Econ 101 Midterm – Flashcards
140 test answers
Unlock all answers in this set
Unlock answers 140question
How scarce resources are allocated to best meet society's goals
answer
Economics can be defined as the study of:
Unlock the answer
question
Maximum combinations of goods and services an economy can produce given its available resources and technology.
answer
A production-possibilities curve indicates the:
Unlock the answer
question
The limitations that exist because of scarce resources
answer
The production-possibilities curve illustrates:
Unlock the answer
question
Bowed outward.
answer
If an economy experiences increasing opportunity costs with respect to two goods, then the production-possibilities curve between the two goods will be:
Unlock the answer
question
Getting the most goods and services from the available resources.
answer
When an economy is producing efficiently it is:
Unlock the answer
question
Potential output.
answer
The points on a production-possibilities curve show
Unlock the answer
question
It can produce more of one good without giving up some of another good
answer
If an economy is producing inside the production-possibilities curve, then:
Unlock the answer
question
A shift outward of the production-possibilities curve.
answer
A technological advance would best be represented by:
Unlock the answer
question
Shift outward of the production-possibilities curve
answer
Economic growth would best be represented by a:
Unlock the answer
question
Are willing to pay the highest price
answer
In a market economy, the people who receive the goods and services that are produced are those who:
Unlock the answer
question
The use of market prices and sales to signal desired output.
answer
The market mechanism may best be defined as:
Unlock the answer
question
Works because prices serve as a means of communication between consumers and producers
answer
The market mechanism:
Unlock the answer
question
The overall economy.
answer
Macroeconomics focuses on the performance of:
Unlock the answer
question
Predict economic behavior, develop economic policies, and explain economic behavior.
answer
Economic models are used by economists to:
Unlock the answer
question
GDP of the United States.
answer
The measure of new goods and services produced in the United States is the:
Unlock the answer
question
Per capita GDP.
answer
Those who are interested in assessing the relative standard of living of different countries over a given time period are most likely to look at:
Unlock the answer
question
Is an increase in output or real GDP.
answer
Economic growth:
Unlock the answer
question
Net exports.
answer
The four major uses of total output are consumption, investment, government purchases, and:
Unlock the answer
question
Consumer goods and services.
answer
Over two-thirds of U.S. output consists of:
Unlock the answer
question
U.S. government purchases
answer
Which of the following is part of the U.S. GDP?
Unlock the answer
question
country must devote some of its scarce resources to investment
answer
In order to attain higher living standards in the long run:
Unlock the answer
question
A payment to an individual for which no current goods or services are exchanged.
answer
The term income transfer refers to:
Unlock the answer
question
The world's biggest exporter and also the world's biggest importer
answer
The U.S. is:
Unlock the answer
question
Lower opportunity cost than your trading partner.
answer
Comparative advantage refers to the ability to produce a good at a:
Unlock the answer
question
Decrease.
answer
IF all the countries in the world decide to prohibit trade, then world output will, ceteris paribus
Unlock the answer
question
Knowledge and skills workers possess.
answer
Human capital is defined as the:
Unlock the answer
question
Shift the curve outward
answer
How will an increase in the level of human capital, ceteris paribus, affect an economy's production-possibilities curve?
Unlock the answer
question
An externality.
answer
The cost or benefit of a market activity borne by a third party is:
Unlock the answer
question
Prices tend to be higher.
answer
When monopolies exist:
Unlock the answer
question
Market participation allows individuals to specialize and, ultimately, consume more
answer
People benefit by participating in the market because:
Unlock the answer
question
Product markets; factor markets
answer
Business firms supply goods and services to ____ and purchase factors of production in ____.
Unlock the answer
question
Factors of production; final goods and services
answer
Individual consumers supply ____ and purchase ____.
Unlock the answer
question
The buyer is both willing and able to purchase the good at alternative prices.
answer
A buyer is said to have a demand for a good only when:
Unlock the answer
question
Decreases
answer
Ceteris paribus, if the opportunity cost of purchasing a good rises, then the maximum price a particular consumer is willing to pay for that good:
Unlock the answer
question
Has a negative slope
answer
According to the law of demand, a demand curve:
Unlock the answer
question
A higher price of the good.
answer
A lower quantity demanded of a good reflects, ceteris paribus:
Unlock the answer
question
Price
answer
Which of the following is not held constant along a given demand curve for a good?
Unlock the answer
question
An increase in consumers' income
answer
Ceteris paribus, which of the following would generally cause an increase in the demand for automobiles?
Unlock the answer
question
An increase in the demand for the other.
answer
Peanut butter and jelly are complements. A decrease in the price of one will result in:
Unlock the answer
question
Holding everything constant except for the variables you are interested in examining
answer
Ceteris paribus means:
Unlock the answer
question
Means that price has changed and there is movement along the demand curve.
answer
A change in demand means there has been a shift in the demand curve, and a change in quantity demanded:
Unlock the answer
question
Add the quantities demanded for each individual demand schedule horizontally.
answer
To calculate market demand we:
Unlock the answer
question
The prices of the factors of production
answer
Which of the following is a determinant of supply?
Unlock the answer
question
Results in a change in quantity supplied
answer
A change in the price of a good:
Unlock the answer
question
An increase in the price of perfume
answer
Ceteris paribus, which of the following is most likely to cause an increase in the quantity supplied of perfume?
Unlock the answer
question
Supply because of a change in a non-price determinant
answer
A shift in supply is defined as a change in:
Unlock the answer
question
A decrease in the supply of corn syrup
answer
Ceteris paribus, if the subsidies given to corn syrup producer decrease, then we can expect:
Unlock the answer
question
The market supply curve intersects the market demand curve.
answer
The equilibrium price in a market is found where:
Unlock the answer
question
No shortages or surpluses.
answer
At the equilibrium price there are:
Unlock the answer
question
That price is greater than the equilibrium price.
answer
If there is a surplus at a given price, then:
Unlock the answer
question
Producers reduce the level of output and reduce price.
answer
When a surplus exists for a product:
Unlock the answer
question
Price of the tickets must have been above the equilibrium price
answer
A ballet performance had many empty seats. This implies that the:
Unlock the answer
question
Higher equilibrium price
answer
A rightward shift in a demand curve and a leftward shift in a supply curve both result in a:
Unlock the answer
question
Decrease and quantity to decrease.
answer
A leftward shift of the market demand curve for HDTVs, ceteris paribus, causes equilibrium price to:
Unlock the answer
question
Decrease and the equilibrium quantity of jelly to decrease.
answer
Assume peanut butter and jelly are complements. Ceteris paribus, an increase in the price of peanut butter will cause the equilibrium price for jelly to:
Unlock the answer
question
A shortage exists at the old equilibrium price.
answer
When the demand for coffee increases, ceteris paribus, the equilibrium price will also increase because:
Unlock the answer
question
Decrease and the equilibrium quantity of ice cream to increase.
answer
Assume milk is used to produce ice cream. Ceteris paribus, a decrease in the price of milk will cause the equilibrium price of ice cream to:
Unlock the answer
question
Changes in market prices.
answer
Resources are directed from one industry to another by:
Unlock the answer
question
Leads the economy to the wrong mix of output.
answer
Market failure implies that the market mechanism:
Unlock the answer
question
Externalities.
answer
Government intervention may be appropriate to correct market outcomes because of:
Unlock the answer
question
When the market mechanism fails to achieve the optimal mix of output
answer
From an economic standpoint, government intervention is justified:
Unlock the answer
question
On its own may not always provide the optimal mix of goods and services
answer
The market:
Unlock the answer
question
Is consumed by one person and excludes consumption by others.
answer
A private good:
Unlock the answer
question
Flood control
answer
Which of the following is an example of a public good?
Unlock the answer
question
Cannot be denied to consumers who have not paid.
answer
In economics, a public good:
Unlock the answer
question
Public goods.
answer
The federal government's role as the provider of national defense is justified by considerations of:
Unlock the answer
question
Public goods
answer
Governments usually build highways because it is difficult to exclude individuals who don't pay for the highways from using them. What type of market failure is involved?
Unlock the answer
question
Reflects the inability to exclude an individual from the benefits of someone else's purchase.
answer
The free-rider problem:
Unlock the answer
question
Joint consumption allows those who do not pay for the good to still benefit from the good.
answer
The market tends to under-produce public goods because:
Unlock the answer
question
Control of resources.
answer
Market power may result from:
Unlock the answer
question
The use of market prices and sales to signal desired output.
answer
The term market mechanism refers to:
Unlock the answer
question
May be beneficial to society if they are natural monopolies and are regulated.
answer
Monopolies:
Unlock the answer
question
Produce less and charge a higher price than what would be socially optimal
answer
The development of market power by a firm is considered to be a market failure because firms with market power will:
Unlock the answer
question
Antitrust policy.
answer
Government intervention to alter market structure or prevent abuse of market power is the basic purpose of:
Unlock the answer
question
There are external benefits associated with education
answer
If the economy relies entirely on the market mechanism to answer the WHAT, HOW, and FOR WHOM questions, it tends to:
Unlock the answer
question
Producers experience lower costs than society.
answer
The market will overproduce goods that have external costs because:
Unlock the answer
question
Both producers and consumers have an incentive to produce and consume too much
answer
When external costs result from the production of a good:
Unlock the answer
question
B. The inoculation of college students against the flu
answer
Which of the following produces external benefits?
Unlock the answer
question
B. Good with an external cost
answer
If Good X has social demand that is less than market demand, then Good X must be a:
Unlock the answer
question
B. Are the costs or benefits of market activities that "spill over" onto third parties
answer
Externalities:
Unlock the answer
question
Multiplying output by price and adding the resulting dollar values.
answer
DVD players can be added to bicycles to compute the GDP by:
Unlock the answer
question
$430,000
answer
Suppose iPhones cost consumers $200 and USB cables cost consumers $25. What contribution does the production of 2000 iPhones and 1200 USB cables make to GDP?
Unlock the answer
question
GDP measures output within the nation's borders only.
answer
Which of the following statements is correct concerning GDP and GNP?
Unlock the answer
question
Is equal to a nation's GDP divided by its population.
answer
GDP per capita:
Unlock the answer
question
Make international comparisons of the standard of living.
answer
The GDP per capita is the most practical way to:
Unlock the answer
question
The value of lawn mowing provided by a teenager for his own family
answer
Which of the following is excluded from calculations of GDP?
Unlock the answer
question
Productive but excluded from GDP because it is a nonmarket activity.
answer
When an individual makes repairs to her own home instead of hiring a company to make the repairs, the activity is:
Unlock the answer
question
Paper purchased by a textbook company
answer
Which of the following is not a final good or service?
Unlock the answer
question
Only the value of final goods.
answer
To avoid counting the same output more than once the calculation of GDP includes:
Unlock the answer
question
Nominal GDP.
answer
The value of final output produced in a given period, measured in current prices is:
Unlock the answer
question
Value of final output produced in a given period measured in constant prices.
answer
Real GDP is the:
Unlock the answer
question
Analyze the growth rate of the economy over time.
answer
Real GDP is used most effectively to:
Unlock the answer
question
Exceed percentage increases in real GDP.
answer
In periods of rising prices, percentage increases in nominal GDP will:
Unlock the answer
question
$7,500 measured in period 1 prices.
answer
Assume nominal GDP is $10,000 billion in period 1 and $15,000 billion in period 2. If prices in period 2 are twice as high as in period 1, real GDP in period 2 is:
Unlock the answer
question
Depreciation.
answer
The wearing out of plant and equipment is known as:
Unlock the answer
question
Gross investment is greater than depreciation.
answer
An economy's production possibilities are most likely to expand if:
Unlock the answer
question
Two-thirds of total output.
answer
When calculating GDP, consumption makes up approximately:
Unlock the answer
question
A retirement portfolio of stocks and bonds.
answer
The economic definition of investment includes all of the following except:
Unlock the answer
question
The value of exports minus the value of imports.
answer
Net exports are:
Unlock the answer
question
C + I + G + (X - M).
answer
The components of GDP are:
Unlock the answer
question
Are old enough to work but choose not to work.
answer
People are not part of the labor force when they:
Unlock the answer
question
In the labor force divided by the total population.
answer
The labor-force participation rate is the number:
Unlock the answer
question
Percentage of the population that is willing and able to work is declining.
answer
When the labor-force participation rate is declining, the:
Unlock the answer
question
Not part of the labor force and is not counted in the unemployment rate.
answer
Jack graduated from college last month, but he has not yet started looking for a job. Jack is:
Unlock the answer
question
The inability of labor force participants to find jobs.
answer
Unemployment is defined as:
Unlock the answer
question
U.S. Census Bureau in monthly surveys that examine whether people are working or are willing to work.
answer
The most widely used measure of the unemployment rate is found by the:
Unlock the answer
question
Black teenagers
answer
Which of the following groups typically has the highest unemployment rate?
Unlock the answer
question
College graduates
answer
Which of the following groups generally has the lowest unemployment rate?
Unlock the answer
question
Duration of unemployment rises.
answer
When an economy enters a recession the:
Unlock the answer
question
People seeking full-time paid employment that work only part-time or are employed at jobs below their capability.
answer
Underemployment is defined as:
Unlock the answer
question
People who report that they are actively seeking a job even when they have little or no intention of finding one.
answer
The phantom unemployed are:
Unlock the answer
question
Seasonal unemployment.
answer
When migrant workers seek employment after the crops have been picked, the unemployment rate goes up. This situation is an example of:
Unlock the answer
question
Frictionally unemployed.
answer
Nancy returns to school to study medicine. After graduating, she spends six months looking for a job. During this period she is considered:
Unlock the answer
question
Structurally unemployed.
answer
Tom worked at NASA for thirteen years. In the fourteenth year, his job was automated, resulting in him losing his job. He looked for a new job for eighteen months before finding a job that paid less. During his eighteen month job search, Tom was considered to be:
Unlock the answer
question
Cyclically unemployed.
answer
A U.S. worker who loses his or her job in an import industry because aggregate demand decreases would be classified as, ceteris paribus:
Unlock the answer
question
Cyclical
answer
Which of the following unemployment categories is most clearly related to the rate of growth in real GDP?
Unlock the answer
question
Average prices are rising, but it is not certain what is happening to relative prices.
answer
Inflation means:
Unlock the answer
question
Signaling changes in the desired mix of output
answer
Which of the following functions are performed by changes in relative prices but not by changes in average prices?
Unlock the answer
question
It is the same as your real income
answer
Which of the following is not true about your nominal income?
Unlock the answer
question
Nominal income.
answer
The amount of money income received in a given time period, measured in current dollars is:
Unlock the answer
question
Nominal income adjusted for inflation.
answer
Real income is:
Unlock the answer
question
The purchasing power of the money you receive.
answer
Your real income is:
Unlock the answer
question
Decreases
answer
Inflation ________________ the purchasing power of money.
Unlock the answer
question
Causes businesses to focus more on the future.
answer
Inflation affects production decisions because it:
Unlock the answer
question
Consumption, saving, and investment behavior.
answer
The uncertainty that results from inflation causes changes in:
Unlock the answer
question
A measure of changes in the average price of consumer goods and services.
answer
The Consumer Price Index is:
Unlock the answer
question
Find out what people buy with their incomes and how the prices of what they buy change.
answer
To construct the Consumer Price Index, the Bureau of Labor Statistics must:
Unlock the answer
question
13.6 percent.
answer
If the CPI increases from 110 to 125 for one year, the rate of inflation for that year is:
Unlock the answer
question
11.5 percent
answer
At the beginning of 2000 the CPI was 159.3. At the end of 2000 it was 177.6. What was the approximate rate of inflation in 2000?
Unlock the answer
question
The base period.
answer
or the CPI, the market basket is expressed in terms of what the goods cost in:
Unlock the answer
question
s the broadest price index, covering all output.
answer
The GDP deflator:
Unlock the answer
question
Value of final output produced, adjusted for changing prices.
answer
Real GDP is the:
Unlock the answer
question
a good or service society deems everyone is entitled to some minimal quality, examples are food stamps, housing vouchers, medic aid
answer
Merit goods
Unlock the answer
question
tax and transfer payments = payments to individuals for which no current goals or services are exchanged, like social security, welfare and unemployment benefits
answer
Inequity
Unlock the answer
question
a postal service, welfare, social reward
answer
Equity
Unlock the answer
question
goods like alcohol and gas
answer
Excise taxes
Unlock the answer
