Economics and Business Cycles Flashcards
6 cards from real BEC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Economics and Business Cycles flashcards as text
Monetary policy is conducted primarily by:
Answer: The Federal Reserve
In the United States, monetary policy — controlling the money supply and interest rates — is the responsibility of the Federal Reserve System.
Price elasticity of demand measures:
Answer: How sensitive the quantity demanded is to a change in price
Price elasticity of demand quantifies the percentage change in quantity demanded resulting from a one-percent change in price, indicating consumer sensitivity to price changes.
An expansionary fiscal policy involves:
Answer: Increasing government spending or cutting taxes to stimulate the economy
Expansionary fiscal policy uses increased government spending or tax reductions to inject demand into the economy, typically employed during recessions.
The Phillips curve illustrates the short-run trade-off between:
Answer: Inflation and unemployment
The Phillips curve depicts the inverse short-run relationship between inflation and unemployment — as unemployment falls, inflation tends to rise, and vice versa.
Which of the following is classified as a leading economic indicator?
Answer: Building permits for new housing construction
Building permits are a leading indicator because they signal future construction activity and economic expansion before it actually occurs.
Comparative advantage suggests that countries should specialize in producing goods where they have:
Answer: A lower opportunity cost than trading partners
Comparative advantage holds that a country should specialize in goods it can produce at a lower opportunity cost relative to trading partners, enabling mutually beneficial trade.