Economic Concepts

Question 1

Congress controls taxation and spending

Answer 1

Fiscal Policy

Question 2

States that producers will supply more of an economic good the higher the price and visa-versa

Supply for a product will vary directly with its price.

Answer 2

The Law of Supply

Question 3

Swings in total national output, income and employment marked by widespread expansion or contraction in my sectors is known as….

Answer 3

Business Cycle

Question 4

The law of demand states that as price increases the quantity demanded will decrease and vice-versa.

Answer 4

The Law of Demand

Question 5

Federal Reserve controls money supply, influences lending rates. 3 Tools Fed can use…
1. Discount Rate (cost of borrowing)
2. Reserve Requirements
3. Open Market Activities (Buy or Sell Securities.

Answer 5

Monetary Policy

Question 6

Monetary Policy Tightening (Contractionary) Tools: Slows pace of growth…

Answer 6

Raise Discount Rate
Raise Reserve Requirements
Sell Securities to open market

Question 7

Monetary Policy Easing (Expansionary) Tools: Increases Growth…

Answer 7

Decrease Discount Rate
Decrease Reserve Requirements
Buy Securities in open market