Marketplace Economy Quiz #2

Questions and Answers

Which of these situations are more likely to happen in a GOOD economy?

Fresh Mart, a local grocery store, had to lay off employees to keep costs down.

David invests his money in a new tech startup company. (correct)

Alex just graduated from technical school and took a new job that pays her a high salary. (correct)

Carlos was able to finish a design bootcamp and interview at many companies until he finds the job he likes best. (correct)

Which of these situations are more likely to happen in a BAD economy?

Carlos was able to finish a design bootcamp and interview at many companies until he finds the job he likes best.

Alex just graduated from technical school and took a new job that pays her a high salary.

The Adobo Grill restaurant has to lay off two employees because business is very slow. (correct)

Jordan takes out a loan to start a new business.

What is GDP (gross domestic product)?

The total value of all the finished goods and services produced in a country over a certain period of time.

______ is the total value of all the finished goods and services produced in a country over a certain period of time.

Gross domestic product (GDP) Signup and view all the answers

An increasing unemployment rate is associated with a growing economy.

False Signup and view all the answers

A decreasing unemployment rate is associated with a growing economy.

True Signup and view all the answers

Steadily increasing inflation is associated with a growing economy.

True Signup and view all the answers

The ____ phase in the business cycle is a period when the level of business activity rises and GDP grows.

Expansion Signup and view all the answers

The ____ phase in the business cycle is a period when the level of business activity declines and GDP falls.

Contraction Signup and view all the answers

The ____ phase in the business cycle is a period that marks the end of declining business activity.

Trough Signup and view all the answers

Why might the government and Central Bank use policy to manage the economy?

To avoid a depression in the economy. Signup and view all the answers

Which of the following statements about economic policy are FALSE?

Economic policy is used to ensure all businesses are following regulations. Signup and view all the answers

If the government and Central Bank don't use economic policy, what could happen?

Prices could skyrocket, making goods more difficult to buy; unemployment could rapidly rise, making it harder to find a job; GDP could rapidly fall, creating a recession in the economy. Signup and view all the answers

Which of the following statements about monetary policy is TRUE?

True Signup and view all the answers

Which of the following statements about monetary policy is FALSE?

True Signup and view all the answers

What is monetary policy?

Monetary policy is policy set by the Central Bank to influence the amount of money and credit available in the economy. Signup and view all the answers

What is expansionary policy used for?

To stimulate growth in the economy. Signup and view all the answers

What is contractionary policy used for?

To fight rapid inflation in the economy. Signup and view all the answers

What is contractionary policy used for?

To discourage individuals from spending. Signup and view all the answers

In order to implement expansionary policy, the government and Central Bank must government spending, taxes, and __ interest rates.

increase, decrease, decrease Signup and view all the answers

In order to implement contractionary policy, the government and Central Bank must ____ government spending, _ taxes, and ____ interest rates.

decrease, increase, increase Signup and view all the answers

In order to implement expansionary policy, the Central Bank and government must _ interest rates, government spending, and ___ taxes.

decrease, increase, decrease Signup and view all the answers

The state of the economy alone can predict how the financial market will perform.

False Signup and view all the answers

When the economy is doing well, the financial market is also guaranteed to do well.

False Signup and view all the answers

Even if the economy is declining, the financial market can still do well.

True Signup and view all the answers

Which of the following behaviors are more likely to happen in a GOOD economy?

Alex just graduated from technical school and took a new job that pays her a high salary. Signup and view all the answers

Which of the following behaviors are more likely to happen in a BAD economy?

Fresh Mart, a local grocery store, had to lay off employees to keep costs down. Signup and view all the answers

Study Notes

Economic Conditions

Good economies typically allow individuals like Carlos to complete job training programs and secure favorable job placements.
Graduates, such as Alex, benefit from high-paying job opportunities within a thriving economy.
In contrast, a bad economy forces businesses like Adobo Grill to lay off employees due to decreased customer demand.

Gross Domestic Product (GDP)

GDP is the total value of all finished goods and services produced in a country within a specified timeframe.
A key measure of economic health, GDP indicates overall economic activity.

Economic Indicators

An increasing unemployment rate is not a sign of economic growth.
Conversely, a decreasing unemployment rate is often associated with a growing economy.
Steadily increasing inflation can signal a growing economy, pointing towards demand exceeding supply.

Business Cycle Phases

Expansion: Characterized by rising business activity and GDP growth.
Contraction: Identified by declining business activity and falling GDP.
Trough: Marks the phase that concludes a decline in business activity.

Government and Central Bank Policies

Economic policy aims to prevent drastic downturns like depressions.
Misconceptions include believing economic policy ensures all businesses adhere to regulations—this is false.
Inaction from the government and Central Bank could lead to skyrocketing prices, rising unemployment, and declining GDP, potentially causing recession.

Monetary Policy

Adjusts the money and credit supply in the economy, influencing economic performance.
Monetary policy does not modify tax policies, which is a common misconception.
Expansionary policy aims to stimulate economic growth, while contractionary policy targets rapid inflation.

Policy Implementation

To implement expansionary policy, the government and Central Bank should increase spending, decrease taxes, and lower interest rates.
For contractionary policy, they must decrease spending, raise taxes, and increase interest rates.

Financial Markets and Economy

The financial market cannot be solely predicted by the state of the economy.
Economic prosperity does not guarantee financial market success, highlighting a disconnect between these areas.
Even in economic decline, financial markets can perform well due to various external factors.

Business Behavior in Economic Context

In favorable economic conditions, individuals like Jordan may take loans to launch businesses, while investors like David may back new ventures.
Businesses in poor economic conditions, such as Fresh Mart, may resort to layoffs to manage expenses.

Studying That Suits You

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Description

Test your understanding of the characteristics of a good economy with this quiz featuring various scenarios. Evaluate real-life situations and determine whether they reflect positive economic conditions. Perfect for students learning about economics or anyone interested in market dynamics.

Marketplace Economy Quiz #2

Questions and Answers

Which of these situations are more likely to happen in a GOOD economy?

Which of these situations are more likely to happen in a BAD economy?

What is GDP (gross domestic product)?

______ is the total value of all the finished goods and services produced in a country over a certain period of time.

An increasing unemployment rate is associated with a growing economy.

A decreasing unemployment rate is associated with a growing economy.

Steadily increasing inflation is associated with a growing economy.

The ____ phase in the business cycle is a period when the level of business activity rises and GDP grows.

The ____ phase in the business cycle is a period when the level of business activity declines and GDP falls.

The ____ phase in the business cycle is a period that marks the end of declining business activity.

Why might the government and Central Bank use policy to manage the economy?

Which of the following statements about economic policy are FALSE?

If the government and Central Bank don't use economic policy, what could happen?

Which of the following statements about monetary policy is TRUE?

Which of the following statements about monetary policy is FALSE?

What is monetary policy?

What is expansionary policy used for?

What is contractionary policy used for?

What is contractionary policy used for?

In order to implement expansionary policy, the government and Central Bank must ______ government spending, ______ taxes, and ______ interest rates.

In order to implement contractionary policy, the government and Central Bank must ______ government spending, _____ taxes, and ______ interest rates.

In order to implement expansionary policy, the Central Bank and government must _____ interest rates, ______ government spending, and _____ taxes.

The state of the economy alone can predict how the financial market will perform.

When the economy is doing well, the financial market is also guaranteed to do well.

Even if the economy is declining, the financial market can still do well.

Which of the following behaviors are more likely to happen in a GOOD economy?

Which of the following behaviors are more likely to happen in a BAD economy?

Study Notes

Economic Conditions

Gross Domestic Product (GDP)

Economic Indicators

Business Cycle Phases

Government and Central Bank Policies

Monetary Policy

Policy Implementation

Financial Markets and Economy

Business Behavior in Economic Context

Studying That Suits You

Description

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In order to implement expansionary policy, the government and Central Bank must government spending, taxes, and __ interest rates.

In order to implement contractionary policy, the government and Central Bank must ____ government spending, _ taxes, and ____ interest rates.

In order to implement expansionary policy, the Central Bank and government must _ interest rates, government spending, and ___ taxes.