Fiscal Policy And The Exonomy Flashcards
The goal of _______ policy is to maintain steady, healthy economic growth.
Fiscal
The GDP grows every year following a long-term growth path of about _____% annual growth.
3%
The last recessions in the last several years were in ________, ________, and the most serious ________-________.
1990
2001
2007-2009
The recession of 1990-1991 lasted 8 months and GDP dropped by ______%
1.3%
Which recession was one of the weakest in US history?
Recession of 2001
The recession of 2001 lasted 8 months and the GDP dropped by ______%
1/4%
What was the most serious recession we’ve had since the depression?
2007-2009 recession
The recession of 2007-2009 lasted 18 months and saw the GDP drop by ______%
4.2%
Who tracks, identifies, and dates recessions in the US?
National Bureau of Economic Research (NBER)
What does not usually rise the same time the recession starts?
Unemployment
What tends to occur after a recession has already begun?
Layoffs
Workers become more _________ after some layoffs have shifted more work to the remaining staff.
Efficient
When the same amount of workers can produce more output, we refer to that as an increase in what?
Productivity
When a recession ends the increase in productivity of the existing workers can handle the increasing demand and business don’t need to hire right away. This is why unemployment is considered what?
A lagging indicator of recessions
What changes don’t mark the starting and ending dates of a recession because they lag the changes in GDP?
Unemployment
Prior to the depression the accepted rule in the economic community was to leave the economy ________ and it would correct ________.
Alone
Itself
Leave the economy alone and it would correct itself is called what?
Laissez-faire
Followers of John Maynard Keynes said that when an economic downturn begins, it will what?
Spiral
Keynesian suggestion was to replace the dwindling private sector spending with what?
Public sector spending
The Works Progress Administration (WPA) was created by whom?
Roosevelt Administration
What provided jobs for unemployed workers and also gave society much needed public goods?
Works Progress Administration (WPA)
To pay all the Work Progress Administration (WPA) workers the government had to __________ the money.
Borrow
The idea behind borrowed money is that the _______ from the additional income would pay off the ______ generated to jump start the economy.
Taxes
Debt
The US providing guns, ships and tanks to allies in Europe during WWII got the economy out of the what?
Depression
When there is too much spending, ___________ begins to build.
Inflation
Increasing demand to fight unemployment is called what?
Expansionary fiscal policy
Reducing demand to fight inflation is called what?
Contractionary fiscal policy
By the time the problem is recognized, a bill is passed, and spending begins the recessions could be over. This illustrates what problem with fiscal policy?
Timing problem
A second problem in fiscal policy is when federal spending rises, local spending drops so net spending stays the same. This is what problem in fiscal policy?
A political problem
Public spending may use the workers and capital that would have been used to build private investment. This third problem in fiscal policy is known as?
Crowding out effect
When the GDP falls or increases, key economic indicators such as unemployment do not change at the same time GDP does. This is known as a what?
Lagging indicator
A drop in the GDP for at least two quarters that don’t need to be consecutive is considered a what?
Recession
What measures the output per resource input?
Productivity
A budget that is balanced over the economic or business cycle is what?
Cyclically balanced budget
What budget related incident may occur during a recession?
Budget deficit
