Questions and Answers
What role does the Federal Reserve play? (Select all that apply)
The most common measure of inflation is a statistic called the?
Consumer Price Index
As a result of decreased production, David lost his job designing cars. Which terms can be used to describe David? (Select all that apply)
What decisions does the business cycle help businesses make? (Select all that apply)
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The exchange of factors of production for income occurs in the?
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Which best describes the economic impact of defaulting on bank loans?
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When individuals are looking for jobs but are unable to find work, they are said to be?
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What advantages does money have over bartered goods? (Select all that apply)
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Which is the most liquid form of money?
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One fact about all currency is that it?
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Which of the following best describes the circular flow model?
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What term is used in macroeconomics to describe the total supply and the total demand?
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Which is an example of how a denomination is divisible?
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Which best describes why investing can be such a challenge?
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According to the business cycle, what characteristic indicates that a depression has been reached?
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Study Notes
Federal Reserve
- Plays a crucial role in the U.S. economy, influencing monetary policy and regulating banks.
Inflation Measurement
- The most common measure of inflation is the Consumer Price Index (CPI), which tracks changes in the price level of a basket of consumer goods and services.
Employment and Economic Terms
- Loss of job due to decreased production can classify David as unemployed and potentially as a victim of structural unemployment.
Business Cycle Decisions
- The business cycle aids in strategic decisions regarding production levels, workforce management, investment timing, and marketing strategies.
Factor Market
- The factor market is where factors of production such as labor, land, and capital are exchanged for income.
Loan Default Impact
- Defaulting on bank loans negatively affects the economy, as it reduces the funds banks have available for lending to others.
Unemployment Definition
- Individuals actively seeking jobs but unable to secure employment are considered unemployed, impacting overall economic health.
Advantages of Money
- Money offers distinct advantages over bartered goods, such as portability, durability, and divisibility, making it more efficient for transactions.
Liquid Money
- Cash and currency in circulation represent the most liquid form of money, easily accessible for immediate use.
Currency Value
- All currency has a changing value, affected by factors like inflation, supply and demand, and economic conditions.
Circular Flow Model
- The circular flow model illustrates the continuous movement of money and resources in the economy, highlighting interactions between households and businesses.
Aggregate Supply and Demand
- In macroeconomics, the term "aggregate" describes the total supply and total demand within an economy.
Divisibility of Denomination
- A good example of the divisibility of a denomination is that one American dollar can be divided into four quarters.
Investment Challenges
- Investing is challenging because there are no guaranteed investments; all investments carry risks.
Business Cycle and Depression
- The occurrence of a trough in the business cycle indicates a depression, marked by prolonged economic decline and reduced activity.
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Test your knowledge on key concepts in economics with these flashcards. Topics include the Federal Reserve's role, inflation metrics, and the business cycle. Perfect for reviewing essential economic principles before your exam.
