Macroeconomics

Question 1

What is macroeconomics?

Answer 1

study of economics from the perspective of the country

Question 2

What does a circular flow model show?

Answer 2

Shows the inter-relationship of a large variety of factors in a national economy; a way to visualize the economic activity of a country.

Question 3

GDP formula

Answer 3

C + I + G + (Ex - Im)

Question 4

C

Answer 4

Private consumption

Question 5

I

Answer 5

Investment

Question 6

G

Answer 6

government spending

Question 7

Ex

Answer 7

exports sold

Question 8

Im

Answer 8

imports bought

Question 9

Prosperity = ?

Answer 9

Low Unemployment

Question 10

Inflation reduces/increases purchasing power

Answer 10

reduces

Question 11

Fiscal Policy

Answer 11

government spending and taxing decisions

Question 12

Monetary Policy

Answer 12

Control of money supply

Question 13

Regulatory Policy

Answer 13

Impact of regulations

Question 14

Foreign Trade Policy

Answer 14

Laws and Rules and Attitude

Question 15

Which letter in the GDP formula represents Fiscal Policy?

Answer 15

G

Question 16

Choices about spendings influences prosperity in which way?

Answer 16

industry will divert resources to meet govt. choices

Question 17

Choices about taxing will influence prosperity?

Answer 17

People seek to avoid taxes; taxes will diminish C

Question 18

How do choices about balancing the budget influence prosperity?

Answer 18

borrowing diverts investment
printing fuels inflation

Question 19

M0 –> M4 (liquid rate of change?)

Answer 19

high to low

Question 20

Two ways to create money

Answer 20

Mint printing
Bank loans

Question 21

Maximum Money formula (bank loan)

Answer 21

Bank Deposits/Reserve Requirement (%–>decimal)

Question 22

Monetary Policy in the US is controlled by?

Answer 22

FED (Federal Reserve Board)

Question 23

Dual Mandate?

Answer 23

Fight Inflation & Fight Unemployment

Question 24

Tools to Control Money Supply

Answer 24

Open Market Operations
Reserve Requirement Ratio
Discount Rate
Term Auction Facility
Interest on Bank Reserve Balances

Question 25

Nerfed Monetary Policy Tools

Answer 25

Reserve Requirement Ratio
Discount Rate
Term Auction Facility

Question 26

Cost Benefit Analysis?

Answer 26

Evaluating the costs and benefits of a regulation

Question 27

Tarrifs

Answer 27

a tax on goods and services imported into the country

Question 28

Taxes

Answer 28

mandatory payment

Question 29

Treaties

Answer 29

made between two foreign governments

Question 30

Indicators of Country’s Economic Prosperity?

Answer 30

GDP + Employment Rates

Question 31

What is Money?

Answer 31

Store of Value
Medium of Exchange
Accounting Element

Question 32

Reasons for Macroeconomics

Answer 32

Promote Prosperity
Avoid Decline

Question 33

Dominant policies in improving country’s economics?

Answer 33

Fiscal and Monetary Policy

Question 34

M0

Answer 34

Currency Notes + Coins + Bank Reserves

Question 35

M1

Answer 35

M0 + demand deposits (money in bank)

Question 36

M2

Answer 36

M1 + marketable services + other less liquid bank deposits

Question 37

M3

Answer 37

M2 + money market funds

Question 38

M4

Answer 38

M3 + least liquid assets

Question 39

Marketable Services

Answer 39

stocks (not very liquid)

Question 40

Revenue Bills and Budget Bills start where

Answer 40

House of Representatives