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1. Inflation is defined as a rise in the general level of
prices. When inflation occurs, the buying power of
the dollar would
A)
increase.
B)
decrease.
C)
remain stable.
D)
not be affected by inflation.
2. If the federal government spends more than it
collects in revenue, then
A)
it is running a surplus.
B)
it is running a deficit.
C)
the inflation rate should decline.
D)
the unemployment rate may increase.
3. Of the following groups, who would be the most
impacted by inflation?
A)
members of strong labor unions
B)
people who do not have any debt
C)
employees who have received raises
D)
individuals living on fixed incomes
4. Which statement describes economic activity in a
recession?
A)
7. Which result occurs when federal government
expenditures are greater than the federal
government's total receipts?
A)
B)
reduced net exports
increased excise taxes
C)
a federal budget surplus
D)
a federal budget deficit
8. The single most important measure of the
economy's overall economic performance, or the
measure of national output, is called
A)
National Income (NI).
Net National Product
B)
(NNP).
Gross National Product
C)
(GNP).
Gross Domestic Product
D)
(GDP).
consumer spending declines
B)
business production increases
C)
the employment rate increases
D)
government regulations decrease
5. The Consumer Price Index (CPI) is best used to
determine
A)
the Dow Jones Index.
B) the rate of inflation.
C)
the unemployment rate.
D) currency exchange rates.
6. Which of these is the BEST definition of GDP?
a description of the quality of life
in a nation
average value of production of
B)
intermediate goods
a collection of all government assets that
C)
could earn money
market value of all goods and services produced in
D)
a country
A)
9. A period during which real GDP declines for two
quarters in a row, or six consecutive months, is
MOST LIKELY a
A)
peak.
B)
C)
recession.
recovery.
D)
trough.
10. Which of these is MOST LIKELY a result of a
high unemployment rate in the United States?
increased
revenues
increased demand for
B)
consumer goods
increased production of
C)
capital goods
greater government expenditures for transfer
D)
payments
A)
11. Which of these will have an effect on the GDP of
the country?
13. In the business cycle model, a recession is MOST
LIKELY
a turnaround point where the real GDP
stops going up.
a turnaround point where the real GDP
B)
stops going down.
a period during which the real GDP increases for
C)
quarters in a row.
a period during which the real GDP decreases for
D)
quarters in a row.
14. If the federal government runs an annual budget
deficit,
A)
they will have a budget
surplus.
Monty buys a Picasso
the national debt will
A)
B)
painting.
increase.
Lisa loses $20.00 in a bet
the national debt will
B)
C)
with Bart.
decrease.
Ned fixes Jay's car without buying
they will attain a balanced
C)
D)
any new parts.
budget.
The Shelbyville Whoopee Cushion company makes 1,000 to
D)
export to China.
12. Taxes are a form of government revenue. Which
of these is a tax source?
federal
grant
state
B)
lottery
personal
C)
income
public
D)
charities
A)
A)
15. In the graph, the year with the highest
unemployment rate is 1983. What was the
approximate unemployment rate in that year?
A)
5.9%
B)
8.5%
C)
9.6%
D)
10.2%
16.The process by which the Federal Reserve
controls the supply, availability, and cost of money
in order to keep the economy stable is
20. What would MOST LIKELY happen if the
Federal Reserve decided to increase the reserve
requirement in banks?
fiscal
policy.
monetary
B)
policy.
the interest
C)
rate.
the discount
D)
rate.
17. When the Federal Reserve sells government
securities on the open market, what effect does this
action have on the nation’s money supply and
interest rates?
The amount of federal taxes people owe
would decrease.
The amount of federal taxes people owe
B)
would increase.
The amount of money circulating in the economy
C)
would decrease.
The amount of money circulating in the economy
D)
would increase.
21. The Federal Reserve wants to increase the
money supply in the United States. What is the
Federal Reserve likely to do to accomplish this?
A)
Money Supply - Decreases / Interest Rates Increase
Money Supply - Increases / Interest
B)
Rates - Increase
Money Supply - Decreases / Interest Rates
C)
- Decrease
Money Supply - Increases / Interest Rates
D)
- Decrease
18. What is the name of the "central bank" of the
United States?
A)
Bank of the
U.S.
The Federal
B)
Reserve
U.S. Congressional
C)
Bank
The Federal Bank of
D)
America
19. Monetary policy is BEST described as
A)
A)
reduce the discount
rate
sell securities on the open
B)
market
increase the reserve requirement
C)
for banks
require banks to hold a reserve for all
D)
types of deposits
22. What consumer behavior is the Federal Reserve
Board trying to encourage when it implements a
loose monetary policy?
A)
increased saving and
spending
decreased saving and
B)
spending
increased saving and reduced
C)
spending
decreased saving and increased
D)
spending
23. What is a main goal of the Federal Reserve in its
monetary policy?
A)
benefits received by employees in addition to
wages and salaries.
lowering
A)
actions by the Federal Reserve System to expand or contracttaxes
the
B)
money supply.
to curb
B)
a system that relies on supply and demand to determine the recessions
value of one
C)
currency to another.
increasing government
C)
spending
actions by the federal government to use spending and revenue
collection to
D)
influence the economy.
regulation of the stock
D)
market
A)
24. The Federal Reserve System controls the size of
the
A)
B)
C)
D)
tax
supply.
money
supply.
demand
supply.
production
supply.
26. All of these represent
state
capitals.
cities with major
B)
ports.
U.S. Court of Appeals
C)
cities.
Federal Reserve System
D)
districts.
27. If the federal government wants to encourage
businesses and consumers to spend more money, it
would MOST LIKELY
A)
increase the tax
rate.
decrease the tax
B)
rate.
increase the reserve
C)
requirement.
decrease government spending on goods
D)
and services.
28. The process by which the government manages
spending and taxes to influence the direction of the
economy is
A)
tax
policy.
trade
B)
policy.
fiscal
C)
policy.
monetary
D)
policy.
29. Which of these is MOST LIKELY to occur after
the government increases taxes?
A)
The above chart represents the organization of the
Federal Reserve System.
25. Which of these correctly completes the chart?
Federal Reserve
Chairman
Federal Open Market
B)
Committee
President of the United
C)
States
Senate and House of
D)
Representatives
A)
·
Atlanta
· Boston
·
Clevelan
d
· Dallas
Annual deficits
increase.
The national debt
B)
increases.
Consumer spending
C)
decreases.
Government programs
D)
decrease
A)
30. Unemployment insurance, Welfare, Medicare,
Medicaid, and Social Security are key components
of
fiscal
policy.
monetary
B)
policy.
supply-side
C)
policy.
wage-price
D)
controls
31. Which action would be a change in the
government's fiscal policy?
A)
an increase in
taxes
a decrease in
B)
unemployment
a decrease in collected
C)
revenues
an increase in the price
D)
of goods
32. The leaders of a small country decide that they
need to enact a contractionary fiscal policy. Which
action is consistent with this fiscal policy?
A)
reduce
taxes
lower its
B)
discount rate
reduce government
C)
spending
lower the price of
D)
securities
33. Of the following taxes, what is the name for the
taxes that all homeowners must pay?
A)
Sales
Tax
Income
B)
Tax
Excise
C)
Tax
Property
D)
Tax
A)