Economics Unit 5 Answers

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The Federal Government’s attempt to stabilize the economy through taxing and government spending.
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Fiscal Policy
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A graph showing the amount of real GDP that could be produced at various price levels.
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Aggregate Supply Curve
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A regulation making it illegal for businesses to give workers raises or to raise prices without the explicit permission of the government
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Wage-price controls
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The total quantity of goods demanded at various price levels.
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Aggregate Demand
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The three-member group that reports on the economic developments to the president.
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Council of Economic Advisers
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The difference between the actual GDP and the potential GDP that could be produced if all resources were fully employed.
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GDP gap
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This theory includes actions to lower unemployment by stimulating aggregate demand
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Keynesian economics
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The emphasis on the role of money and its growth as a key to controlling inflation and unemployment.
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Monetarism
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A graph showing the quantity of real GDP that would be purchased at each possible price level.
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Aggregate demand curve
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The interest rate that the Fed charges on loans to financial institutions
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Discount rate
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The deposit a member bank keeps at the Fed.
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Member bank reserve
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Policy in which the Fed plans to allow the money supply to grow and interest rates to fall.
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Easy money policy
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This is the market rate of interest minus the rate of inflation.
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Real rate of interest
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The law giving the Fed authority to extend the truth- in-lending disclosures to people borrowing from corporations, retail stores, auto dealers and lending inst.
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Regulation Z
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This group advises the President on economic developments and strategy.
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Council of Economic Advisers
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Which type of economics would deregulation be most closely associated with?
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Supply-side economics
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The government is the only sector large enough to counter decreased investment spending is a statement of which type of economics
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Keynesian economics
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What effect will an increase in production costs have on aggregate supply?
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Decrease aggregate supply
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Which of the following can economist provide insight into using Aggregate supply and demand: employment, inflation, recession, or all ?
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All of the above
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One consequence of allowing an independent body to manage the nation’s monetary policy is that these policies are often criticized by __________
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Politicians
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Supply-side economics advocates ____________ government involvement in business.
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Reduced
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According to the Keynes’ theory of the multiplier- accelerator effect, what will a decline in investment spending lead to?
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Recessionary economic activity
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__________ __________ refers to expenditures, taxation, and borrowing made by a government to influence the economy.
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Fiscal policy
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A comprehensive measure of consumer discomfort during a period of rising inflation and high unemployment.
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Misery index
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Wages adjusted for inflation are know as?
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Real wages
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___________ are changes in the economy that shift the aggregate demand or supply curve.
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Determinants
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Raising personal income tax rates is reserved for the U.S. Congress to impact what?
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Fiscal policy
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Which part of the Federal Reserve decides whether to raise or lower interest rates to control money supply?
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Board of Governors
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Which of the following is M1: Money market funds, savings deposits, traveler’s checks and currency, or investment stocks?
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Traveler’s checks and currency
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The primary monetary policy making body of the Federal Reserve is?
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Federal Open Market Committee
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Unlike short-term politicians, the Federal Reserve employees are concerned with the _________-_______ health of the economy.
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Long-run
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If the Federal Reserve is buying bonds on the open market, what economic problem are they trying to correct?
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High Inflation
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The Board of Governors is made up of how many members to regulate and supervise the Federal Reserve?
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Seven
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12 District bank and regional member banks combine to make up the corporation known as?
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The Federal Reserve
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If the Federal Reserve raises the discount rate, or cost of borrowing, what will banks likely do?
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Raise their loan interest rates to borrowers

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