Gross Domestic Product
What is the equation of Gross Domestic Product?
Y=C+I+G+NX
What are the three types of unemployment?
Cyclical, Structural, and Frictional
What is the Federal Reserve?
The Central Bank of the United States
Who conducts fiscal policy?
Congress and the President
Name the four components of GDP
Consumption, Investment, Government, and Net Exports
What is seasonal unemployment?
A type of frictional unemployment due to change in weather or seasons
Who oversees the federal reserve and how are they picked?
Board of Governors - nominated by the president and confirmed by the senate
How is fiscal policy conducted?
Changing spending and taxation
What is the full definition of GDP?
U.S Dollar Value of all final goods and services produced within a country
Country A has 50 million people. 20 million people are employed. 10 million are currently looking for a job. 20 million people have given up looking for work. What is the unemployment rate?
33%
How does the Fed conduct monetary policy?
- Raising/Lowering Interest Rates
- Buying/Selling Bonds
What are the differences between fiscal and monetary policy?
Fiscal: Political; govt spending and taxation
Monetary: Politically independent; raising/lowering interest rates; buying/selling bonds
Country A has a few residents. Country A purchases $2 billion dollars for a new law enforcement building. The residents of Country A purchase a combined $1 billion dollars' worth of food and other items. Residents of Country A buy $3 billion of goods from Country B. Exports from Country A total $2 billion. Every business in Country A buys $5 billion new technology. What is the GDP of country A?
$7 billion
60%
District Bank Presidents and Board of Governors
19
Define deficit and surplus; how do both affect the national debt
Deficit: Spending exceeds income from taxes
Surplus: Income from taxes exceeds spending
Deficits can cause national debt to increase
Surpluses can cause national debt to decrease
What is an example of each component of GDP? be specific
Answers vary
What is an example of each type of unemployment?
Answers vary
Describe the three main roles of the Federal Reserve System?
- Conducting monetary policy
- Payment processing
- supervision and regulation
Describe both contractionary and expansionary fiscal policy What is each in response to and how is it conducted?
Expansionary: in response to recession; increasing spending and lowering taxes
Contractionary: In response to inflation; decreasing spending and raising taxes