ECO Chapter 6
THE BUSINESS CYCLE
o Since the 1930s the US (and most national governments) uses tools to improve
Monetary Policy: uses changes in the quantity of money to alter interest
rates and affect overall spending
Fiscal Policy: Uses chan
Types of Unemployment
o Some unemployment is natural
o Over the past 50 years, the national unemployment rate has
never dropped below 2.9%
o There are three types of unemployment
1. Review Module 29.
2. Review PowerPoint for Module 29.
3. Review Financial Sector test questions.
Graph 2. Loanable Funds Model.
Use Graph 2 to answer question 26.
Other things being equal, an increase in taxes on savings will:
Macroeconomics Test 1
Paradox of thrift depresses the economy and raises unemployment
Spending more stimulates the economy.
The more cash decreases purchasing power.
Keynesian economics is an economic slumps are caused by not effective
Macroeconomics :Study of the economy as a whole
Microeconomics: Study of how individual households and firms make decisions and interact with one another in markets
GDP stands for: Gross Domestic Product. / Measures total income of everyone in the economy
Exam 3 macro economics
Ch13 fiscal policy
The Govt. funds many programs though tax revenues.
-Govt. transfers: payments by the govt. to households for which no goods or service is provide
-Social insurance program: govt. programs (
Ch. 12 Macroeconomic
Aggregate Demand and Aggregate Supply
(model: short-run, long-run, aggregate demand)
[A lower aggregate price level ( all the prices of good and services), we move along
because the price id on the axis, this would increase the aggr
Ch. 11 Macroeco.
Assumptions to know how our complicated world works.
1. Aggregate price level fixed. (0 inflation / no changes in price)
Firms meet the demand at present prices (the demand for good is going to determine
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1. As the U.S. workforce becomes more educated:
A. the actual output of goods and services is declining.
B. technology is becoming less important in contribut
Fiscal policies can stabilize Australias economy
by Leena Palekar
The role of a government is to stabilize economy, or smooth out business
cycles, as economic activity in a market economy tends to fluctuate
Economic policy tools that are cap