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1 Name ____________________________ Test Date _________________________ Economics Unit 3 Study Guide: Macroeconomics John Maynard Keynes challenged the classical view of economics. What role did Keynes want the federal government to have in making economic policy? Labor unions provide what kind of services for employees? – sales tax -- vehicle sales tax -- fuel tax -- insurance tax All of the above raise revenues for what level of government? What is the name given to a tax levied on cigarettes, gasoline or alcohol? What are the three main goals of the U.S. government’s economic policy? What do economists call the policy (which goal) that encourages all factors of production to be used as efficiently as possible? What types of economic activities would be counted in GDP and contribute to economic growth? (examples) What are some common characteristics of an entrepreneur? What is the largest source of revenue for the national government? 2 The unemployment rate has risen to 9.7%. GDP is declining and so is the Consumer Price Index. It would appear the county is in a deep recession or early depression. What could the government do to stabilize the economy? Where in the Constitution is the authority given for the United States government to tax its citizens? What book most influenced the U.S. free enterprise system? What is the Congressional legislation (Act) that made it possible for states to pass right-to-work laws? What are the characteristics of an economic expansion? - defense - international aid - net interest - Medicare All of the above are categories of what type of expenditure (level of Gov.)? The federal government employs a ________________ policy during a recession which involves increasing spending or decreasing taxes, or a combination of the two. During a period of inflation, they use a ___________________ policy involves decrease government spending or increasing taxes, or a combination of the two. What is both an expenditure and a source of revenue? 3 Short Answers: Explain the three main economic goals and their indicators. Explain the theory of the Laffer Curve and it’s limitations. Explain the three main theories of fiscal policies and who are the main philosophers behind those theories.