GDP/Business Cycle
This term refers to the total market value of all final goods and services produced within a country's borders in a specific time period.
Gross Domestic Product (GDP)
What is the term for a sustained increase in the general price level?
Inflation
What Type of Unemployment: A landscaper who cant find work in the winter.
Seasonal unemployment
Fiscal Policy is exclusively managed by these two branches of the federal government.
Congress and the President
Which entity is responsible for conducting monetary policy in the United States?
The Federal Reserve
In the business cycle, this is the point where economic activity reaches its maximum before starting to decline.
Peak
What measures inflation?
Consumer Price Index (CPI)
What type of unemployed would you be if you were in between jobs or looking for a job for the first time?
Frictional
What type of fiscal policy is Increasing government spending
expansionary fiscal policy
This tool is the percentage of deposits that banks are legally required to keep on hand (in the vault or at the Fed) rather than lending out.
Reserve Requirement
*Triple Play* What are the component of GDP?
Consumer spending, Investment spending, Government Spending, Next Exports
What is the term for a sustained decrease in the general price level of goods and services?
Deflation
The Government begins funding training programs to teach computer repair and website design to unemployed adults. Which kind of unemployment would this training help eliminate?
Structural
If the government wants to stop high inflation by using fiscal policy, what can they do?
Either increase taxes or cut government spending
In which situation might the Federal Reserve buy government securities or lower its discount rate?
In a recession.
What is the difference between nominal GDP and real GDP?
Real GDP is adjusted for inflation; nominal GDP is not
The Bureau of Labor Statistics calculates CPI by tracking the price changes of this figurative collection of about 80,000 goods and services bought by a typical household.
What is a Market Basket
A person gets fired due to a down turn (contraction) in the economy? What type of unemployed would they be?
Cyclical
If the government wanted to use fiscal policy to expand the economy, which action would congress take?
Increase government spending or Decrease Taxes.
This is the Fed’s most frequently used tool, involving the buying or selling of government bonds to increase or decrease the money supply.
Open Market Operations
During which phase of the business cycle is unemployment typically the highest?
Trough
While inflation hurts many, this specific group of people often benefits because they can pay back the money they owe with dollars that are worth less than when they originally borrowed them.
Who are Borrowers (or Debtors)
What is considered the natural rate of unemployment?
4-6%
This occurs in a single year when the government’s total spending exceeds the total tax revenue it collects.
Budget Deficit
*Double Play* The Federal Reserve system is made up of...
12 banks in different regions of the U.S. and the Federal Open Market Committee