Economics Unit 3 Study Guide – Macroeconomic Concepts
Standards
SSEMA1 – The student will illustrate the means by which economic activity is measured.
SSEMA2 – The student will explain the role and functions of the Federal Reserve System.
SSEMA3 – The student will explain how the government uses fiscal policy to promote price stability, full
employment, and economic growth.
Reading Assignments:
Economics Principles and Practices
Chapters 9, 10, 13, 14, 15, 16,
Terms to know: You are responsible for knowing ALL the terms in the chapters listed in the box above. The ones listed
below should be defined or identified on loose leaf paper and turned in. DUE DATE = 10/14/10
1. Sin tax 16. Estate tax 31. Medicaid 46. Depression
2. Incidence of a tax 17. Customs duty 32. Deficit spending 47. Cyclical Unemployment
3. Tax loophole 18. Per capita 33. Federal debt 48. Frictional Unemployment
4. Individual income tax 19. Public sector 34. Balanced budget 49. Structural unemployment
5. Sales tax 20. Private sector 35. Entitlements 50. Regulation Z
6. Proportional Tax 21. Transfer payment 36. GDP 51. Monetary policy
7. Progressive tax 22. Grant-in-aid 37. Intermediate products 52. Fractional Reserve System
8. Regressive tax 23. Distribution of income 38. Underground economy 53. Easy Money Policy
9. Payroll Withholding System 24. Federal budget 39. Inflation 54. Tight Money Policy
10. Internal Revenue Service 25. Mandatory spending 40. Price index 55. Open Market Operations
11. Tax return 26. Discretionary spending 41. Market basket 56. Discount Rate
12. FICA 27. Fiscal year 42. Standard of living 57. Aggregate Demand
13. Medicare 28. Federal budget surplus 43. Business cycle 58. Aggregate supply
14. Excise tax 29. Federal budget deficit 44. Business fluctuation 59. Stagflation
15. Gift tax 30. Appropriations bill 45. Recession 60. Fiscal policy
Short Answer Questions: These questions should be answered in COMPLETE sentences on loose leaf paper and turned in
for a grade. They are due the day you take your unit test (tentatively scheduled for the week of October 25)
1. What are the several categories of things NOT included in GDP?
2. What is the most important measure of inflation?
3. Define stagflation (include all elements of it).
4. AGGREGATE supply and demand, unlike regular supply and demand, both apply to what?
5. To get the unemployment rate, divide the number of unemployed individuals by … what?
6. To be considered as officially unemployed, you have to be __________ and looking for ____________.
7. What are the several different types of unemployment? Provide examples of each.
8. When consumers are not spending as much as they were, what is likely happening to the economy?
9. What defines a recession?
10. What are some characteristics of an economic boom?
11. What are some characteristics of a recession?
12. Explain the difference between a budget deficit and the national debt.
13. What are the components of the nation’s GDP?
14. Draw and explain the business cycle diagram.
15. Define monetary policy.
16. How does monetary policy differ from fiscal policy?
17. When the Fed sells bonds, what is the economic effect?
18. When the Fed buys securities, what are the effects?
19. What happens when the Fed increases the reserve rate? Decreases?
20. What tool would the Fed use to stop inflation? How?
21. How can the Fed increase the money supply?
22. Define fiscal policy.
23. What type of tax is:
a) The sales tax?
b) The income tax?
c) A payroll tax, such as Social Security?
d) An excise tax on a needed good, such as gasoline or tires?
24. a) When the government raises taxes, what is the likely impact on consumer and investment spending?
b) What is the impact when taxes are lowered?
ECON October 2010
Sunday Monday Tuesday Wednesday Thursday Friday Saturday
1 2
3 4 Unit 2 Exam 5 Unit 2 Exam 6 7 8 Cartoon Due 9
Business
Project Check
10 11 12 13 PSAT 14 Unit 3 15 16
nd
2 Period Words &
Blocked Terms Due
17 18 19 20 21 22 Cartoon 23
Due
24 25 26 27 28 29 End of 30
Grading Period
31
Macroeconomic Concepts
SSEMA1 The student will illustrate the means by which economic activity is measured.
a. Explain that overall levels of income, employment, and prices are determined by the spending and production decisions of
households, businesses, government, and net exports.
b. Define Gross Domestic Product (GDP), economic growth, unemployment, Consumer Price Index (CPI), inflation, stagflation, and
aggregate supply and aggregate demand.
c. Explain how economic growth, inflation, and unemployment are calculated.
d. Identify structural, cyclical, and frictional unemployment.
e. Define the stages of the business cycle, include peak, contraction, trough, recovery, expansion as well as recession and
depression.
f. Describe the difference between the national debt and government deficits.
SSEMA2 The student will explain the role and functions of the Federal Reserve System.
a. Describe the organization of the Federal Reserve System.
b. Define monetary policy.
c. Describe how the Federal Reserve uses the tools of monetary policy to promote price stability, full employment, and economic
growth.
SSEMA3 The student will explain how the government uses fiscal policy to promote price stability, full employment, and
economic growth.
a. Define fiscal policy.
b. Explain the government’s taxing and spending decisions.