2. • THE PROCESS BY WHICH THE MONETARY
AUTHORITY OF A COUNTRY CONTROL
THE SUPPLY OF MONEY, OFTEN TARGETING A
RATE OF INTEREST FOR THE PURPOSE OF
PROMOTING ECONOMIC GROWTH AND
STABILITY
ANS: MONETARY POLICY
4. • TRADITIONALLY USED TO TRY TO
COMBAT UNEMPLOYMENT IN A RECESSION BY
LOWERING INTEREST RATES IN THE HOPE
THAT EASY CREDIT WILL ENTICE BUSINESSES
INTO EXPANDING.
ANS: EXPANSIONARY POLICY
5. •INTENDED TO SLOW INFLATION IN
ORDER TO AVOID THE RESULTING
DISTORTIONS AND DETERIORATION
OF ASSET VALUES
ANS: CONTRACTIONARY POLICY
6. •THE VALUE OF A COUNTRY'S TOTAL
EXPORTS MINUS THE VALUE OF ITS
TOTAL IMPORTS.
ANS: NET EXPORT
7. • REPRESENTS AN OUTFLOW OF DOMESTIC
CURRENCY TO FOREIGN MARKETS.
ANS: TRADE DEFICIT
8. • REPRESENTS A NET INFLOW OF DOMESTIC CURRENCY FROM
FOREIGN MARKETS, AND IS THE OPPOSITE OF A TRADE
DEFICIT, WHICH WOULD REPRESENT A NET OUTFLOW.
ANS: TRADE SURPLUS
9. • MOST COMMONLY USED TO REFER TO GOVERNMENT
SPENDING RATHER THAN BUSINESS OR INDIVIDUAL
SPENDING.
ANS: BUDGET DEFICIT
10. • THE PORTION (EXPRESSED AS A PERCENT) OF
DEPOSITORS' BALANCES BANKS MUST HAVE ON
HAND AS CASH
ANS: REQUIRED, RESERVE, RATIO
11. • A DEBT INVESTMENT IN WHICH AN INVESTOR LOANS MONEY
TO AN ENTITY (CORPORATE OR GOVERNMENTAL) THAT
BORROWS THE FUNDS FOR A DEFINED PERIOD OF TIME AT A
FIXED INTEREST RATE.
ANS: BOND
