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End of Quarter Economics Test

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  • Which number shows the economy is growing?
    4
  • Does increasing the discount rate fit with loose or tight money policy?
    Tight money policy
  • What is point 1 showing?
    Peak
  • The lowest point in the business cycle is called what?
    Trough
  • What happens to GDP when aggregate demand increases
    GDP increases.
  • Does decreasing the Federal Funds Rate fit with loose or tight money policy?
    Loose money policy
  • What is occurring in this picture?
    Aggregate Supply is increasing.
  • What are reserve requirements?
    The amount of money banks must keep at the Federal Reserve.
  • Loose or Tight Money Supply: Which do you want if you are facing rising unemployment and dropping GDP?
    Loose money policy.
  • What is occurring in this picture?
    Aggregate Supply is decreasing.
  • What are the main goals of the Federal Reserve?
    Have a strong economy with low inflation. Keep the money supply growing steadily.
  • What is point 4 showing?
    Expansion or Recovery
  • Is lowering the reserve requirements fitting with loose or tight money policy?
    Loose money policy
  • In the business cycle, what do we call contraction that lasts for 6 months or more?
    A Recession
  • What is point 3 showing?
    Trough
  • What is occurring in this picture?
    Aggregate Demand is decreasing.
  • What is point 2 showing?
    Contraction (it is also possible it is a Recession)
  • What is occurring if we have a loose money supply?
    The Federal Reserve is working to get more money into the economy.
  • Loose or Tight Money Supply: Which do you want if you are facing rising inflation?
    Tight money supply
  • What typically happens with inflation during a recession?
    It drops.
  • What typically occurs with GDP during a recession?
    It decreases.
  • What typically happens with unemployment during a recession?
    It increases.
  • Aggregate demand increases when what happens with the price level?
    The price level decreases.
  • What do we call the natural rise and fall of economic growth over time?
    Business Cycle
  • What is occurring in this picture?
    Aggregate demand is increasing.
  • At which number on the business cycle will you likely see unemployment dropping?
    4
  • Which number shows the economy is shrinking?
    2
  • Aggregate supply increases when what happens to the price level?
    It decreases.
  • What is occurring if we have a tight money supply?
    The Federal Reserve is taking measures to decrease the amount of money in the economy.
  • Define a recession.
    A period of two or more quarters where GDP is declining (You must mention GDP).
  • What is likely to occur with aggregate demand if consumers are confident the future looks bright?
    Aggregate demand will likely increase.
  • Define aggregate supply.
    The total amount of goods and services produced in a country in a specific time.
  • Define aggregate demand.
    Total demand for all goods and services in an economy at a specific time.
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