Unit 3 Economics Test Answers – Flashcards
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GDP
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The total dollar amount of all final goods and services produced within a country's boarders
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Recession
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Decline in the real GDP
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Business cycle
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Systematic changes in the real GDP marked by alternating periods of expansion and contraction
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Expansion
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Period of growth in GDP
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Fiscal policy
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Policies involving government spending and taxes
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Keynesian economics
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The use of fiscal policy to help grow the economy
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Automatic stabilizers
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Programs that automatically trigger benefits as soon as you qualify due to a downturn in your personal economic life
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Economic indicators
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Statistics used to measure current conditions as well as to forecast financial or economic trends
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Leading
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Measurable economic factor that changes before the economy starts to follow a pattern
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Coincident
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Economic factor that varies directly and simultaneously with the business cycle
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Lagging
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Measurable economic factor that changes after the economy has already begun to follow a particular pattern
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Inflation
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The overall increase in prices
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Consumer price index
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How people measure inflation
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Demand pull
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Increase in demand, but not an increase in supply, causing prices to rise
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Cost push
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Rising production costs push businesses to raise the price of their goods
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Unemployed
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People available for work who made a specific effort to find a job
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Unemployment rate
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The number of unemployed people divided by the total number of persons in the civilian workforce
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Frictional unemployment
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Caused by personal problems such as being fired
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Structural unemployment
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Job is eliminated because it is obsolete. Think technology.
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Cyclical unemployment
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Related to swings in the economy
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Seasonal unemployment
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Caused by regular changed in demand throughout the year
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Monetary policy
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Controlling the expansion/contraction of the money supply to influence the cost and availability of credit
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Reserve requirements
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Banks are not aloud to lend out all their money
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Open market operations
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Method used by the FED to change the amount of money in the economy
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Federals fund rate
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The rate that banks pay when they borrow from other banks
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Discount rate
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The rate that banks pay when they borrow from the FED
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Prime rate
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The interest rate that banks lend to the most credit worthy customers
