GDP/Inflation/Unemployment Monetary & Fiscal Policy Unit 4 Exam GDP/Inflation/Unemployment Monetary & Fiscal Policy

Who creates fiscal policy? Government Congress & President

What monetary policy tool is the Fed using when it sells government bonds? Open Market Operations

What rate of inflation is a single-digit inflation rate? Creeping

Due to this, the dollar buys less: Inflation

In how long does a person need to have inquired after a job to be counted a part of the unemployment rate? 1 month

Current GDP is: $16.8 trillion

Inflation rate of 14% is considered: Galloping inflation

To exercise contractionary fiscal policy, what would the government do about the tax rate? Raise it

What effect would an easy money policy have on unemployment? Lower it

To contract the money supply and lower inflation, how would the FOMC conduct open market operations? Sell government bonds

Unemployment during a recession is most likely due to: Cyclical unemployment

An unemployment rate considered to have reached full employment: ~ 5%

What effect does raising the reserve requirement have on the inflation rate? Lowers it

How can the Fed use the discount rate to stimulate GDP growth? Lower it

When was the Federal reserve created? 1913

How many federal reserve districts does America have? 12

How many people sit on the Fed’s Board of Governors? 7

What Fed entity sets monetary policy? Federal Open Market Committee FOMC

Who is the current Fed Chairperson? Janet Yellen

What is our current unemployment rate? 5.9% (Sept 2014)

Which of the following is counted in the unemployment rate? Fred who works part time but needs fulltime work Paul who does not work, but lives off his dad’s wealth Bob who lost his Job yesterday and has already begun interviewing with Target Bob

Unemployment due to teens looking for their first job: Frictional unemployment

Unemployment due to a lawyer deciding to become a truck driver: Frictional unemployment

Employment in what type of industries are most affected by recessions? Those selling big ticket items ie: boats, cars etc.

What is the point in the business cycle just before recovery? Trough

What’s another word for the recovery phase of the business cycle? Expansionary phase

What often happens to workers laid off during the recessionary phase when the economy begins to recover? Rehired

What type of unemployment accounts for layoffs in the banking industry when ATM machines increasingly became the norm? Technological unemployment

A hurricane wipes out 2,000 acres of orange grove land in Florida A hurricane wipes out 2,000 acres of orange grove land in Florida. Fruit harvesters hit the unemployment lines. Unemployment increases due to: Seasonal unemployment

The dollar value of the final goods and services produced within a country’s borders within a given year: GDP

What economic indicator is the measure of a nation’s output? GDP

What indicator reflects a nation’s production capacity? GDP

Which IS included in calculating GDP? Sugar purchased by Betty Crocker Tires purchased by Ford Motors Corp. DVDs purchased by a vacationer from a Chinese street vender in Hong Kong Cucumbers purchased at the Farmer’s Market #4

Which is included in GDP? Concert tickets purchased on e-bay Music downloaded illegally Flowers purchased online A home-made dress #3

What modification of nominal GDP is used to allow economists to compare one nation’s worker’s productivity to another nation’s? Per capita GDP

What economic indicator is a measurement of the nation’s income? GNP

What economic indicator applies to the following scenario? The dollar value of production from a foreign plant making power tools in New Jersey GDP

What economic indicator applies to the following scenario? Martha Stewart’s clothing line manufactured in sweat shops in Indonesia and shipped back to the US GNP

What type of fiscal policy does the graph below suggest? Expansionary

Inflation rates in Germany during the Great Depression: Hyperinflation

Theory of inflation where demand exceeds supply: Demand-pull theory

Cause of inflation wherein the government is at fault for the excessive demand: Deficit spending

What happens to the general price level when expansionary monetary policy injects too much money into the economy? Increases

What product price increase would most broadly influence the general price level? Oil

What happens to the unemployment rate among teens when the minimum wage increases?

What is the greatest predictor of a high income? Human capital investment Education specialization

Which free trade agreement benefited Mexico, Canada, and the U.S.? NAFTA North American Free Trade Agreement

What international organization both replaced GATT and encourages trade in Third world nations? WTO World Trade Organization

What type of fiscal or monetary policy would cause the following shift? Expansionary P GDP

What the FOMC decide about the produce the following effect?

Those who promote lowering trade barriers are: Free traders

Who most appreciates lower prices from foreign markets? Free traders

Who fears US dependence on foreign markets most? Protectionists

Who wants most to protect American jobs? Protectionists