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🇺🇸 Foreign Service Officer Test (FSOT) · flashcards
Foreign Service Officer Test (FSOT) Economics Flashcards
59 question-and-answer cards covering Economics as it is examined in Foreign Service Officer Test (FSOT). 24 of them are printed below, taken from across the deck — no signup, no paywall on the preview.
24 sample cards from the Economics deck
Sampled from the end of the deck, so these are different cards from the ones shown on the syllabus page.
What are the four phases of the business cycle?
Expansion (peak), peak, contraction/recession, and trough, followed by recovery. Output, employment, and income fluctuate around a long-run growth trend.
What is the common rule-of-thumb definition of a recession?
Two consecutive quarters of declining real GDP. (In the US, the NBER officially dates recessions using a broader set of indicators.)
What is the difference between demand-pull and cost-push inflation?
Demand-pull inflation results from aggregate demand exceeding supply ('too much money chasing too few goods'). Cost-push inflation results from rising production costs (e.g., higher oil or wages) shifting aggregate supply left.
What primarily drives long-run economic growth?
Increases in productivity (output per worker), driven by capital accumulation, technological progress, human capital (education/skills), and growth in the labor force.
What is fiscal policy and who conducts it?
Fiscal policy is the use of government spending and taxation to influence the economy. In the US it is set by Congress and the President.
What is the difference between expansionary and contractionary fiscal policy?
Expansionary fiscal policy increases government spending and/or cuts taxes to stimulate a weak economy. Contractionary fiscal policy cuts spending and/or raises taxes to cool an overheating economy.
What is the spending multiplier and its formula?
The multiplier measures how an initial change in spending produces a larger change in total output. Simple multiplier = 1 / (1 - MPC) = 1 / MPS, where MPC is the marginal propensity to consume.
What is the difference between the budget deficit and the national debt?
A budget deficit is the shortfall when government spending exceeds revenue in a single year. The national debt is the cumulative total of all past deficits minus surpluses.
What is the difference between progressive, regressive, and proportional taxes?
A progressive tax takes a larger percentage from higher incomes (e.g., US income tax). A regressive tax takes a larger percentage from lower incomes (e.g., sales tax as a share of income). A proportional (flat) tax takes the same percentage from all incomes.
What is monetary policy and who conducts it in the US?
Monetary policy is the control of the money supply and interest rates to influence the economy; in the US it is conducted by the Federal Reserve (the Fed).
What are the three main tools of the Federal Reserve?
Open market operations (buying/selling government securities), the discount rate (rate charged to banks borrowing from the Fed), and reserve requirements (the fraction of deposits banks must hold).
How does the Fed use open market operations to ease policy?
It buys government securities, which injects money into the banking system, increases reserves, lowers interest rates, and expands the money supply (expansionary policy). Selling securities does the reverse.
What is the money multiplier in fractional reserve banking?
Money multiplier = 1 / reserve requirement ratio. It is the maximum amount the money supply can expand from a new deposit, e.g., a 10% reserve ratio gives a multiplier of 10.
What is the dual mandate of the US Federal Reserve?
To promote maximum (full) employment and stable prices (low, stable inflation). It also aims to moderate long-term interest rates.
What is the principle of comparative advantage?
A country should specialize in producing and exporting goods it can make at a lower opportunity cost than others, even if another country has an absolute advantage in everything; trade then makes both better off.
What is the difference between absolute advantage and comparative advantage?
Absolute advantage is producing more of a good with the same resources (greater efficiency). Comparative advantage is producing a good at a lower opportunity cost. Trade is driven by comparative, not absolute, advantage.
What is the difference between a tariff and a quota?
A tariff is a tax on imported goods that raises their price. A quota is a quantity limit on how much of a good can be imported. Both protect domestic producers but reduce trade and consumer surplus.
What determines exchange rates under a floating regime, and what does appreciation mean?
Exchange rates are set by supply and demand for currencies in the foreign exchange market. Appreciation means a currency gains value relative to another (buys more foreign currency); depreciation means it loses value.
How does currency depreciation affect a country's trade?
A weaker (depreciated) currency makes a country's exports cheaper to foreigners and imports more expensive domestically, tending to increase exports and reduce imports.
What is the balance of payments and its two main accounts?
The balance of payments records all economic transactions between a country and the world. Its two main parts are the current account (trade in goods/services, income, transfers) and the capital/financial account (investment and asset flows).
What is the difference between a trade deficit and a trade surplus?
A trade deficit occurs when a country imports more than it exports (negative net exports). A trade surplus occurs when exports exceed imports (positive net exports).
What is the role of the International Monetary Fund (IMF)?
The IMF promotes global monetary cooperation and financial stability, provides short-term loans to countries facing balance-of-payments crises, and offers economic surveillance and policy advice.
What is the role of the World Bank?
The World Bank provides long-term loans, grants, and technical assistance to developing countries to fund development projects and reduce poverty (distinct from the IMF's short-term stabilization role).
What is the role of the World Trade Organization (WTO)?
The WTO sets and enforces the rules of international trade, works to reduce trade barriers, and provides a forum for negotiating trade agreements and resolving trade disputes between member nations.
What this deck covers
The Economics deck follows the Foreign Service Officer Test (FSOT) Economics syllabus — 3 chapters and 11 topics — so questions land on material that is genuinely examinable rather than trivia around it. That works out to roughly 19.7 cards per chapter.
Answers are written to be recallable, not just readable — averaging about 188 characters, which is long enough to carry the reasoning and short enough to say out loud.
A deck like this earns its keep on the second and third pass. Read the syllabus first so you know the shape of the subject, then use the cards to find the specific facts that have not stuck.
Economics flashcards FAQ
How many Economics flashcards are in this Foreign Service Officer Test (FSOT) deck?
59 cards. This page previews 24 of them, sampled evenly across the deck so you can judge the difficulty before installing anything.
Are these Foreign Service Officer Test (FSOT) flashcards free?
Yes. The preview here is free to read with no signup, and the full 59-card deck is free inside the Examius app.
What do the Economics cards cover?
They follow the Foreign Service Officer Test (FSOT) Economics syllabus — 3 chapters and 11 topics — so the questions track what is actually examinable.
How should I use these flashcards?
Read the syllabus first so you know the shape of the subject, then drill the deck. Examius schedules each card with spaced repetition, so cards you keep missing come back sooner and ones you know drift further apart.