Quiz 3-5 Flashcards
What is a IQ ?
Import quotas
What does GDP stand for ?
Gross Domestic Product
What is V.E.R ?
Voluntary Export Restraints
If a GDP falls for 2 consecutive quarters, its called a what ?
Recession
Trade war
Escalating trade barriers
Name three durable goods in your home
Fridge, table, couch etc
Explain, in detail, what fracking is
It produces light crud, receiving oil from the ground with machines
M1 or M2 liquid assest
M1
M1 or M2 demand account
M1
M1 or M2 savings account
M2
M1 or M2 CD
M2
Name two reasons a country may devalue their currency
Increase exports and increase domestic spending
Name three things that might happen if a country devalues their currency
Increase unemployment
Slow economy
Growing debt payment
Decrease imports
How far apart should a expenditure approach and income approach be in discovering GDP
0%
Name the four parts of the business cycle
Expansion
Peak
Contraction
Trough
How does the government make more money ?
Taxation
tariffs
(Income tax)
What are intermediate goods ?
Materials used to make the final product
What happens to job growth in a recession ?
Unemployment increases
Who’s interest does the business have as a top priority ?
Shareholders
What happens to unemployment during a recession ?
Its increases
What happens to a business in a recession ?
Stop buying products, business could go out of business
Define Tariff
Tax on foreign goods
What are the three trade barriers we discussed in class ?
Import quotas: only so much product can come in
Voluntary export restrictions: only so much product can go out
Tariffs: a tax on foreign goods
What Economic System is the Parable of the Vineyard ?
Communism
What is a Trade Imbalance ?
When a nation puts out so much product, but brings a smaller amounts of imports (vice versa)
Why did Fracking become affordable ?
Fracking became affordable because gas price rose
In a free market economy you have periods of ________ and ____________
Surplus
Deficit
Name three reasons for Import Quotas
Protect U.S. manufacturing
Protect consumers
Protect prices
When unemployment is below 4%-5% it is effectively considered what ?
Full employment
Name three things that may cause inflation
Devaluing currency
A shortage
Raising minimum wage
Are we on the Gold Standard or on the Floating Exchange Rate (Floating Dollar) ?
Floating Dollar
Define Money Manipulation
Devaluing a currency on purpose to get around the tariff
A benefit for devaluing a country’s currency
Increasing exports
Increasing domestic spending
Costs for devaluing a country’s currency
Slow economy
Increasing unemployment rate
Increasing debt payments
Inflation
What is the name of Chinese currency ?
Yuan
Which of the following is not possible long-term negative impact on a nation’s economy if they devalue their currency ?
Lower debt payments
Which of the following is a short-term positive impact on a nation’s economy of they devalue their currency
Increased domestic spending on domestic goods
What are three positive things that may happen after a natural disaster ?
Employment rate
Government aid
Money from insurance
What are three negative things that may happen during/after a natural disaster ?
Business closes
Unemployment rates go up
Loss of assets
Define Shareholder
A owner of stock
Define Stakeholder
A person of interest or concern with something, especially a business
How might our government reduce spending ?
Military reduction and stopping infrastructure
Name three ways a Wal-Mart type of store may hurt a local economy
Have other stores go out of business
Keep paying at a cheaper price
Taking more product from other companies
Name three ways a Wal-Mart type of store may help a local economy
It’s well know
Helps get jobs
Cheaper prices
Why do we have issues today with China as a trade partner ? Name three things
Devalue currency
To much imports
Steal our technology
Do most countries carry external debt ?
Yes
What is the desired outcome of our trade war with China ?
We will have more of a trade imbalance
GDP is the, “dollar value of all final __________ and _________ produced within a country’s borders in a given year
Goods and services
Does GDP include intermediate goods ?
No
Would GDP include cars made in Ohio by a company owned by a Japanese company ?
Yes
Would GDP include cars made in Brazil by an American owned company ?
No
Your neighbor bought a brand new house in 2010. He was transferred to a new job in Georgia so he sold his house last week. Would this be included in the US GDP for this year ?
No
In the above scenario, would the fee paid to the real estate agent who handled the resale of the house last week be counted in this year’s GDP ?
Yes
You hired a contractor to build a new home for you today. Would the lumber, nails, shingles, windows, and doors be included in this year’s GDP ?
No
In question #8, would the sale of the home be included in this year’s GDP ?
Yes
When comparing the “Expenditure Approach” and the “Income Approach” for figuring out the GDP, should they give us the same total or very different totals ?
The same total
Examples of durable goods
Stove Car Refrigerator Play Stations Computer Lazy Boy Chair
Examples of nondurable goods
Blue jeans
Green beans
Air Jordan’s
Does measuring the GDP help determine how well the economy is doing ?
Yes
An economy is said to be in recession when GDP falls for how many consecutive quarters ?
Two consecutive quarters
Does rising unemployment typically happen during periods of recession ?
Yes
Does rising interest rates cause job growth to shrink or expand ?
Shrink
Before we were on the “Floating Dollar” the U.S. had its mien backed by what valuable item ?
Gold
When a country devalues its currency, do they typically see an increase or decrease in exports ?
Increase
When a country devalues its currency, will their economy typically slow or grow in the long term ?
Slow
What is the different we discussed in class between a Charge Card (like American Express) and a Visa card ?
Charge Card is 100% payed off monthly
Visa Card is when you have to pay back with interest
What is a real estate appraisal ?
Estimation of value
If you were approved for a secured loan, you may have to give some kin doc collateral. What is a collateral ?
Something you can secure a loan
Example- collateral on your house loan, you us you house
If you default on a secured loan, they may _______________ your collateral
repossess
What is P and I ?
Principle and interest
If GDP decreases for ________ consecutive months, it is called a _____________
Six
Recession
If your bank need a temporary loan, they would get that loan from the _____________ Bank
Central
If Rason’s Smelly Shoe Company had a record year in sales, Name there things we discussed in class they may do with their profits
Expansion
More employees
More product
____________ is King (Economically speaking)
Cash
The greater the Risk the greater the potential ___________
Reward
If you have lack of cash to pay you bills, you are cash ________
Poor
The Federal Reserve Bank is also known as the ________
The Fed
Who issues credit cards ?
Banks
When you use a Visa debit card, do you pay a bill at the end of the month or do funds automatically come out of your checking account at the time of the transaction ?
Funds automatically come out of your checking account at the time of the transaction
Is M1 money considered Liquid Assets or Fixed Assets ?
Liquid Assets
Which typically has higher interest Checking accounts or Savings account ?
Savings
Checking accounts are considered demand accounts, certificate account, savings accounts, or money market
Demand accounts
Name a savings instrument that can be either short or long term, that earns interest, that has a penalty if you pull money out before its maturity date, and which typically locks in an interest rate
CD
Who sets the rate which banks loan each other money
The Fed
If you knowingly write checks without having the funds in the account, you may be guy of ________ _________
Check fraud
Example: Basically jail time
The price paid for the use of borrowed money
Interest
A paper currency issued during the Civil War
Greenback
The ability to be used as, or directly converted into, cash
Liquidity
Money in a checking account that can be paid out “on demand”
Demand deposit
Objects that have value because the government has decreed that they are an acceptable means to pay debts
Fiat money
Failing to pay back a loan
Default
An institution for receiving, keeping, and lending money
Bank
A card used to withdraw money from a bank account
Debt card
Coins and paper bills used as money
Currency
A widespread panic in which many people try to redeem their paper money at the same time
Bank run
A monetary system in which paper money and coins had the value of certain amounts of gold
Gold standard
The seizure of property from the borrowers who don’t repay their loans
Foreclosure
A banking system thats keeps only a fraction of its funds on hand and lends out the remainder
Fractional Reserve Banking
A bank that belongs to the Federal Reserve System
Member bank
The direct exchange of one set of goods or services for another
Barter
All the money available in the US economy
Money supply
A bank that can lend to other banks in time of need
Central bank
A specific type of loan that is used to buy real estate
Mortgage
The amount of money borrowed
Principle
Anything that serves a a medium of exchange, a unit of account, and a store of value
Money
A card entitling its owner to buy goods and services based on the owner’s promise to pay for those goods and services
Credit Card
A person or institution to whom money is owned
Creditor
The amount the bank must keep inside the vaults
Reserve Ratio
