Macroeconomic Principles and Government Intervention Quiz

GDP includes consumption, investment, government spending, and net exports.

CPI measures the average change in prices of a basket of consumer goods and services over time.

GDP is the measure of a country's economic output in a given time frame.

The Fed implements monetary policy to regulate money supply, interest rates, and promote economic stability.

Mixed economies combine elements of private ownership and government intervention in economic activities.

The exchange rate represents the value of one currency in terms of another in the foreign exchange market.

A recession is a period of economic decline, typically defined by two consecutive quarters of negative GDP growth.

Expansionary fiscal policy aims to boost economic activity by increasing government expenditures.

Crowding out occurs when increased government borrowing reduces funds available for private investment.

The Phillips Curve shows the trade-off between inflation and unemployment in an economy.

Contractionary monetary policy aims to decrease inflation by reducing money supply and increasing interest rates.

Stagflation is a situation of stagnant economic growth with simultaneous high inflation and high unemployment.

The Federal Funds Rate is the interest rate at which banks lend to each other overnight.

Fiscal policy relates to government finances, while monetary policy pertains to central bank actions affecting money supply and interest rates.

Monetary policy tools include interest rates, open market operations, and reserve requirements, not fiscal deficits.

Automatic stabilizers, like unemployment benefits, automatically offset economic fluctuations.