PUP 3002 Exam #2 Questions with
Complete Answers
At what employment rate percentage due we typically consider is full employment? -
ANSWER-4 to 5%
This is potentially desired because the average citizen believes it is better to be a net
exporter and import a smaller portion of what they consume, - ANSWER-A positive
balance of trade
Balance of trade: - ANSWER-export- imports
More exports> job availability
The trade off: - ANSWER-1) At full employment inflation runs high
2) at low inflation, unemployment runs high1) At full employment inflation runs high
Employment Rate - ANSWER-the The ratio that measure the proportion of the
country's working age population that is employed
Real GDP - ANSWER-The percent rate of increase in GDP that is adjusted for
inflation
Percapita income - ANSWER-the growth of the ratio of GDP to population
Jobs are heavily dependent on economic growth, so when economic growth is
present what happens to jobs? - ANSWER-More jobs are open
When economic growth is declining what happens to jobs? - ANSWER-Recession;
less jobs are open
The classic Model - ANSWER-approach assumes that supply and demand are
natural regulatory tools and thus the economy regulates itself
Austerity policies - ANSWER-Policies that reduce a governments budget deficit
What type of policies produce austerity on a government? - ANSWER-1) Reducing
Government Spending
2) Raising taxes
3) Or both
Those who favor the classic model tend to favor what during times of recession? -
ANSWER-Austerity or less government spending
, What causes inflation? - ANSWER-Increases in the production of money or excess
money in the economy
Those who favor the Keynesianism model tend to favor what during time of a
recession - ANSWER-More government spending
Keynesian approach - ANSWER-encourages deficit spending; spend more that
budgeted or more during times of recession
What tools do government use to manage the economy? - ANSWER-1) Fiscal Policy
2) Monetary Spending
3) Regulation
Who picks the chairperson and the six other members of the federal reserve? -
ANSWER-PRESIDENT pick then the SENATE has to approve.
Fiscal policy - ANSWER-has to do with taxing and spending
Monetary policy - ANSWER-involves managing the supply of money
Who manages the supply of money? - ANSWER-Federal Reserve
The main job of these people is to set the discount rate which is the rate that
members have to pay the FED for money: - ANSWER-Federal Reserve
When the federal reserve offers lower discount rates to the banks what does this
translate into? (low and high % rates) - ANSWER-Lower interest rates for consumers
which allows them to borrow and SPEND MORE
What type of policy involves TAXING and SPENDING decision? - ANSWER-Fiscal
Policy
What does Redistribution do? - ANSWER-Reduces income inequality and can
contribute to economic growth .
What is the collective action problem regarding taxes? - ANSWER-society wants
specific program, but individuals may not be willing to pay for them
Progressive taxation - ANSWER-what type of taxation involves wealthier members of
society paying a higher portion of their income as taxes and lower income members
pay less?
What countries are part of progressive taxation? - ANSWER-1) US
2) UK
3) France
Regressive Taxation - ANSWER-occurs when poorer people pay a larger share of
their income
Complete Answers
At what employment rate percentage due we typically consider is full employment? -
ANSWER-4 to 5%
This is potentially desired because the average citizen believes it is better to be a net
exporter and import a smaller portion of what they consume, - ANSWER-A positive
balance of trade
Balance of trade: - ANSWER-export- imports
More exports> job availability
The trade off: - ANSWER-1) At full employment inflation runs high
2) at low inflation, unemployment runs high1) At full employment inflation runs high
Employment Rate - ANSWER-the The ratio that measure the proportion of the
country's working age population that is employed
Real GDP - ANSWER-The percent rate of increase in GDP that is adjusted for
inflation
Percapita income - ANSWER-the growth of the ratio of GDP to population
Jobs are heavily dependent on economic growth, so when economic growth is
present what happens to jobs? - ANSWER-More jobs are open
When economic growth is declining what happens to jobs? - ANSWER-Recession;
less jobs are open
The classic Model - ANSWER-approach assumes that supply and demand are
natural regulatory tools and thus the economy regulates itself
Austerity policies - ANSWER-Policies that reduce a governments budget deficit
What type of policies produce austerity on a government? - ANSWER-1) Reducing
Government Spending
2) Raising taxes
3) Or both
Those who favor the classic model tend to favor what during times of recession? -
ANSWER-Austerity or less government spending
, What causes inflation? - ANSWER-Increases in the production of money or excess
money in the economy
Those who favor the Keynesianism model tend to favor what during time of a
recession - ANSWER-More government spending
Keynesian approach - ANSWER-encourages deficit spending; spend more that
budgeted or more during times of recession
What tools do government use to manage the economy? - ANSWER-1) Fiscal Policy
2) Monetary Spending
3) Regulation
Who picks the chairperson and the six other members of the federal reserve? -
ANSWER-PRESIDENT pick then the SENATE has to approve.
Fiscal policy - ANSWER-has to do with taxing and spending
Monetary policy - ANSWER-involves managing the supply of money
Who manages the supply of money? - ANSWER-Federal Reserve
The main job of these people is to set the discount rate which is the rate that
members have to pay the FED for money: - ANSWER-Federal Reserve
When the federal reserve offers lower discount rates to the banks what does this
translate into? (low and high % rates) - ANSWER-Lower interest rates for consumers
which allows them to borrow and SPEND MORE
What type of policy involves TAXING and SPENDING decision? - ANSWER-Fiscal
Policy
What does Redistribution do? - ANSWER-Reduces income inequality and can
contribute to economic growth .
What is the collective action problem regarding taxes? - ANSWER-society wants
specific program, but individuals may not be willing to pay for them
Progressive taxation - ANSWER-what type of taxation involves wealthier members of
society paying a higher portion of their income as taxes and lower income members
pay less?
What countries are part of progressive taxation? - ANSWER-1) US
2) UK
3) France
Regressive Taxation - ANSWER-occurs when poorer people pay a larger share of
their income
