Putting it All Together: The Macroeconomy

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1.Why do many economists believe that the Fed's influence in a recession is limited?

2.Name the five basic sectors of the economy.

a.

b.

c.

d.

e.

3.What is the paradox of thrift?

4.Name three leakages from the circular flow and tell what injection counteracts each leakage? (6pts)

a.

b.

c

5.What is the main economic function of the government?

6.In a five-sector economy, when is the economy said to be in equilibrium?

7.What is the effect of too much money flowing into the economy?

8.What two moves might government take to counteract this?

a.

b.

9.What three things fall when too much money flows out of an economy?

a.

b.

c

10.How is saving by households connected to investment by firms?

11.Why would you say that saving and investment are necessary for improving future standards of living? (3 pts)