The government's use of fiscal policy to reign in inflation or stimulate a recession is accomplished by changing either ______ or _______.
- Money supply or interest rates
- Government spending or taxes
- Interest rates or government spending
- Taxes or the money supply

Mainstream economists believe that the economy is not always self-correcting and requires government intervention to either stimulate the economy out of a recession or reign in inflation. Which is an example of expansionary fiscal policy?
- Additional government spending
- Increasing taxes
- Decreasing interest rates
- Increasing the money supply

The government often implements a change within the tax rate to either stimulate an economic downturn or curb inflation. What component in the GDP growth equation is directly effected by a tax cut (fiscal stimulus)?
- Consumption (C)
- Investment (I)
- Only government spending is affected (G)
- Net exports (X - M)

The formula for the unemployment rate is
- One divided by the consumption rate
- Number or unemployed people divided by labor force
- One divided by the reserve ratio
- Number of employed people divided by total population

The Classical economists believed that:
- The economy is self-correcting
- The economy needs fiscal or monetary stimulus to recover from a recession
- The economic cycle depends on the phases of the moon
- The 56 Chevy is the best classic car ever built

No two recessionary patterns are alike. A V-shaped recessionary dip in the business cycle indicates a ______. A U-shaped dip signals a ______.
- Short recovery before entering a second recession; Recession that can last for years at a time with little change
- Short and deep recession; Shallow or deep recession that lasts longer than usual

Consumer theory, production theory, and market price equilibrium are all areas of analysis in
- Macroeconomics
- Microeconomics

Microeconomics deals with the much larger picture of how national economies and the broader global economy perform. In contrast, macroeconomics deals with the individual markets and consumers that make up the economy.
- True
- False

Supply side economics promises to:
- Lower taxes to lower the budget deficit
- Raise taxes to lower the budget deficit
- Lower taxes to increase the budget deficit
- Raise taxes to increase the budget deficit

The difference between actual and potential GDP is known as ______. It measures the total ouptut an economy sacrifices when it does not use its resources efficiently and to its full productive potential.
- An inflationary gap
- A recessionary gap
- Opportunity cost

An adjustable rate mortgage would only prove advantageous over a fixed rate mortgage if
- The fixed rate mortgage was higher
- The inflation rate rose
- The inflation rate remained stable
- The fixed rate mortgage was lowered

A flatter long-term growth trend line signals a
- Constant growth in real GDP over time
- Rapid growth in nominal GDP
- Slower growth in real GDP

If the government wants to use fiscal policy to stimulate the economy, it will:
- Increase government spending and cut taxes
- Increase government spending and increase taxes
- Cut government spending and raise taxes
- Cut government spending and cut taxes

Which type of inflation index measures changes in the cost of important raw materials?
- The PPI
- The CPI
- The FBI

If actual output is above potential output, we run the risk of:
- Inflation
- Recession
- Stagflation
- Armageddon

The government's use of fiscal policy to reign in inflation or stim...