Macroeconomic Policies and Economic Indicators Quiz

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

GDP represents the total value of all goods and services produced within a country's borders in a specific time period.

Inflation is the rate at which the general level of prices for goods and services is rising, eroding purchasing power.

The Federal Reserve, often referred to as the Fed, is the central banking system of the United States.

A trade deficit occurs when the value of a country's imports exceeds the value of its exports.

Monetary policy involves actions taken by central banks to regulate the money supply, interest rates, and credit conditions to achieve economic goals.

When the number of people seeking employment equals the number of people who are employed, the unemployment rate is 0%.

Decreasing taxes reduces disposable income, lowering consumer spending and investment, thus reducing aggregate demand.

CPI measures inflation, not economic growth, whereas GDP, GNP, and NNP are measures of economic growth.

The unemployment rate typically lags behind changes in the overall economy, making it a lagging economic indicator.

CPI measures changes in the average level of prices of goods and services consumed by households over time, indicating inflation or deflation.

Stagflation is an economic condition characterized by stagnant economic growth, high unemployment, and high inflation.

The Phillips curve illustrates the inverse relationship between unemployment and inflation rates.

Crowding out occurs when increased government spending leads to reduced investment from the private sector due to higher interest rates.

Supply-side economics focuses on policies to increase the production of goods and services, aiming to spur economic growth and reduce unemployment.