Goal 9 Study Guide

NOTE: For vocab terms you have already been quizzed on, provide a synonym for the word. This means, jot down a one word definition for each word, in a way you can understand it.

Chapter 23.2 Measuring Growth, Fiscal Policy, Price Stability, and the Stock Market

Define the following terms:

  1. real GDP
  2. business cycle
  3. civilian labor force
  4. unemployment rate
  5. fiscal policy
  6. inflation
  7. consumer price index

Answer the following questions:

  1. What makes the real GDP a better measure of the economy than the GDP?
  2. What are the four parts of the business cycle?
  1. What happens to the economy during expansion?
  2. What happens to the economy during a peak?
  3. What happens to the economy during a contraction/recession?
  4. What happens to the economy during a trough?
  5. What happens if a recession becomes severe enough?
  6. What happened in 1929?
  7. Who makes up the civilian labor force?
  8. What is the personal impact of unemployment?
  9. Why would the government use fiscal policy to cut taxes?
  10. Why would the government use fiscal policy to increase spending?
  11. What happens to the value of money during inflation?
  12. During expansion, what happens to the unemployment rate?
  13. During recession, what happens to the unemployment rate?
  14. What is a stock?
  15. What are the two ways that investors can earn money on stocks?
  16. What are dividends?
  17. What are capital gains?
  18. What are capital losses?
  19. What is it called when someone buys a stock hoping to sell it later for more than they paid?
  20. What determines the price of a stock?
  21. What are three things that may create positive expectations for a stock? What will happen to the price of the stock?
  22. What are stock market indexes?
  23. Give two examples of a stock market index.
  24. What is a stock exchange?
  25. Give two examples of a stock exchange.
  26. If stock prices rise, what can we assume about the economy?
  27. If stock prices fall, what can we assume about the economy?

Chapter 24.1What is Money?

Define the following terms:

  1. coin
  2. currency
  3. commercial bank
  4. savings and loan association
  5. credit union

Answer the following questions:

  1. What are the three functions of money?
  2. What gives money value?
  3. What happens to money you put in the bank?
  4. How to banks make money?
  5. What is interest?
  6. What are two examples of commercial banks?
  7. How safe is the money we put in banks?
  8. What is the FDIC?
  9. What does the FDIC insure?

Chapter 24.2 The Federal Reserve

Define the following terms:

  1. central bank
  2. Federal Open Market Committee
  3. monetary policy
  4. discount rate
  5. reserve requirement
  6. open market operations

Answer the following questions:

  1. What is the Federal Reserve?
  2. Who owns the Fed?
  3. Who manages (runs) the Fed?
  4. Who is in charge of the Board of Governors? Who has this position today?
  5. What are the three functions of the Fed?
  6. Name two ways that the Fed acts as a regulator.
  7. Name two ways that the Fed acts as the government’s bank.
  8. How does the Fed stimulate the economy?
  9. How does the Fed slow the economy?
  10. What three tools does the Fed use to control money supply?
  11. If the Fed wants to slow the economy, what might it do to the discount rate, the reserve requirement, or open market operations?
  12. If the Fed reduces the money supply, what will happen to the interest rates at banks?
  13. If the Fed wants to stimulate the economy, what might it do to the discount rate, the reserve requirement, or open market operations?
  14. If the Fed increases the money supply, what will happen to the interest rates at banks?

Chapter 25.1 The Federal Budget

Define the following terms:

  1. budget
  2. mandatory spending
  3. discretionary spending
  4. appropriations bills
  5. Social Security
  6. Medicare

Answer the following questions:

  1. What are the two types of spending?
  2. What is the largest and second-largest source of income for the government?
  3. What is a progressive tax?
  4. What is a regressive tax, and who does it hurt?
  5. What does the government spend the most money on?
  6. Who does Social Security benefit?
  7. What does the government spend the second most amount of money on?
  8. What causes defense spending to increase?
  9. What is a budget surplus?
  10. What is a budget deficit?

Chapter 26.1 International Trade

Define the following terms:

  1. export
  2. import
  3. comparative advantage
  4. tariff
  5. quota
  6. free trade
  7. exchange rate
  8. balance of trade
  9. trade deficit
  10. trade surplus

Answer the following questions:

  1. Does the United States import or export more?
  2. What problem does international trade help solve?
  3. What factors of production can comparative advantage be based upon?
  4. What two things might a country use to protect its businesses from foreign products?
  5. What is the European Union?
  6. What is NAFTA?
  7. If a country’s currency loses value, what does it do more?
  8. The American Labor Force

Define the following terms:

  1. labor union
  2. right-to-work law
  3. collective bargaining
  4. mediation
  5. arbitration
  6. strike
  7. boycott

Answer the following questions:

  1. What is a closed shop?
  2. What is a union shop?
  3. What is the rust-belt?
  4. What is the sun-belt?
  5. What might a union want a company to do?
  6. Why aren’t there as many unions today as there were in the past?