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

2. Who creates fiscal policy?
Government
Congress & President

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

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

5. Due to this, the dollar buys less:
Inflation

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

7. Current GDP is:
$16.8 trillion

8. Inflation rate of 14% is considered:
Galloping inflation

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

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

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

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

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

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

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

16. When was the Federal reserve created?
1913

17. How many federal reserve districts does America have?12

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

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

20. Who is the current Fed Chairperson?
Janet Yellen

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

22. 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

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

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

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

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

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

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

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

30. 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

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

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

33. What indicator reflects a nation’s production capacity?
GDP

34. 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

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

36. 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

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

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

39. 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

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

41. Inflation rates in Germany during the Great Depression:
Hyperinflation

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

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

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

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

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

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

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

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

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

51. What the FOMC decide about the produce the following effect?

52. Those who promote lowering trade barriers are:
Free traders

53. Who most appreciates lower prices from foreign markets?
Free traders

54. Who fears US dependence on foreign markets most?
Protectionists

55. Who wants most to protect American jobs?
Protectionists