Exam: 04.00 Getting Political Pre-Assessment – Flashcards
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Use this image to answer the following question. In the business cycle phase marked A, economists expect
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economic growth to slow down
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Which actions would the Federal Reserve most likely take to slow inflation?
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Raise reserve requirement and sell government securities
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To promote economic growth, countries would most likely act so that inflation
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Remains at a low level
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In the diagram above, what will happen if the government sets the price for Internet access at Point B?
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There will be a shortage of Internet access.
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How could government-sponsored grants for the private development of new technologies result in a lower national debt?
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Making initial development private saves the government from funding all of the research.
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This text appears on the economics page of the local newspaper. One of the sentences is incorrect. Which corrected sentence would make the passage accurate?
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... expand the money supply by lowering discount rates and reserve requirements.
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The economy is in a severe recession. The government should
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Increase Spending
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Sales of new homes increased each month of the last year. The economy is likely in
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Expansion
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The part of the Federal Reserve with the most impact on the money supply is the
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Federal Open Market Committee
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Unemployment is on the rise, though inflation is quite low. Gross Domestic Product is rising but more slowly than the goal rate. The Federal Reserve may buy government securities in open market operations in order to
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increase the money supply and encourage economic growth
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How does the government deal with a budget deficit?
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Increase taxes, sell bonds, and decrease spending
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Natural monopolies are
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products that one supplier can produce most efficiently
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Meetings of Federal Reserve officials occur in
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Washington D.C.
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What role does government regulation serve in business?
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Protect consumers and producers
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Concerned that the size of the federal debt is stifling economic growth, citizen groups encourage Congress to tackle the issue with meaningful reform to the federal budget. Which actions are most likely to accomplish this goal?
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Increase taxation and decrease spending
