FREE S-12 Economic Factors Questions and Answers
What is the primary purpose of fiscal policy in the economy?
Correct!
Wrong!
Fiscal policy, implemented by the government, adjusts spending levels and tax rates to influence economic activity.
Which Federal Reserve tool directly affects the money supply?
Correct!
Wrong!
The Federal Reserve buys or sells government securities to increase or decrease the money supply.
What does Gross Domestic Product (GDP) measure?
Correct!
Wrong!
GDP indicates the overall economic health and size of an economy.
During which phase of the business cycle is unemployment typically the highest?
Correct!
Wrong!
Unemployment is highest during the trough phase, when economic activity is at its lowest point.
How does inflation impact fixed-income investments?
Correct!
Wrong!
Inflation erodes the real value of fixed-income returns, as purchasing power declines over time.