BEC Economics and Business Cycles 3

Question 1

Monetary policy is conducted primarily by:

Accepted Answer

The Federal Reserve

Answer

The U.S. Treasury Department

Answer

Congress

Answer

The President's economic advisors

Question 2

Price elasticity of demand measures:

Accepted Answer

How sensitive the quantity demanded is to a change in price

Answer

How quickly firms can adjust supply in response to price changes

Answer

The relationship between income and quantity demanded

Answer

The responsiveness of supply to input cost changes

Question 3

An expansionary fiscal policy involves:

Accepted Answer

Increasing government spending or cutting taxes to stimulate the economy

Answer

Raising taxes and cutting spending to reduce inflation

Answer

Raising interest rates to slow borrowing

Answer

Reducing the money supply to control price levels

Question 4

The Phillips curve illustrates the short-run trade-off between:

Accepted Answer

Inflation and unemployment

Answer

GDP growth and interest rates

Answer

Trade deficits and budget deficits

Answer

Investment and consumption

Question 5

Which of the following is classified as a leading economic indicator?

Accepted Answer

Building permits for new housing construction

Answer

The unemployment rate

Answer

Average duration of unemployment

Answer

Outstanding commercial and industrial loans

Question 6

Comparative advantage suggests that countries should specialize in producing goods where they have:

Accepted Answer

A lower opportunity cost than trading partners

Answer

The highest absolute production efficiency

Answer

The most natural resources

Answer

The largest labor force