Economic Trends and Policies Quiz

Recession is marked by a significant decline in Gross Domestic Product (GDP).

Market economies do not involve government ownership of resources; they rely on private ownership and market forces.

Expansionary fiscal policy involves increasing government spending to stimulate economic activity.

Gross Domestic Product (GDP) measures the total value of goods and services produced in a country.

A trade deficit occurs when a country's imports exceed its exports in terms of goods and services.

Inflation is the persistent rise in the overall price level of goods and services in an economy.

Inflation results from a situation where demand outpaces the supply of goods and services, causing price levels to rise.

Fiscal policy involves government decisions on spending and taxation to influence the economy.

Consumer Price Index (CPI) is a common measure used to gauge the level of inflation in an economy.

Expansionary monetary policy aims to boost economic growth by increasing the money supply.

Stagflation refers to a challenging economic scenario with simultaneous high inflation, low growth, and high unemployment.

Supply-side economics aims to stimulate growth by addressing factors affecting the supply of goods and services.

Imports are not considered a component of aggregate demand, which typically includes consumption, investment, government spending, and net exports.

Quantitative easing is a monetary policy tool involving the purchase of financial assets to increase the money supply.

The Phillips Curve illustrates the trade-off between inflation and unemployment.

The Federal Reserve manages monetary policy to control money supply and interest rates.

The Laffer Curve depicts the relationship between tax rates and the resulting tax revenue.

Monetarism posits a direct relationship between increases in the money supply and corresponding increases in price levels over time.

Elasticity measures how quantity demanded responds to changes in price for a particular good or service.

The 'invisible hand' in economics refers to the self-regulating mechanism where individual pursuit of self-interest unintentionally contributes to overall economic order.