3.4.3 Test (TST): Macroeconomics	Test
Economics Points Possible:40	Name:	Erick Hernandez
Date:

Part I: Short-Answer Questions (20 points)

1. Identify the three primary macroeconomic goals countries have, and describe the importance of each. (4 points)

2. Briefly explain what inflation is. Then, describe how inflation can be both helpful and harmful to an economy. (4 points)

3. Briefly describe the four phases of the business cycle expansion, peak, contraction, and trough and the cause of each. Then, briefly explain how recessions and depressions fit into the business cycle. (4 points)

4. Identify and briefly explain the two primary functions of money. Then, explain how these two primary functions are related to each other. (4 points)

5. Identify the main role of a country's central bank. Then, identify and describe the three main monetary policy goals of central banks. (4 points)

Part II: Application and Critical Thinking (20 points)

6. Respond to the following prompts about the goals and effects of government spending on the economy. (20 points)

a. In a sentence or two, explain the big-picture, overall goals of government spending on the economy.

b. Complete the chart by identifying four of the six types of government spending you learned about. Then, briefly define each and describe the effect it has on the economy or its citizens.

c. Compose a paragraph addressing the following question: In your opinion, which of the types of spending you identified has the greatest or most important impact on the economy? Support your response with relevant reasons or your own personal experiences, if applicable.

Type of government spending	Definition	Effect