Govt Spending & Net Exports
Define import
Something made somewhere else and purchased here.
Define inflation
The tendency for money to lose value over time
Expansionary monetary policy fights what problem in an economy?
Unemployment
Who decides fiscal policy in the United States?
Congress
What is the state bird of Kansas?
The Western Meadowlark
What is a benefit of having positive net exports?
Larger GDP
More valuable currency (relative strength)
Typically speaking, if unemployment goes down, what will happen to inflation?
It will go up
Contractionary monetary policy fights what problem in an economy?
Inflation
If the government passed a bill that spent more money on public schools, what type of fiscal policy would that be?
Expansionary fiscal policy
What is the chemical symbol for gold?
Au
What is a public good?
Something that can be used by everyone, but owned by no one.
Why can't inflation ever stay at 0%?
Because governments promote a little inflation as a good thing.
What is the primary role of the Federal Reserve?
To set monetary policy.
Give an example of a fiscal policy that would lower unemployment.
Increase government spending
Or
Decrease taxes
How many provinces does Canada have?
10
What is a benefit of having negative net exports?
More consumer choice
More specialized economy
Why can't unemployment ever be at 0%?
Because of the natural unemployment rate (structural and frictional unemployment)
What are the three ways that the federal reserve sets monetary policy?
The discount rate
Open Market Operations (OMO)
Reserve Requirements
Give an example of fiscal policy that would reduce inflation
Raising taxes
Or
Lowering government spending
What team does LeBron James play on today?
The Lakers
What is the role of the government in the circular flow model?
To keep things running smoothly.
Why do governments tend to prefer inflation over deflation?
The government can use contractionary policies to lower inflation, but it doesn't have good tools for fixing deflation.
What are the three functions of money?
Medium of Exchange
Unit of Account
Store of Value
Give an example of an externality of fiscal policy
They can be politically motivated
Or
They can be very slow to react to a problem
What is the national flower of Scotland?
The thistle