Fiscal Policy and Central Banking Quiz

An index that measures poverty across various aspects of life, including health, education, and living standards.

A situation where individuals lack access to basic necessities like food and shelter.

Government payments made directly to individuals to redistribute income, essentially transferring money from taxpayers to those who need assistance.

People actively seeking employment but are unable to find work.

A situation where a country or company needs to continuously take out new loans to repay existing ones.

Funds withdrawn from the flow of income, such as savings, taxes, or imports.

The value of goods and services measured using current market prices.

A measure of the average change in prices paid by consumers for a basket of goods and services.

Unemployment caused by a decline in overall economic activity, leading to job losses.

Unemployment resulting from a mismatch between the skills of job seekers and the skills required by available jobs.

Unemployment that occurs during specific periods of the year due to seasonal changes in demand.

Unemployment resulting from the time it takes for individuals to transition between jobs.

The sustained increase in the general price level of goods and services in an economy over time.

Inflation caused by an increase in the overall cost of production, such as rising wages or raw material prices.

Inflation caused by an increase in aggregate demand exceeding the economy's capacity to produce goods and services.

A situation where the price level is rising at an extremely rapid rate.

A situation where the general price level remains constant due to low and stable inflation.

A situation where wages are inflexible and unable to adjust downward to reach equilibrium levels during periods of unemployment.

Automatic stabilizers are economic policies that automatically adjust to stabilize the economy during fluctuations in the business cycle without requiring government intervention. Think of built-in safety nets.

A form of taxation where individuals with higher incomes pay a higher percentage of their income in taxes.

A form of transfer payment made to individuals who are unemployed to help them cover their basic needs.

The way the central bank manages the money supply and interest rates to influence the economy.

The independent authority responsible for managing the nation's monetary system.

The amount of money available in the economy at a given time.

The cost of borrowing money, expressed as a percentage of the loan amount.

The use of government spending and taxes to influence the economy.

A financial plan outlining government revenue from taxes and its spending on various programs.

A situation where government spending exceeds its revenue from taxes.

A situation where government revenue from taxes exceeds its spending.

A contractionary monetary policy that reduces the amount of money in circulation by increasing the reserve requirements for banks. This forces banks to hold more money in reserve and decreases lending, thereby reducing investment and consumption.

A contractionary monetary policy where the central bank raises interest rates to make borrowing more expensive for both individuals and businesses. This discourages spending and investment, slowing down economic growth.

An expansionary monetary policy where the central bank buys bonds to inject more money into the economy. This increases the money supply, stimulates lending, and encourages investment and consumption.

An expansionary monetary policy similar to OMOs but on a larger scale, involving the purchase of riskier bonds to further stimulate the economy. This is used primarily when interest rates are already very low.

Taxes paid directly on individuals' income or wealth, such as income tax and inheritance tax.

Taxes levied on the sale of goods and services, such as value-added tax (VAT) and carbon taxes.

Government spending on goods and services that are used up within the current year, such as healthcare and education.

Government spending on long-term investments, such as infrastructure projects like new airports.

The unequal distribution of income amongst people in a society, often observed in capitalist systems where business owners earn significantly higher incomes than employees.

Refers to the uneven distribution of wealth assets amongst individuals and groups within a society. This can be caused by unequal incomes and the ability to save and invest, leading to disparities in opportunities and long-term security.

A situation where a small portion of the population holds a disproportionately large share of the total wealth, often accumulated through generational transfers and wealth accumulation.

The ability of individuals to move up or down the economic ladder, influenced by factors like access to education, healthcare, and social opportunities. Wealth inequality can hinder social mobility as those without financial resources may face barriers to advancement.

The state of having a standard of living that is considered below an acceptable level, typically lacking basic necessities like food, clean water, healthcare, and education.

The potential for someone to move up or down in social status, often determined by factors like wealth, education, and opportunities. Unequal wealth distribution can significantly impact social mobility.

The ability for individuals to access resources like high-quality education, healthcare, and housing. Differences in social mobility often stem from limited access to resources.