economics quiz 1 Flashcards
what are the 4 stages of the business cycle
depression, recovery, prosperity, recession
what is laissez-fair
belief that government should keep their hands off the economy and let the individuals make the decisions
whats the theory of ‘the invisible hand’
that the market naturally self-regulates as when individuals pursue their own interests/make their own decisions in self-interest, it overall benefits society/economy in general
Whats John Maynard Keynes’s economic theory
economy moves in peaks and valleys and that the government should help to level these out in order to create a smooth economy
whats the fiscal policy during recessions and depressions
to reduce taxes and increase government spending
whats the monetary policy during recession and depression
lower interest rates
What is the fiscal policy during property and recovery
increase taxes and decrease government spending
whats the monetary policy during prosperity and recovery
increase interest rates
what are the two main types of government intervention during the business cycle
fiscal policy and monetary policy
whats the major problem of the free market economy
instability
what happens in depression
rising unemployment, decrease in consumer buying power
what happens in recovery
prices rise faster then costs, increase in production, increased imployement opportunities, new consumer demands, increased investment
what happens in prosperity
rise in production
what happens during recession
price and profits drop, production decreases, workers laid off, financial panic, people start to save money, production drops, factories shut down
define fiscal policy
the use of government spending and taxation to influence the economy
define monetary policy
actions to influence the economy by controlling a nation’s money supply through interest rates
what was Rosevelt economic belief
you must spend money to make money and that by giving people they will spend it so eventually factories will produce again
what was the purpose of the New Deal
alleviate the economic crisis created by the great depression
what were the promises/programs of the New Deal (9)
emergency banking relief act, civilian Conservation Corps act, cultural adjustment act, Tennessee Valley Authority Act, national. employment system act, homeowners refinancing act, Glass-Steagall act, Farm Credit Act, National Industrial Recovery Act
what happened in 1918
ww1 ended
what happened in October 1929
stock market crashed and the great depression began
what was the 1930s called and why
dirty 30s because of the great depression
How many Americans were unemployed in the 1930s
25%
what was the purpose of the Emergency Banking Relief Act
protect banking systems from collapse
what was the purpose of the Civilian Conservation Corps Act
to provide work opportunities for the jobless
what was the purpose of the Cultural Adjustment Act
control surplus agricultural production through price supports and subsidies
what was the purpose of the Tennesse Valley Authority Act
to establish government agencies to promote economic development of the Tennesee Valley region
what was the purpose of the National Employment System Act
establish a national employment system
what was the purpose of the Homeowners Refinancing Act
to provide loans and mortgages to homeowners
what was the purpose of the Glass-Steagall act
regulate banking industry
what was the purpose of the Farm Credit Act
provide short and medium-term loans to farmers for production and marketing
what was the purpose of the NATIONAL INDUSTRIAL RECOVERY ACT
Revive industrial activity and reduce unemployment through government regulations
when did FDR take office and what did he promise
1933 with the promise of a new deal
what else did President FDR do
abolished prohibition
