Economic Policy

Question 1

The measure of the total value of economic activity in a nation in one year

Answer 1

Gross Domestic Product (GDP)

Question 2

A slowdown in economic activity, officially defined as a decline that persists for two quarters

Answer 2

Recession

Question 3

The amount by which ANNUAL SPENDING exceeds TAX REVENUE

Answer 3

Defecit

Question 4

The amount by which ANNUAL TAX REVENUE exceeds SPENDING

Answer 4

Surplus

Question 5

John Maynard Keynes believed that governments can control the economy by manipulating demand; running deficits to expand it and surpluses to contract it

Answer 5

Keynesianism

Question 6

The accumulation of yearly deficits

Answer 6

Debt

Question 7

Which country in the world spends the most money?

Answer 7

United States

Question 8

A sustained rise in the price level such that people need more money to purchase the amount of goods and services

Answer 8

Inflation

Question 9

-The governing board of the country’s central bank
-Buys and sells federal securities (treasury bills & bonds)
-Sets the interest rate that all banks pay
-Sets the percentage of deposits that banks are required to hold in reserve

Answer 9

Federal Reserve Board

Question 10

Three economists who head up a professional staff that advises the presidents on economic policy

Answer 10

Council of Economic Advisors