Economics Chapter 14 and 15 Review Test Friday November 20, 2009 Bring a pencil with you for the test Vocabulary: Please define the following. Suggestion: create flashcards for easy review of vocabulary. Chapter 14: 1. Business Cycles: 2. Business Fluctuations 3. peak 4. trough 5. recession 6. unemployment rate 7. frictional unemployment 8. structural unemployment 9. cyclical unemployment 10. technological unemployment 11. Price level 12. deflation 13. creeping inflation 14. galloping inflation 15. hyperinflation 16. Lorenz curve 17. poverty guidelines 18. welfare 19. food stamps 20. workfare Chapter 15: 21. monetary policy 22. reserve requirement 23. excess reserves 24. discount rate 25. margin requirements Answer the following questions. If it ask for an example try and identify two or three. 26. What are the two phases of the business cycle? 27. What is a depression? 28. What factors contributed to the Great Depression? 29. What factors contribute to business cycles? 30. What is the index of leading indicators? 31. Give examples of the following a. Seasonally unemployed b. Technologically unemployed c. Cyclically unemployed 32. Why does the unemployment rate understate employment conditions? 33. When is full employment reached? 34. How is the inflation rate calculated? 35. What is the wage-price spiral theory of inflation? 36. What are the consequences of inflation? 37. If all families received exactly the same income, the Lorenz curve would appear as a _____________________________line. 38. Why do we have income inequality? 39. When is a person considered “living in poverty? 40. How many (approximately) Americans are currently living in poverty? 41. Why has the income gap widened since 1980? 42. Who owns the FED? 43. What banks are members of the FED? 44. What are the parts of the Federal Reserve System? 45. What services does the FED provide? 46. When a bank keeps $12 of $100 deposit as legal reserves, it is using the _______________________________ system. 47. What are excess reserves? 48. What actions does the FED use to promote “easy money?” 49. What actions does the FED use to promote “tight money?” 50. What are the tools of monetary policy?
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