The Economy: Show Me The Money

Question 1

Business cycle

Answer 1

Fluctuations between expansion & recession which is a part of modern capitalist economies

Question 2

Two types of state involvement in the economy

Answer 2

• laissez-faire: “hands-off”, allows to go free

- interventionist state

Question 3

What type of proach does the national gov’t have?

Answer 3

A mixed

Question 4

Economic conditions

Answer 4

• inflation
• economic stability
• recession

Question 5

Inflation (too hot)

Answer 5

A rise in the general price levels of the economy

Question 6

Economic stability (just right)

Answer 6

A situation in which there is economic growth, rising national income, high employment, & steadiness in the general level of prices

Question 7

Recession (too cold)

Answer 7

A short-term decliné in the economy that occurs as investment sags, production falls off, and unemployment increases

Question 8

2 types of governmental economic policy

Answer 8

• fiscal policy

- monetary policy

Question 9

Fiscal policy

Answer 9

-federal gov’t policies on taxes, spending & debt management

Question 10

Who controls fiscal policy

Answer 10

Congress & president control fiscal policy

Question 11

3 types of taxes

Answer 11

• progressive: more $ you make, the higher the % you pay
• regressive: more $ you make, the lower the % you pay
• flat: everyone pays the same rate

Question 12

16th amendment

Answer 12

Allows congress to collect income tax

Question 13

What is the average rate an American pay ?

Answer 13

35-40%

Question 14

Budget terms

Answer 14

• deficit: spend more money then you have
• surplus:more more money
• balance budget: an equal budget; spend equal amount
• debt: all the deficits added together

U.S. debt = $21 trillion

Question 15

Which country is in the most debt?

Answer 15

China

Question 16

Federal budget 2916 (estimated)

Answer 16

• revenue: $3.3 trillion

- expenditures: $4 trillion

Question 17

Monetary policy

Answer 17

-federal gov’t policy regulating the notions money supply & interest rates

Question 18

The Federal Reserve System

Answer 18

-independent agency created in 1913 to regulate monetary policies. Controlled by the federal reserves board (a.k.a the “Fed”) made of 7 members who serve for 14 yrs. Members are nominated by the president & confirmed by the senate. Lead by a chairman appointed for 4 years

Question 19

3 methods the “Fed” controls monetary policies

Answer 19

• reserve requirements: control the banks
• discount rate: interest rate which Fed charges the bank
• open market operations: sell & buy T-bills

Question 20

Consumer Price Index (CPI)

Answer 20

An index measuring inflation

Question 21

Outsourcing

Answer 21

Migration of drives to an external provider

Question 22

Off-shoring

Answer 22

Out sourcing to a different nation in order to take advantage of lower labor costs

Question 23

Gross Domestic Product (GDP)

Answer 23

Total market value of all final goods& services produced in a country on a given year. GDP for the U.S. in 2017 was $19.4 trillion

Question 24

Dow Jones index

Answer 24

Index at the total weighted value of 30 blue chips stocks

Question 25

How much is Dow Jones worth ?

Answer 25

25000 points