Chapter 15
True or False
Budget surpluses have no effect on the National Debt.
False
True/False
The Central Bank of America is the Bank of America.
False
True/False
Exports create additional jobs in the exporting country.
True
The main accomplishment of ___________________ was introducing the idea of using government action to stimulate aggregate demand.
John Maynard Keynes
The result of the government outbidding private bond interest rates is the __________________________.
crowding-out effect
Government spending and taxation are the two tools used in ____________.
Fiscal Policy
Federal Reserve operations that control monetary policy have two goals, ___________________ and ____________.
To control inflation/reduce economic stagnation or recession
As the value of the dollar decreases, ___________
increase and become _________ expensive.
imports/less
The Federal Reserve System 'creates' money for banks to lend by adjusting the _____________________.
required reserve ratio
The __________________________________ states that a small change in spending causes a larger change in GDP.
spending-multiplier effect
Unemployment insurance and food stamp programs are two examples of __________________________.
Automatic stabilizers.
The Federal Reserve System provides banking services to both the _____________________________ and ____________________.
Federal Government/ private banks
Protecting domestic jobs, infant industries and national security are all arguments for _________________ policies.
protectionist
When Monetary and Fiscal policies are not coordinated, the effects of those actions are _______________.
uncertain
The ____________________________ is the interest the Federal Reserve charges when it lends money to other banks.
discount rate
If the government wants to use an expansionary fiscal policy, they will ___________ government spending and ______________ taxation.
increase/decrease
Tight-money policy is another name for ___________
monetary policy.
Contractionary
Producing an item at a lower _______________ cost gives one nation a comparative advantage over other nations that produce the item at a higher ___________ cost.
opportunity/opportunity
As the value of the dollar ___________, imports increase and become more expensive, and exports become more expensive and decrease.
decreases
_______________________ is the ability of one trading nation to produce a good/service more efficiently than another nation.
Absolute advantage
National emergencies, the need for public goods and services, stabilization of the economy, and the role of government in society are the four main causes of ___________.
Deficit spending
Cash on hand, interest rates, level of income and the cost of consumer goods and services are the four factors affecting the _________________________.
demand for money
Embargoes, tariffs, quotas and voluntary export restraints are all examples of _________________.
trade barriers
When the Federal Reserve System sells bonds on the open market, raises the required reserve ratio or increases the discount rate they are using ___________________ policy.
contractionary monetary
__________________ is the sale of a good/service in another country at a lower price than it is sold in the home market.
Dumping