Exercise Answers 1 Supply side trickle down 2 Supply 3 GDP 4

Exercise Answers

1. Supply side trickle down

2. Supply  

3. GDP

4. Land, Labor, Capital.
5. Discretionary

6. Economics

7. A. What goods and services  to produce, B. How to produce them,  C. Who gets them

8. Microeconomics

9. Adam Smith

10. Opportunity cost

11. Demand
12. Macroeconomics

13. Trumpnomics

14. Discount rate

15. Federal Reserve
16. Peak, recession, bottom, expansion.

17. Discouraged workers

18. Deficit
19. Economist in chief

20. Real

21. Business Cycle

22. Josef Schumpeter

23. John M. Keynes

24. Defense

25. Nominal

26. Mandatory entitlement

27. Surplus

28. Classical model

29. Bill Clinton

30. Protect

31. Government spending and taxation

32. Fed funds rate

33. Debt

34. Reaganomics

35. Inflation
36. Monetarist

37. Reserve requirement ratio, discount rate, and Open market operations

38. Laissez Faire

39. Roosevelt , Kennedy, Obama

40. TARP, American Recovery and Reinvestment Act ( G up) and Fed rate cuts.

41. Keynesian model.

42. Milton Friedman

43. Free and competitive

44. Keynesian bottom up

45. Hoover, Coolidge, and Harding.

46. Tariff

47. Laffer
48. Comparative advantage

49. Demographic Tsunami

Exercise    : Write number in space below. Use each # once

Use the #s from page 1. Use each # once.

The main driver of the federal deficit and debt is ____________spending due to the _______ (aging baby boomers living longer).  Spending that has to be renewed every year like funds for hurricane relief is __________ spending.

About 20 cents out of every federal dollar spent today goes to  ___________ discretionary spending. During the 1960s we were spending about 50 cents out of every dollar on defense due to the lack of entitlement spending.
Using the digging a hole analogy the act of taking dirt out of the hole would relate to  _____; the act of putting dirt back into the hole would relate to ________ and the size of the hole would relate to ______. The last President to have a budget surplus was _______. The 2 tools of fiscal policy are ____________. The 3 tools of monetary policy are __________.  The rate that the Fed charges banks to borrow from the Fed is the _______whereas the short term rate that one bank charges another is the ___________. The goal of the ___________is to conduct monetary policy to ensure stable prices (low inflation) and a growing economy (low unemployment).

The macro model that believes that the economy is inherently stable and will self correct back to full employment given recession by falling prices and wages is the  _______. The model that believes that the economy is inherently unstable and will not correct back to full employment and advocates changing AD through fiscal and monetary policy to keep the economy in equilibrium at full employment output is the ________.

Solution

The main driver of the federal deficit and debt is _#18(Deficit)_spending due to the _______ (aging baby boomers living longer).  Spending that has to be renewed every year like funds for hurricane relief is _#5Discretionary_ spending.

About 20 cents out of every federal dollar spent today goes to  _#24. Defense_ discretionary spending. During the 1960s we were spending about 50 cents out of every dollar on defense due to the lack of entitlement spending.
Using the digging a hole analogy the act of taking dirt out of the hole would relate to  _____; the act of putting dirt back into the hole would relate to _#1. Supply side trickle down_ and the size of the hole would relate to _#17. Discouraged workers_.

The last President to have a budget surplus was _#29. Bill Clinton_. The 2 tools of fiscal policy are _#31. Government spending and taxation___. The 3 tools of monetary policy are _#37. Reserve requirement ratio, discount rate, and Open market operations_.  The rate that the Fed charges banks to borrow from the Fed is the __#14. Discount rate__whereas the short term rate that one bank charges another is the _#32. Fed funds rate__. The goal of the _#15. Federal Reserve_is to conduct monetary policy to ensure stable prices (low inflation) and a growing economy (low unemployment).

The macro model that believes that the economy is inherently stable and will self correct back to full employment given recession by falling prices and wages is the  _#28. Classical model_. The model that believes that the economy is inherently unstable and will not correct back to full employment and advocates changing AD through fiscal and monetary policy to keep the economy in equilibrium at full employment output is the _#41. Keynesian model.