Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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1.
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A business cycle…
a. | occurs every five years. | c. | leads to a
depression. | b. | includes four phases. | d. | reaches a high point called a trough. |
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2.
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At the start of the 1980s, the U.S. economy experienced a(n)…
a. | depression. | c. | recession. | b. | expansion. | d. | trough. |
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3.
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The consumers who would most likely benefit from inflation would be those
who…
a. | are about to apply for a real estate loan. | b. | are retired on a
fixed income. | c. | have most of their money in a savings account. | d. | have previously
borrowed money at a low fixed interest rate. |
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4.
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Consumer attitudes, new technology, and government spending are examples of
factors that…
a. | are directly reflected in the Consumer Price index. | b. | are tracked by the
Bureau of Labor Statistics. | c. | can trigger economic ups and
downs. | d. | tend to increase inflation. |
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5.
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Economists consider the economy at a level of full employment when the
unemployment rate is…
a. | zero. | c. | below 5.5%. | b. | below 1.5%. | d. | below 20%. |
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6.
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Of the following, the action most likely to help boost the economy out of a
recession is…
a. | cutting personal taxes. | c. | decreasing the money
supply. | b. | decreasing government spending. | d. | raising business
taxes. |
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7.
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The members of the Federal Reserve Board are…
a. | appointed by the Secretary of the Treasury. | b. | confirmed by the
Senate. | c. | elected by the citizens of each district. | d. | nominated by the
House of Representatives. |
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8.
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The Fed could increase the money supply by…
a. | lowering the reserve requirement. | c. | raising the federal funds
rate. | b. | raising the discount rate. | d. | selling government securities. |
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9.
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Open market operations involve…
a. | banks establishing interest rates charged to the Fed. | b. | the Fed establishing
interest rates charged to banks. | c. | the Fed establishing interest rates charged to
consumers. | d. | the Fed selling or buying government securities. |
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10.
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The Fed’s most important and frequently used tool for stabilizing the
economy is…
a. | open market operations. | c. | the discount
rate. | b. | tax policies. | d. | the reserve requirement. |
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