Fiscal Policy
The entities that conduct fiscal policy
Who are Congress and the President?
The organization that conducts monetary policy
What is the FOMC, or the Open Market Committee?
What a country has when it can produce more of a good with a given amount of resources
What is absolute advantage?
The value of exports minus the value of imports
What is the trade balance (or net exports)?
A general increase in prices in an economy
What is inflation?
Contractionary fiscal policy is rarely used because it is __________________
What is politically unpopular?
The tool that monetary policy adjusts
What is the interest rate?
When a country has the comparative advantage it has this
What is the lower opportunity cost?
When the value of imports exceeds the value of exports
What is a trade deficit?
Expansionary policy can be compared to stepping on this in a car
What is the gas or the accelerator?
The most famous proponent of fiscal policy
Who is John Maynard Keynes?
The parts of GDP that monetary policy affects
What are investment and consumer spending?
If Oceania has the comparative advantage in producing glasses but not windows, which good should it export?
What is glasses?
This leads to gains from trade.
What is specialization?
The historical event that spawned the idea of fiscal policy
What is the Great Depression?
If unemployment is high, an appropriate expansionary fiscal policy choice would be this.
What is increasing government spending or decreasing taxes?
With high inflation, this would be the appropriate monetary policy choice.
What is raise interest rates?
If two countries can both produce the same amount of a good with the same resources, who has the absolute advantage?
What is neither?
He developed the theory of comparative advantage
Who is David Ricardo?
One part of the Fed's dual mandate is price stability. What is the other?
What is maximum employment?
The size of the U.S. national debt
What is $31 trilliion?
One of the issues with monetary policy is time lags. The other is this.
What is the fact that the FOMC members are not elected?
If two countries specialize based on their comparative advantage, and then trade, where will they be on their production possibilities curve?
What is beyond the frontier?
The 3 major U.S. trading partners
What are Canada, Mexico, and China?
The sum of all prior budget deficits and surpluses
What is the national debt?