A slow or strong economy affects everything from gas prices to college tuition. When the economy is unhealthy, many people lose their jobs or homes and are less able to afford the things they need. But, there are certain things the government can do to ease the burden faced by the American people during tough economic times.
Take the quiz below and get your facts straight when it comes to diagnosing our nation’s economic health.
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Quiz: Economic Myth Busters
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Which one does not factor into a weakening national economy?
Sales tax is set by states or cities. Risky home loans and rising gas prices have both contributed to recent economic issues.
Why is college tuition getting more expensive?
More people are going to college than ever before and fewer loans are available because some lenders cant afford to finance students. Also a slow economy makes existing costs more of a burden on people.
How would rising costs of oil affect Americans?
Consumers are seeing high prices at the pump because of high oil prices. The U.S. gets most of its oil abroad, and strained relationships could affect our supply. For example, Venezuelas President Hugo Chavez recently threatened to cut off oil supplies to the U.S. because of a poor political relationship.
Unemployment hurts the economy:
When a person loses his or her job, the country suffers as well. For example, if Rosie the riveter loses her job, there are fewer rivets (goods) produced which weakens the economy. In addition, Rosie has less money to spend on goods, which could cause other people to lose their jobs too.
You paid $10 for a basketball that cost $9 last year. Why?
Inflation is a natural rise in prices over time. The rate of inflation depends on the supply and demand of goods and currency.
Recession is a sharp drop of the stock market.
Recession is defined by two consecutive quarters of decline in the Gross Domestic Product (GDP).
A market or group of securities in which prices are rising is called a:
The term is used to describe a rising market. A Bear market describes decreasing markets. The names came from the way the animals attack their prey– a bull points its horns upward, and a bear lowers its paws to the ground.
What is the Fed?
The Federal Reserve provides services to banks and serves as a bank to the federal government. It has the power to regulate interest rates to try and keep the economy healthy.
Inflation is a rise of prices, on average from 2-3 percent.
Prices naturally rise but inflation can become a problem when they rise too rapidly. The Federal Reserve (Fed) actively tries to keep inflation rates at 2-3 percent every year.
A slow economy impacts the U.S. auto industry.
Slow economic growth and rising gas prices can cause decreased auto sales. With a slow economy, Americans are less likely to buy new goods.
Which of the following would NOT help the economy grow:
The government sometimes gives people monetary tax credits to boost the economy. If each American has a little more money to spend, it could make an overall difference.