Econ 110 BYU – Flashcards
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Historically, the typical price-earnings ratio for stocks is about:
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15
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A country's trade balance will fall if..
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either saving falls or investment rises.
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As the number of stocks in a person's portfolio increases,
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the risk of the portfolio decreases, as indicated by the decreasing value of the standard deviation of the portfolio.
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Which of the following is generally an opportunity cost of investment in human capital?
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forgone present wages
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If traveler's checks were $1000 higher and saving deposits were $500 higher, M1 would be
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$1,000 higher and M2 would be $1,500 higher.
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In a closed economy, private saving is
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the amount of income that households have left after paying for their taxes and consumption.
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If the exchange rate rises from .65 British pounds per dollar to .70 pounds per dollar, then compared to British goods, U.S. goods become
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relatively more expensive for both British and U.S. residents.
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If there were no factors keeping wages from reaching equilibrium then there would be no
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structural unemployment.
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Which of the following is correct?
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A bank's deposits at the Federal Reserve counts as part of the bank's reserves. The Federal Reserve pays
interest on these deposits.
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Which of the following statements is correct? In the special case of the 100-percent reserve banking the money multiplier is
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1 and banks do not create money.
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Rafael is the newly-appointed plant manager for a company that manufactures head phones. Rafael's senior supervisors told him that the output the firm produces, given the number of workers employed, indicates that some workers may be shirking. According to efficiency wage theory, what should he do?
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pay all workers more than the equilibrium wage rate
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If there are diminishing returns to capital, then
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increases in the capital stock increase output by ever smaller amounts.
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A U.S. firm exchanges dollars for yen and then uses them to buy Japanese goods. Overall as a result of these transactions
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both U.S. net capital outflow and U.S. net exports fall.
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If the exchange rate is .60 British pounds = $1, a bottle of ale that costs 3 pounds costs
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$5
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Frictional unemployment is
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inevitable, because at any given time, jobs are being created in some firms and destroyed in other firms.
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A central bank's setting (or altering) of the money supply is known as
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monetary policy
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The money supply decreases if
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households decide to hold relatively more currency and relatively fewer deposits and banks decide to hold relatively more excess reserves and make fewer loans.
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Net capital outflow equals the purchase of
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foreign assets by domestic residents - the purchase of domestic assets by foreign residents
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Industrial machinery is an example of
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a factor of production that in the past was an output from the production process.
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Which of the following is not correct?
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Economists who study the effects of unions typically find that union workers earn about 25 to 35 percent more than those who are not in a union
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Which of the following statements is true?
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a.The quantity of natural resources per worker can influence productivity.
b. Technological knowledge and human capital are closely related.
c. Over long periods of time, the prices of most natural resources are stable or falling, relative to other prices.
d. All of the above are correct.
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If the Mexican nominal exchange rate does not change, but prices rise faster in Mexico than in all other countries, then the Mexican real exchange rate
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rises
The nominal exchange rate simply states how much of one currency can be traded for a unit of another currency. The real exchange rate, on the other hand, describes how many of a good or service in one country can be traded for one of that good or service in another country.
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Which of the following people purchased the correct asset to meet his or her objective?
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Tim wanted a high return, even if it meant taking some risk, so he purchased stock issued by Specific Electric instead of bonds issued by Specific Electric.
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In the fourteenth century it is estimated that deaths resulting from the bubonic plague reduced the population by about a third. Assuming diminishing returns, the decrease in population should have
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increased productivity and real GDP per person.
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A creditor of a corporation holds
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bonds sold by the corporation. If the corporation experiences financial difficulties bond holders are paid before stock holders
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Net exports must equal zero for any economy
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a. that is closed.
b. for which Y = C + I + G.
c. for which S = Y - C - G.
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In an economy that relies upon barter,
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there is no item in the economy that is widely accepted in exchange for goods and services.
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At some point during the financial crisis of 2008-2009, people with uninsured deposits at financial institutions withdrew money from their accounts at those institutions. This phenomenon characterized which element of the financial crisis?
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the decline in confidence in financial institutions
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An economy's natural rate of unemployment is the
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amount of unemployment that the economy normally experiences.
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During the past century the average growth rate of U.S. real GDP per person implies that it doubled, on average, about every
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35 years.
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Which of the following best illustrates diversification?
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Instead of holding only the stocks of companies engaged in the banking business, a person decides to hold stock in a number of different companies producing different goods and services.
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Which of the following is not always correct for a closed economy?
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a. National saving equals private saving plus public saving.
b. Net exports equal zero.
c. Real GDP measures both income and expenditures.
d. Private saving equals investment.
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moral hazard
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is a situation in which one party gets involved in a risky event knowing that it is protected against the risk and the other party will incur the cost.
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adverse selection
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is the tendency of those in dangerous jobs or high risk lifestyles to get life insurance. 2. A situation where sellers have information that buyers don't (or vice versa) about some aspect of product quality.
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risk-return tradeoff
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is the principle that potential return rises with an increase in risk
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The Bureau of Labor Statistics produces data on
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a. unemployment.
b. types of employment.
c. length of the average workweek.
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fundamental analysis
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is the foundation of solid investing. It helps you determine the underlying health of a company by examining the business' core numbers: its income statements, its earnings releases, its balance sheet, and other indicators of economic health.
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Unemployment insurance
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a. may improve the ability of the economy to match workers with appropriate jobs.
b. reduces the job search efforts of the unemployed.
c. increases the amount of frictional unemployment in the economy.
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The curve becomes flatter as the amount of capital per worker increases because of
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diminishing returns to capital.
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If a bank that desires to hold no excess reserves and has just enough reserves to meet the required reserve ratio of 15 percent receives a deposit of $600, it has a
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$510 increase in excess reserves and a $90 increase in required reserves.
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Evidence indicates that the typical person who becomes unemployed will
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soon find a job.
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Which of the following is included in the demand for loanable funds?
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government borrowing but not investment
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The available evidence indicates that
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outperforming the market on a consistent basis is extremely difficult to do.
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Measured in 2010 dollars, real GDP per person in the United States in 2010 was about 14 times that in
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India
