Match each of the terms on the left with its definition on the right. Click on the term first and then click on the matching definition. As you match them correctly they will move to the bottom of the activity.

KEY TERMS

Question

Self-regulating economy
Keynesian economics
Monetary policy
Fiscal policy
Recession
Expansion
Business cycle
Business-cycle peak
Business-cycle trough
Long-run economic growth
Inflation
Deflation
Price stability
Open economy
Trade deficit
Trade surplus
changes in government spending and taxes designed to affect overall spending.
the short-run alternation between economic downturns, known as recessions, and economic upturns, known as expansions.
an economy that trades goods and services with other countries.
the point in time at which the economy shifts from recession to expansion.
a situation in which the overall cost of living is changing slowly or not at all.
period of economic upturn in which output and employment are rising; most economic numbers are following their normal upward trend; also referred to as a recovery.
changes in the quantity of money in circulation designed to alter interest rates and affect the level of overall spending.
the point in time at which the economy shifts from expansion to recession.
a rise in the overall level of prices.
the sustained rise in the quantity of goods and services the economy produces.
a fall in the overall level of prices.
the surplus that results when the value of goods and services bought from foreigners is less than the value of the goods and services sold to them.
the deficit that results when the value of the goods and services bought from foreigners is more than the value of the goods and services sold to consumers abroad.
a school of thought emerging out of the works of John Maynard Keynes; according to Keynesian economics, a depressed economy is the result of inadequate spending and government intervention can help a depressed economy through monetary policy and fiscal policy.
describes an economy in which problems such as unemployment are resolved without government intervention, through the working of the invisible hand, and in which government attempts to improve the economy’s performance would be ineffective at best, and would probably make things worse.
a downturn in the economy when output and employment are falling; also referred to as a contraction.