Introduction to Economics quiz #2 Flashcards
Introduction to Economics quiz #2
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If a country has Y > C + I + G, then it has what kind of balance? If a country has Y > C + I + G, it has a trade surplus (exports exceed imports). Keynesian economics advocates what kind of government action during recessions? Keynesian economics advocates increased government spending and lower taxes during recessions to boost demand. Which one of the following is not true when the economy is in macroeconomic equilibrium: aggregate demand equals aggregate supply, all resources are fully employed, or inflation is zero? It is not true that inflation is zero when the economy is in macroeconomic equilibrium. Typically, high inflation is a sign of what in the economy? Typically, high inflation is a sign of an overheating or rapidly growing economy. Consumption, investment, government spending, exports, and imports are components of what? Consumption, investment, government spending, exports, and imports are components of aggregate demand. Typically, low inflation is a sign of what in the economy? Typically, low inflation is a sign of a stable or slowly growing economy. When nations desire a healthy macroeconomy, they typically focus on three goals. One of these is what? One goal is low unemployment (the others are stable prices and economic growth). A country will roughly double its GDP in twenty years if its annual growth rate is approximately what percent? A country will double its GDP in twenty years if its annual growth rate is about 3.5%. Typically, low inflation is a sign of what in the economy? Typically, low inflation is a sign of economic stability. What is the APUSH definition of Keynesian economics? Keynesian economics is the theory that government intervention can stabilize the economy through fiscal and monetary policy. The aim of the study of macroeconomics is to examine what? The aim of macroeconomics is to examine the overall performance and structure of the economy. When the economy of a country is operating close to its full capacity, what is likely to happen? When operating close to full capacity, the economy may experience inflationary pressures. What type of economy does the US have? The US has a mixed economy. With regard to the economy, the term 'negative inflation' is synonymous with which of the following? Negative inflation is synonymous with deflation. What does a declining national debt indicate? A declining national debt indicates that the government is running budget surpluses or reducing its deficits. When the US dollar becomes weaker, which of the following is true? When the US dollar becomes weaker, US exports become cheaper for foreign buyers. Why do business cycle fluctuations typically arise? Business cycle fluctuations arise due to changes in aggregate demand and supply, shocks, and policy changes. In macroeconomics, an aggregate is a collection of which of the following? An aggregate is a collection of individual economic units combined into a whole, such as total output or total spending. What is the result of an increase in the money supply? An increase in the money supply can lead to higher inflation and lower interest rates. When the central bank lowers the reserve requirement on deposits, what is the likely effect? Lowering the reserve requirement increases the money supply and can stimulate economic activity. Deflation occurs when there is a decline in what? Deflation occurs when there is a decline in the general price level of goods and services. The three major economic centers of the world are which regions? The three major economic centers are North America, Europe, and Asia. The U.S. economy is now driven by which sector? The U.S. economy is now driven by the service sector. A decrease in government spending will cause a(n) what in aggregate demand? A decrease in government spending will cause a decrease in aggregate demand. In a macroeconomic context, what are implicit liabilities? Implicit liabilities are future obligations, such as promised government benefits, not yet reflected in the national debt. Overall, what measures the overall size and health of an economy? Gross Domestic Product (GDP) measures the overall size and health of an economy. A major advantage of the built-in or automatic stabilizers is that they do what? Automatic stabilizers help smooth out fluctuations in the economy without new government action. Which describes the role of automatic stabilizers in the economy? Automatic stabilizers reduce the impact of economic fluctuations by adjusting taxes and spending automatically. An increase in government spending with no change in taxes leads to a what in aggregate demand? An increase in government spending with no change in taxes leads to an increase in aggregate demand. If an economy experiences deflation, then what happens to the general price level? If an economy experiences deflation, the general price level falls. Macroeconomic topics do not usually include which of the following: the price of a specific good, national unemployment, or inflation? Macroeconomic topics do not usually include the price of a specific good. An unexpected increase in total spending will cause an increase in what? An unexpected increase in total spending will cause an increase in GDP. Aggregate output is the primary measure of what in the economy? Aggregate output is the primary measure of the economy's total production.
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