question

How People Make Decisions 1. People Face Trade-offs 2. The Cost of Something is What you give up to get it 3. Rational People think at the margin 4. People respond to incentives HOW PEOPLE INTERACT 5. Trade can make everyone better off 6. Markets are usually a good way to organize economic activity 7. Governments can sometimes improve market outcome HOW THE ECONOMY WORKS AS A WHOLE 8. A country's standard of living depends on its ability to produce goods and services 9. Prices rise when the government prints too much money 10. Society faces a short-run trade-off between inflation and unemployment

answer

10 Principles

question

resources are limited

answer

The phenomenon of scarcity stems from the fact that

question

people face trade-offs

answer

MItch has $100 to spend and wants to buy either a new amplifier for his guitar or a new mp3 player to listen to music while working out. Both the amplifier and the mp3 player cost $100,s o he can only buy one. This illustrates the basic concept that

question

people work less and produce fewer goods and services

answer

When the government redistributes income from the wealthy to the poor,

question

understand that the opportunity cost of attending college is very high

answer

High-school athletes who skip college to become professional athletes

question

the enjoyment she would have received had she watched the video

answer

Mallory decides to spend three hours working overtime rather than watching a video with her friends. she earns $8 an hour. Her opportunity cost of working is

question

charged any ticket price above $0 for the three remaining seats

answer

The average cost per seat on the 50-passenger floating-on-air bus company's trip from Kansas City to St. Louis, on which no refreshments are served, is $45. In advance of a particular trip, three seats remain unsold. The bus company could increase its profit only if it

question

how the decisions of households and firms lead to desirable market outcomes

answer

The invisible hand refers to

question

Labor is more productive making cotton cloth with a mechanical loom that with a hand loom.

answer

A worker in Thailand can earn $2 per day making cotton cloth on a hand loom. A worker in the United States can earn $80 per day making cotton cloth with a mechanical loom. What accounts for the difference in wages?

question

In the short run, falling inflation is associated with rising employment.

answer

Which of the following is the most correct statement about the relationship between inflation and unemployment?

question

both buyers and sellers

answer

In a competitive market, the quantity of a product produced and the price of the product are determined by

question

Sellers set the price of the product

answer

Which of the following is not a characteristic of a perfectly competitive market... A. sellers set the price of the product B. There are many sellers. C. Buyers must accept the price the market determines.

question

-Chuck's -24 Units -increases by 3 units

answer

Price Audrey Bob Chuck Dottie $12 2 1 3 4 $10 4 4 4 5 $8 6 7 5 6 $6 8 8 4 7 $4 10 9 3 8 $2 12 10 2 9 -Whose Demand does not obey the law of demand? -If these are the only four buyers in the market, then the market quantity demanded at a price of $8 is? - If these are the only four buyers in the market, then when the price decreases from $6 to $4, the market quantity demanded?

question

a leftward shift of a demand curve

answer

A decrease in demand is represented by

question

a decrease in the price of mp3 players

answer

Which of the following would not shift the demand curve for mp3 players?

question

razors to increase

answer

Suppose the American Medical Association announces that men who shave their heads are less likely to die of heart failure. We could expect the current demand for

question

The demand for rice will increase.

answer

What will happen in the rice market now if buyers expect higher rice prices in the near future?

question

an increase in the price of mp3 players

answer

Which of the following would not shift the supply curve for mp3 players?

question

The supply of rice will decrease

answer

What will happen in the rice market now if sellers expect higher rice prices in the near future?

question

demand tends to be inelastic

answer

For a good that is a necessity

question

toothpaste

answer

Which of the following is likely to have the most price inelastic demand? -mint-flavord toothpaste -toothpaste -Colgate mint flavored toothpaste -a generic mint-flavored toothpaste

question

one year after the price increase

answer

If the price of natural gas rises, when is the price elasticity of demand likely to be the highest?

question

the demand for motor oil would tend to be inelastic

answer

There are very few, if any, good substitutes for motor oil. Therefore,

question

Tommy Hilfiger jeans

answer

For which of the following goods would demand be most elastic. - clothing - blue jeans -Tommy Hilfiger jeans - All three would have the same elasticity of demand since they are all related

question

1

answer

Suppose there is a 6 percent increase in the price of good X and a resulting 6 percent decrease in the quantity of X demanded. Price elasticity of demand for X is

question

4.5 percent increase in the quantity demanded

answer

If the price elasticity of demand for a good is 1.5, then a 3 percent decrease in price results in a

question

assuming that the demand for university education is inelastic

answer

Get Smart University is contemplating an increase in tuition to enhance revenue. If GSU fells that raising tuition would enhance revenue, it is

question

Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous.

answer

Suppose that demand for a good increases and, at the same time, supply of the good decreases. What would happen in the market for the good?

question

Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.

answer

Suppose the number of buyers in a market increases and a technological advancement occurs also. What would we expect to happen in the market?

question

shows the relationship between quantity of inputs used to make a good and the quantity of output of that good

answer

Production Function

question

the increase in output that arises from an additional unit of that input

answer

Marginal Product

question

Fixed Cost + Variable Cost

answer

Total Cost

question

Fixed Cost/ Quantity

answer

Average Fixed Costs

question

Variable Cost/ Quantity

answer

Average Variable Cost

question

Total Cost/Quantity

answer

Average Total Cost

question

change in total cost/ change in quantity

answer

Marginal Cost

question

trends

answer

The phrases of a business cycle include

question

-Economic fluctuations are irregular and unpredictable - Most macroeconomic variables fluctuate together -As output falls, unemployment rises

answer

Three key facts about economic fluctuations (business cycle)

question

significant decline in economic activity over a few months

answer

What is recession? How do you know we are in a recession?

question

normally visible in real GDP, real income, employment, industrial production, and wholesale retail sales.

answer

A recession when we have two consecutive quarters of decline in real GDP?

question

NBER

answer

___ in the US has many years had a Business Cycle Dating Committee dating the US business cycle.

question

real GDP

answer

Which of the following is most commonly used to monitor short-run changes in economic activity? - the inflation rate -real GDP -aggregate demand -aggregate supply

question

short-run economic fluctuations.

answer

In 1936, John Maynard Keynes published a book, The General Theory, which attempted to explain

question

aggregate demand is not adequate

answer

What is the cause of short-run economic fluctuation?

question

to explain short-run fluctuations in economic activity around its long-run trend

answer

Economist use the model of aggregate demand and aggregate supply

question

short-run fluctuations in the economy

answer

Most economists use the aggregate demand and aggregate supply model primarily to analyze

question

falls because falling prices increase the real value of a dollar

answer

People will spend more if the price level

question

decreased consumption, which shifts aggregate supply left

answer

Suppose a stock market crash makes people feel poorer. This decrease in wealth would induce people to desire

question

in the long run the aggregate supply curve is vertical in the short run slopes upward

answer

Aggregate supply curve in the long run: in the short run:

question

aggregate demand right

answer

From 2001 to 2005 there was a dramatic rise in the price of houses. if this made people feel wealthier, then it would shift

question

consumption increases, so aggregate demand shifts right

answer

When taxes decrease, consumption, increases, so aggregate demand shifts right

question

- aggregate demand shifts left - both the price level and real GDP falls

answer

Suppose the economy is in long-run equilibrium. Then because of corporate scandal, international tensions, and loss of confidence in policymakers, people become pessimistic regarding the future and retain that level of pessimism for some time. - Which curve shifts and in which direction? - IN the short run what happens to the price level and real GDP?

question

shifts in aggregate demand shifts in aggregate supply

answer

Two causes of economic fluctuations

question

1. passive: do nothing and wait for economy to recover by itself 2. active: use fiscal (increase spending or cut taxes) and monetary policy (increase money supply or decrease interest aright) to fight the economic recession

answer

Policymakers may respond to a recession in 2 ways

question

Keyenes inadequate demand and an easy solution, expansionary fiscal policy

answer

Mass unemployment had a single cause

question

changes in federal taxes and purchases that are intended to achieve macroeconomic policy objectives

answer

Fiscal policy

question

federal

answer

Economists use the term fiscal policy to refer only to the actions of the _____ government

question

increasing government purchases or decreasing taxes

answer

Expansionary fiscal policy

question

decreasing government purchases or increasing taxes

answer

Contractionary fiscal policy

question

the actions the Fed takes to manage the money supply and interest rates to pursue its macroeconomic policy goals

answer

Monetary policy

question

many buyers and sellers trading identical products so that each buyer and seller is a price taker.

answer

A competitive market has

question

is the selling price times the quantity sold PxQ

answer

Total Revue for a firm

question

total revenue divided by the quantity sold

answer

Average revenue

question

change in the total revenue form an additional unit sold

answer

Marginal revenue

question

Total Revenue- Total Cost or (Price - Average Total Cost) x Q

answer

Profit

question

at the quantity where marginal revenue= marginal cost

answer

Profit maximization occurs

question

increase Q

answer

When Marginal Revenue ; Marginal Cost

question

decrease Q

answer

When Marginal Revenue; Marginal cost

question

the revenue it gets from producing is less than the variable cost of production TR;VC

answer

The first shuts down if

question

lies above average variable cost

answer

The portion of the marginal cost curve that _______ is the competitive firm's short run supply curve.

question

revenue it would get from producing is less that its total cost. TR<TC

answer

In the long run, the firm exits the market if

question

The production function depicts the relationship between the quantity of labor and the quantity of output.

answer

Which of the following statements about a production function is correct for a firm that uses labor to product output?

question

The farmer is able to product 5600 bushels of wheat when he hires 4 workers

answer

On a 100 acre farm, a farmer is able to product 3000 bushels of wheat when he hires 2 workers. He is able to produce 4400 bushels of wheat when he hires 3 workers. Which of the following possibilities is consistent with the property of diminishing marginal product

question

average total cost is falling

answer

When marginal cost is less than average total cost

question

$6.43 $-3000

answer

A certain firm produces and sells staplers. Last year, it produced 7000 staplers and sold each stapler for $6. In producing the 7000 staplers, it incurred variable costs of $28000 and a total cost of $45000. -In producing the 7000 staplers, the firm's average total cost...? - The firms accounting profit for the year was...?

question

$4

answer

For Firm A, when four unites of output are produced, the total cost is $175 and the average variable cost is $33.75. What would the average fixed cost be if ten units were produced?

question

long run supply curve lies above average total cost

answer

The competitive firm's _______________ is the portion of its marginal-cost curve that ________________.

question

equal to marginal revenue

answer

For a firm in a perfectly competitive market, the price of the good is always

question

$32

answer

Suppose a firm in a competitive market produces and sells 8 units of output and has a marginal revenue of $8. What would be the firm's total revenue if it instead produced and sold 4 units of output?

question

price is below the firm's average variable cost

answer

When a perfectly competitive firm decides to shut down, it is most likely that

question

loss of exactly $27

answer

A profit-maximizing firm in a competitive market is able to sell its product for $7. At its current level of output, the firm's average total cost is $10. The firm's marginal cost curve crosses its marginal revenue curve at an output level of 9 units. The firm experiences a

question

$110

answer

Smith Tire Company has a total fixed cost of $300,000 per year. The firm's average variable cost is $80 for 10,000 tires. At that level of output, the firm's average total costs equal ...

question

Jennifer must earn above a 3.7 GPA in her senior year in order to raise her cumulative GPA to a 3.7

answer

Jennifer is a junior in college. Her current cumulative grade point average is 3.5 out of a 4.0 scale. Jennifer is hoping that by the time she graduates, she can raise her cumulative GPA to a 3.7.What must she earn to raise her cumulative GPA to a 3.7?

question

Many firms have market power.

answer

Which of the following is NOT a characteristic of a perfectly competitive market? - firms are price takers - firms can freely enter the market - many firms have market power - goods offered for sale are largely the same

question

$1,000

answer

Smith Technologies has average variable costs of $1 and average total costs of $3 when it produces 500 units of output. The firm's total fixed costs equal

question

$4800

answer

Laura is gourmet chef who runs a small catering business in a competitive industry. Laura specializes in making wedding cakes. Laura sells 20 wedding cakes per month. Her monthly total revenue is $4500. The marginal cost of producing the 101st unit of output is $300. What is the total cost of producing 101 units?

question

1,000

answer

Assume a certain firm is producing Q=1,000 units of output. At Q=1000, the firm's marginal cost = $15 and its average total cost = $11. The firm sells its output for $12 per unit. At q=1000 the firm's profit equals

question

10985

answer

Assume a certain firm is producing Q=1,000 units of output. At Q=1000, the firm's marginal cost = $15 and its average total cost = $11. The firm sells its output for $12 per unit. At q=999 what is the firm's total cost?

question

the average fixed cost is becoming smaller and smaller

answer

Bob Edwards owns a bagel shop. Bob hires an economist who assesses the shape of the bagel shops ATC curve as a function of the # of bagels produced. The results indicate a Ushaped ATC curve. Bob's economist explains that ATC is U-shaped for 2 reason. The first is the existence of diminishing marginal product which causes it to rise. What would be the second reason?

question

the total market value of final goods and services produced within a country in a given period of time

answer

GDP

question

falls

answer

Yoda switches from going to Speedy Lube for an oil change to changing the oil in his car himself, then GDP

question

10.

answer

A barber charges $10 for a haircut. In turn, the barber pays his assistant $2 per haircut in return for sweeping the floor, sharpening the scissors, and other chores. For each haircut given, the total contribution of the barber and his assistant, taken together, to GDP is

question

Loony, a Canadian citizen grows sweet corn in Minnesota and sells it to a grocery store in Canada.

answer

Which of the following examples of production of goods and services would be included in US GDP? - Loony, a Canadian citizen, grows sweet corn in Minnesota and sells it to a grocery store in Canada. - Uncle Sam, an American citizen, grows peaches for his family in the back yard of their Atlanta home.

question

200

answer

Amy's card shop receives a shipment of Valentine's Day cards in December 2008. Amy pays the wholesale distributor of the cards a total of $500. In February 2009 she sells the cards for a total of $700. The contribution of theses transactions to GDP in the year 2009 is

question

total market value of all final goods and services produced

answer

Production GDP

question

consumption + investment + government spending + (exports-imports)

answer

Expenditure GDP

question

the spending by households on goods and services with the expiation of purchases of new housing (food, clothing, CD, DVD, air ticket)

answer

Consumption (C)

question

The spending capital equipment, inventories, and structures, including new housing

answer

Investment (I)

question

The spending on goods and services by local state and federal governments

answer

Government Purchases (G)

question

Net purchase by foreigners exports minus imports

answer

Net Exports (NX)

question

values the production of goods and services at current prices

answer

Nominal GDP

question

values the production of gods and services at constant prices

answer

Real GDP

question

Only Ralph's payments are included in GDP.

answer

Ralph pays someone to mow his lawn, while Mike mows his own law. Regarding these two practices, which of the following statements is correct? -Only Ralph's payments are included in GDP. - Ralph's payments as well as the estimated value of Mike's mowing services are included in GDP. - Neither Ralph's payments now the estimated value of Mike's mowing services is included in GDP.

question

$3000

answer

In the economy of Wrexington in 2008, exports were $500, GDP was $6400, government purchases were $1500, imports were $600, and investment was $2000. What was Wrexington's consumption in 2008?

question

16 trillion

answer

In 2012, US GDP was almost

question

70 percent of GDP

answer

In the United States in 2012, consumption represented approximately

question

a measure of the overall costs of the goods and services bought by a typical consumer. It is used to monitor changes in the cost of livinig over time

answer

Consumer Price Index

question

(Current CPI- Previous CPI)/ Previous CPI

answer

Compute Inflation

question

the interest rate usually reported and not corrected for inflation (never below 0)

answer

Nominal interest rate

question

the interest rate that is corrected for the effects of inflation Nominal interest rate - inflation

answer

Real interest rate

question

3%

answer

You borrowed $100 for one year. Nominal interest was 5%. During the year inflation was 2%. What was the real interest rate?

question

you don't know, have to do forecasting/projection

answer

How do you know what the real interest rate is next month or next year?

question

has to spend more dollars to maintain the same standard of living

answer

When the consumer price index rises, the typical family

question

the CPI

answer

The inflation rate you are likely to hear on the nightly news is calculated from

question

the CPI better reflects the goods an services bought by consumers

answer

The CPI is more commonly used as a gauge of inflation than the GDP deflator is because

question

104

answer

Suppose a basket of goods and services has been deleted calculate the CPI and 2002 has been selected as the base year. In 2002, the basket's cost was $50; in 2004 , the basket's cost was $52; and in 2006, the baskets cost was $54.60. The value of the CPI in 2004 was

question

5 percent

answer

If the nominal interest rate is 8 percent and the rate of inflation is 3 percent, then the real interest rate is

question

6.7 % (march)

answer

Most recent monthly Unemployment rate in the U.S

question

1933: 24.9% 1944: 1.2%

answer

Historical HI and Low of unemployment

question

Bureau of Labor Statistics

answer

Unemployment is measured by the

question

he or she is over 16

answer

The BLS considers a person an adult if

question

he or she has spent some of the previous week working at a paid job

answer

A person is considered employed if

question

he or she is on temporary layoff, is looking for a job, or is waiting for the start date of a new job

answer

A person is unemployed if

question

a full-time student, homemaker, or retiree, is not in the labor force

answer

A person who fits neither of these categories

question

the total number of workers the sum of the employees and the unemployed

answer

Labor force

question

is calculated as the percentage of the labor force that is unemployed unemployed/labor force

answer

Unemployment rate

question

their labor earnings

answer

To maintain their standard of living, most people rely on

question

short-run ups and downs of the economy

answer

Cyclical unemployment is closely associate with

question

Tuuli, who is waiting for her new job to start

answer

Who of the following would be included in the Bureau of Labor Statistics' "unemployed" category? - Tuuli, who is waiting for her new job to start - Jyri, who worked only 15 hours last week - Panu, who neither has a job now is looking for one - ALL

question

A country's standard of living depends on its ability to produce goods and services.

answer

What are some countries rich and some are poor?

question

(GDPt-GDPt-1)/GDPt-1

answer

Growth (size of economy)

question

Real Per Captia GDP (PCGDPt-PCGDPt-1)/ PCGDPt-1

answer

Growth (standard of living)

question

PCGDP = GDP/population growth of PCGDP = growth of GDP - growth of population

answer

What is the relation ship between size of the economy growth and standard of living growth?

question

over last 50 years delivered impressive growth Chile Singapore, Batswana

answer

Growth Miracles

question

PRODUCTIVIITY

answer

Why is the standard of living is higher in some countries but not in others?

question

plays a key role in determining living standards for all nations in the world

answer

Productive

question

the key determinant of growth in living standards

answer

Growth in productivity

question

average labor productivity * share of population employed

answer

Real GDP per capita

question

how much each worker can produce how many people are working

answer

Real GDP per person depends on

question

2 percent per year

answer

Over the past century in the US, real GDP per person has grown, on average, by about

question

Singapore

answer

In which of the following countries has economic growth been sufficiently strong in recent history to propel that country from being among the poorest i nthe world to being among the reaches in the world? India, Mexico , Nigeria, or Singapore?

question

Ethiopia

answer

Average income has been stagnant for many years in

question

Madagascar

answer

Which of the following countries had the lowest level of real GDP per person in 2010?

question

productivity

answer

The one variable that stands out as the most significant explanation of large variations in living standards around the world is

question

human capital

answer

Perry accumulated a lot of mathematical skills while in high school, college, and graduate school. Economists include these skills as part of Perry's

question

has few natural resources

answer

Despite its status as one of the richest countries in the world, Japan

question

physical capital

answer

The saws, lathes, and drill presses that woodworkers at Cedar Valley Furniture use to produce furniture are called

question

her devious training in survival course

answer

Which of the following best illustrates the human capital of a survivor stander on an island? - the fishing poles she has produced -the invention of a better fishing lure -the fresh fruit and fish on and around the island -her devious training in survival course

question

the spectacular economic growth experienced by South Korea over the years 1960 to 1990

answer

The catch up effect can help explain

question

increases the level of productivity

answer

In the long run, a higher saving rate

question

South Korea

answer

Which of the following countries benefited significantly form the catch-up effect in the last half of the twentieth century? -Ethiopia -US -Canada -South Korea

question

China

answer

Which of the following Countries achieved higher economic growth, in part by mandating a reduction in population growth? - Great Britain -China -Australia -France

question

takes the form of commodity with intrinsic value (Gold, silver, cigarettes)

answer

Commodity money

question

used as money because of government decree. It does not have intrinsic value. (coins, currency, check deposits)

answer

Fiat money

question

Society faces a short-run tradeoff between inflation and unemployment. Prices rise when the government prints too much money.

answer

Which two of the Ten Principles of Economics imply that the Fed can profoundly affect the economy?

question

The Board of Governors The Regional Federal Reserve Banks The Federal Open Market Committee

answer

The primary elements in the Federal Reserve System are

question

Board of Governors seven president Senate

answer

The Fed is run by a ________ which has ____ members appointed by the _____ and confirmed by the ____

question

serve staggered 14 year terms so that one comes vacant every two years, president appoints a member as chairman to serve as a four-year term

answer

The board of governors

question

12 Boston, New York, Philadelphia, Richmond, Atlanta, Cleveland, St. Louis, Dallas, Chicago, Minneapolis, Kansas City, and San Francisco Board of Directors in Washington

answer

Regional Federal Reserve Banks

question

meets approximately every six weeks to review the economy

answer

The Federal Open Market Committee

question

-the primary way in which the Fed changes the money supply is through open-market operation - The Fed conducts these when it buys government bonds from or sells government bonds to the public

answer

Open Market Operations

question

purchases and sells US government bonds

answer

The Fed

question

- regulate banks to ensure they follow federal laws intended to promote safe and sound banking practices (restrictions on assets, capital requirements, bank supervision) - Acts as a banker's bank, making loans to banks and as a lender of last resort - Conducts monetary policy by controlling the money supply

answer

Three Primary Functions of the Fed

question

Federal Reserve System

answer

The central bank

question

the financial intermediaries that accept deposits and make loans

answer

Banks

question

individuals and institutions that hold deposits in banks

answer

Depositors

question

individuals and institutions that borrow form the banks

answer

Borrowers from banks

question

deposits that banks have received but have not loaned out

answer

Reserves

question

fraction of deposits that banks hold as reserves

answer

Reserve ratio

question

in a fractional-reserve banking system, banks hold a fraction of the money deposited as reserves and lend out the rest

answer

fractional reserve

question

-open market operations -changing the reserve requirement -changing the discount rate

answer

The Fed has 3 tools in its monetary toolbox

question

The reserve requirement is the amount (%) of a bank's total reserves that may not be loaned out. Increasing the reserve requirement decreases the money supply. Decreasing the reserve requirement increases the money supply.

answer

Changing the Reserve Requirement

question

The discount rate is the interest rate the Fed charges banks for loans. Increasing the discount rate decreases the money supply. Decreasing the discount rate increases the money supply.

answer

Changing the Discount Rate

question

$500 in your savings account

answer

Which of the following is not included in M1?

question

You pay for your oil change using currency

answer

Which of the following best illustrates the medium of exchange function of money?

question

has no intrinsic value

answer

Fiat money

question

was created in 1913 has more than one specific job to perform is an example of a central bank

answer

The Federal Reserve

question

All of the above

answer

At any given time, the voting members of the Federal Open Market Committee include -five of the 12 presidents of the regional Federal Reserve banks - the president of the Federal Reserve Bank of New York - the seven members of the Board of Governors

question

It makes loans to large business firms

answer

The Federal Reserve does all except which of the following? - It controls the supply of money -it acts as a lender of last resort to banks - it makes loans to large business firms - it tries to ensure the health of the banking system

question

all of the above

answer

The New York Federal Reserve Bank -president always gets to vote at the FOMC meetings - conducts open market transactions - is one of 12 regional Federal Reserve Banks - all of the above

question

convert Federal Reserve Notes into gold

answer

Which of the following does the Federal Reserve not do? -conduct monetary policy - act as a lender of last resort -convert Federal Reserve Notes into gold - serve as a bank regulator

question

open-market operations

answer

Which tool of monetary policy does the Federal Reserve use most often?

question

20 percent assets will increase by $1000 $400

answer

Assets- Reserves $2000, Loans $8000 Liabilities- Deposits $10,000 The reserve ratio for this bank is... If $1000 is deposited into the First Bank of Johnson City, and the bank takes no other actions, its... Starting from the situation as depicted by the T-account, if someone deposits $500 into the First Bank of Johnson City, and if the bank makes new loans so as to keep its reserve ratio unchanged, then the amount of new loans what is makes will be...

question

% Change in Quantity Demanded / % Change in Price

answer

Price Elasticity of Demand

question

Elasticity equals zero demand line is vertical

answer

Perfectly Inelastic Demand

question

Elasticity is less than 1

answer

Inelastic Demand

question

Elasticity Equals 1

answer

Unit Elastic Demand

question

Elasticity is grater than 1

answer

Elastic Demand

question

Elasticity Equals Infinity

answer

Perfectly Elastic Demand

question

the Fed does not control the amount of none that households choose to hold as deposits in banks

answer

A problem that the FeD faces when it attempts to control the money supply is that

question

the Fed buys a $10,000 bond from the bank or the Fed lends the bank $10,000

answer

The reserve requirement ratio is 10 percent. Which of the following pairs of changes would both allow a bank to lend out an additional $10,000?

question

Whenever marginal cost is less than average total cost, average total cost is falling. Whenever marginal cost is greater than average total cost, average total cost is rising. The marginal-cost curve crosses the average-total-cost curve at its minimum.

answer

The Relationship between Marginal Cost and Average Total Cost

question

Marginal cost rises with the quantity of output. The ATC curve is U shaped. The MC curve crosses the ATC curve at the minimum of ATC.

answer

Important Properties to remember about MC, ATC curve

question

Many decisions are fixed in the short run but variable in the long run, so a firm's long run cost curves differ from its short-run cost curves.

answer

The Relationship between Short-Run and Long Run Average Total Cost

question

the property whereby long-run ATC falls as the quantity of output increases -higher production levels allow specialization among workers, which permits each worker to become better at a specific task

answer

Economies of Scale

question

the property whereby long-run ATC rises as the quantity of output increases -coordination problems that are inherent in any large organization

answer

Diseconomies of Scale

question

the property whereby long-run ATC stays the same as the quantity of output changes

answer

Constant Returns to Scale

question

the firm should increase its output

answer

If marginal revenue is greater than marginal cost,

question

the firm should decrease its output

answer

If marginal cost is greater than marginal revenue,

question

marginal revenue and marginal cost are exactly equal.

answer

At the profit-maximizing level of output,

question

a lower price

answer

A weaker demand together with a strong supply would most likely result in

question

The demand for bourbon whiskey is more elastic than the demand for alcoholic beverages in general.

answer

Which of the following statements is correct? The demand for natural gas is more elastic over a short period of time than over a long period of time. The demand for smoke alarms is more elastic than the demand for Persian rugs. The demand for bourbon whiskey is more elastic than the demand for alcoholic beverages in general. All of the above.

question

less than 5800

answer

On a 500-acre farm, a farmer is able to produce 3,000 bushels of wheat when he hires 2 workers. He is able to produce 4,400 bushels of wheat when he hires 3 workers. Which of the following possibilities is consistent with the property of diminishing marginal product?

question

the stock of equipment and structure

answer

Physical Capital

question

knowledge and skills

answer

human capital

question

inputs into production provided by nature

answer

natural resources

question

understanding of best way to produce goods and services

answer

technological knowledge

question

(Nominal GDP/Real GDP) * 100

answer

GDP Deflator

question

(# of unemployed/ labor force) *100

answer

Unemployment rate

question

(labor force/adult population) *100

answer

Labor force participation rate

question

because it takes time for workers to search for the jobs that best suit their tastes and skills

answer

frictional unemployment

question

because the # of jobs available in some labor markets is insufficient to provide a job for everyone who wants one

answer

structural unemployment

question

the set of assets in an economy that people regularly use to buy goods and services from other people

answer

money

question

demand deposits traveler's checks other checkable deposits currency

answer

M1

question

savings deposits small time deposits money market mutual funds a few minor categories everything in M1

answer

M2

Economics – Flashcards with Answers

Unlock all answers in this set

Haven't found what you were looking for?

Search for samples, answers to your questions and flashcards