Economics

Question 1

Fiscal Policy

Answer 1

Federal taxation and spending designed to level out business cycle, achieve full employment, price stability, and sustained economic growth.

Question 2

Monetary Policy

Answer 2

Action taken by Federal Reserve to influence the money supply

Tools: Reserve Requirements, Discount Rate, Open Market Operations

Question 3

Leading Economic Indicators

Answer 3

• Initial claims for unemployment
• New manufacturing Orders
• New private housing units
• S&P 500
• Index of consumer expectations

Question 4

Coincident Indicator

Answer 4

Industrial Production

Question 5

Recession vs Depression

Answer 5

2 quarters of decline in real GDP vs 6 quarters of decline

Question 6

CPI

Answer 6

Consumer Priced Index

Market Basket of selected good and services

Question 7

PPI

Answer 7

Producer Priced Index

Index of price of various items such as farm products and industrial commodities

Leading indicator of inflation

Question 8

Business Cycle

Answer 8

Expansion - Peak - Recession/Contraction - Trough - Recovery/Expansion

Question 9

Durable Goods

Answer 9

Cyclical

Items which do not wear out quickly

Question 10

Nondurable Goods

Answer 10

Defensive

Items which are consumed quickly

Question 11

Deflation vs Disinflation

Answer 11

Deflation is declining price vs Disinflation is deceleration of price of good and services