Unit 2 - Chapter 15

Question 1

Macroeconomics

Answer 1

Involves the study of the whole economy at the aggregate level.

Question 2

Ceteris paribus

Answer 2

Holding all other factors in the economy constant when examining one part of the economy.

Question 3

Free-market economists

Answer 3

Are also known as neo-classical economists

Question 4

Keynesian economists

Answer 4

Are the followers of the economist John Maynard Keynes.

Question 5

Depression

Answer 5

Long and deep recession.

Question 6

Recession

Answer 6

A period of negative economic growth lasting at least 6 months.

Question 7

Fiscal policy

Answer 7

The use of government spending and taxation to achieve the government’s policy objectives.

Question 8

Monetary policy

Answer 8

The use of interest rates to achieve the government’s policy objectives.

Question 9

Monetarism

Answer 9

The belief that as inflation is assumed to be caused by excessive growth of the money supply, monetary policy should be used to control its growth.

Question 10

Supply-side economics

Answer 10

A branch of free-market economics arguing that government policy should be used to improve the competitiveness and efficiency of markets.