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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?
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
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?
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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.