#1
Which of the following is a lagging indicator of the economy?
Corporate Profits
ExplanationIndicates past economic performance.
#2
What tool does the central bank use to control the money supply in the economy?
Interest Rates
ExplanationAdjusts borrowing costs to influence spending.
#3
Which of the following is NOT a goal of monetary policy?
Income Redistribution
ExplanationPrimarily focused on price stability and economic growth.
#4
In which phase of the business cycle does the economy experience rising GDP, low unemployment, and increasing consumer spending?
Expansion
ExplanationPeriod of economic growth and prosperity.
#5
Which of the following is a characteristic of a recession?
Rising unemployment
ExplanationEconomic downturn with job losses and reduced consumer spending.
#6
What is the name of the policy tool where the central bank sets a limit on the amount of reserves banks must hold?
Reserve Requirement
ExplanationControls the amount of funds banks can lend.
#7
What is the name of the economic phenomenon where prices rise consistently over time?
Inflation
ExplanationDecreases purchasing power over time.
#8
Which of the following is NOT a component of GDP?
Trade Deficit
ExplanationReflects the difference between imports and exports.
#9
What does the term 'inflation targeting' refer to in monetary policy?
Aiming for a specific inflation rate
ExplanationCentral bank's objective to maintain stable prices.
#10
Which of the following is an example of expansionary monetary policy?
Decreasing the reserve requirement
ExplanationIncreases money supply to stimulate economic growth.
#11
Which of the following is a leading indicator of economic activity?
Consumer Confidence Index
ExplanationPredicts future economic trends.
#12
What is the name of the monetary policy tool that involves buying and selling government securities?
Open Market Operations
ExplanationControls money supply through market transactions.
#13
What is the name of the interest rate at which the Federal Reserve lends to commercial banks?
Discount Rate
ExplanationDetermines the cost of borrowing from the central bank.
#14
Which of the following is an example of a contractionary fiscal policy measure?
Raising interest rates
ExplanationIntended to reduce aggregate demand.
#15
What is the name of the Federal Reserve's policy-setting committee in the United States?
Federal Open Market Committee (FOMC)
ExplanationResponsible for monetary policy decisions.
#16
What does the term 'Phillips curve' represent?
The relationship between inflation and unemployment
ExplanationIllustrates the inverse relationship between unemployment and inflation.
#17
What term describes the situation when the economy experiences a prolonged period of low economic growth and high unemployment?
Stagflation
ExplanationCombination of stagnation and inflationary pressure.
#18
What does the term 'liquidity trap' refer to in monetary policy?
A situation where monetary policy becomes ineffective due to zero or near-zero interest rates
ExplanationCentral bank unable to stimulate the economy.