test Mod

What is macroeconomics designed to do?

• Study individual business decisions
• Measure small market changes
• Study international trade only
• Measure the overall economy and identify problems

What defines a recession in the economy?

• High employment rates and rising prices
• Two consecutive quarters of negative GDP growth
• Increased consumer spending
• Rising stock market prices

What is the Phillips Curve used to show?

• Government spending patterns
• The relationship between taxes and spending
• The relationship between inflation and unemployment
• The relationship between supply and demand

What happens to wages during high unemployment?

• They tend to increase rapidly
• They stay exactly the same
• They tend to decrease
• They are not affected at all

How can the government use fiscal policy during a recession?

• By increasing interest rates
• By increasing government spending
• By reducing the money supply
• By increasing unemployment

What is the main purpose of monetary policy during a recession?

• To decrease the money supply
• To increase taxes
• To increase the money supply
• To reduce government spending

What is crowding out in economics?

• Too many people shopping at once
• When government borrowing leads to higher interest rates
• When stores run out of products
• When banks close early

What does the Rule of 70 help us calculate?

• The unemployment rate
• The inflation rate
• How long it takes for GDP to double
• The tax rate

What is the national debt?

• Money owed by businesses
• Total amount the government owes to creditors
• Money owed by citizens
• The yearly budget deficit

What is productivity in economics?

• How many hours people work
• How much money workers make
• Output per worker
• The number of factories in a country