Economics – Flashcards with Answers

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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
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10 Principles
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resources are limited
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The phenomenon of scarcity stems from the fact that
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people face trade-offs
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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
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people work less and produce fewer goods and services
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When the government redistributes income from the wealthy to the poor,
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understand that the opportunity cost of attending college is very high
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High-school athletes who skip college to become professional athletes
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the enjoyment she would have received had she watched the video
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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
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charged any ticket price above $0 for the three remaining seats
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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
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how the decisions of households and firms lead to desirable market outcomes
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The invisible hand refers to
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Labor is more productive making cotton cloth with a mechanical loom that with a hand loom.
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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?
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In the short run, falling inflation is associated with rising employment.
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Which of the following is the most correct statement about the relationship between inflation and unemployment?
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both buyers and sellers
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In a competitive market, the quantity of a product produced and the price of the product are determined by
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Sellers set the price of the product
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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.
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-Chuck's -24 Units -increases by 3 units
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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?
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a leftward shift of a demand curve
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A decrease in demand is represented by
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a decrease in the price of mp3 players
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Which of the following would not shift the demand curve for mp3 players?
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razors to increase
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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
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The demand for rice will increase.
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What will happen in the rice market now if buyers expect higher rice prices in the near future?
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an increase in the price of mp3 players
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Which of the following would not shift the supply curve for mp3 players?
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The supply of rice will decrease
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What will happen in the rice market now if sellers expect higher rice prices in the near future?
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demand tends to be inelastic
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For a good that is a necessity
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toothpaste
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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
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one year after the price increase
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If the price of natural gas rises, when is the price elasticity of demand likely to be the highest?
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the demand for motor oil would tend to be inelastic
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There are very few, if any, good substitutes for motor oil. Therefore,
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Tommy Hilfiger jeans
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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
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1
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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
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4.5 percent increase in the quantity demanded
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If the price elasticity of demand for a good is 1.5, then a 3 percent decrease in price results in a
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assuming that the demand for university education is inelastic
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Get Smart University is contemplating an increase in tuition to enhance revenue. If GSU fells that raising tuition would enhance revenue, it is
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Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous.
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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?
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Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.
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Suppose the number of buyers in a market increases and a technological advancement occurs also. What would we expect to happen in the market?
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shows the relationship between quantity of inputs used to make a good and the quantity of output of that good
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Production Function
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the increase in output that arises from an additional unit of that input
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Marginal Product
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Fixed Cost + Variable Cost
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Total Cost
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Fixed Cost/ Quantity
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Average Fixed Costs
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Variable Cost/ Quantity
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Average Variable Cost
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Total Cost/Quantity
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Average Total Cost
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change in total cost/ change in quantity
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Marginal Cost
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trends
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The phrases of a business cycle include
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-Economic fluctuations are irregular and unpredictable - Most macroeconomic variables fluctuate together -As output falls, unemployment rises
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Three key facts about economic fluctuations (business cycle)
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significant decline in economic activity over a few months
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What is recession? How do you know we are in a recession?
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normally visible in real GDP, real income, employment, industrial production, and wholesale retail sales.
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A recession when we have two consecutive quarters of decline in real GDP?
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NBER
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___ in the US has many years had a Business Cycle Dating Committee dating the US business cycle.
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real GDP
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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
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short-run economic fluctuations.
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In 1936, John Maynard Keynes published a book, The General Theory, which attempted to explain
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aggregate demand is not adequate
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What is the cause of short-run economic fluctuation?
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to explain short-run fluctuations in economic activity around its long-run trend
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Economist use the model of aggregate demand and aggregate supply
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short-run fluctuations in the economy
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Most economists use the aggregate demand and aggregate supply model primarily to analyze
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falls because falling prices increase the real value of a dollar
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People will spend more if the price level
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decreased consumption, which shifts aggregate supply left
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Suppose a stock market crash makes people feel poorer. This decrease in wealth would induce people to desire
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in the long run the aggregate supply curve is vertical in the short run slopes upward
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Aggregate supply curve in the long run: in the short run:
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aggregate demand right
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From 2001 to 2005 there was a dramatic rise in the price of houses. if this made people feel wealthier, then it would shift
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consumption increases, so aggregate demand shifts right
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When taxes decrease, consumption, increases, so aggregate demand shifts right
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- aggregate demand shifts left - both the price level and real GDP falls
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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?
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shifts in aggregate demand shifts in aggregate supply
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Two causes of economic fluctuations
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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
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Policymakers may respond to a recession in 2 ways
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Keyenes inadequate demand and an easy solution, expansionary fiscal policy
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Mass unemployment had a single cause
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changes in federal taxes and purchases that are intended to achieve macroeconomic policy objectives
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Fiscal policy
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federal
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Economists use the term fiscal policy to refer only to the actions of the _____ government
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increasing government purchases or decreasing taxes
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Expansionary fiscal policy
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decreasing government purchases or increasing taxes
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Contractionary fiscal policy
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the actions the Fed takes to manage the money supply and interest rates to pursue its macroeconomic policy goals
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Monetary policy
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many buyers and sellers trading identical products so that each buyer and seller is a price taker.
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A competitive market has
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is the selling price times the quantity sold PxQ
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Total Revue for a firm
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total revenue divided by the quantity sold
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Average revenue
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change in the total revenue form an additional unit sold
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Marginal revenue
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Total Revenue- Total Cost or (Price - Average Total Cost) x Q
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Profit
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at the quantity where marginal revenue= marginal cost
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Profit maximization occurs
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increase Q
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When Marginal Revenue ; Marginal Cost
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decrease Q
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When Marginal Revenue; Marginal cost
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the revenue it gets from producing is less than the variable cost of production TR;VC
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The first shuts down if
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lies above average variable cost
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The portion of the marginal cost curve that _______ is the competitive firm's short run supply curve.
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revenue it would get from producing is less that its total cost. TR<TC
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In the long run, the firm exits the market if
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The production function depicts the relationship between the quantity of labor and the quantity of output.
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Which of the following statements about a production function is correct for a firm that uses labor to product output?
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The farmer is able to product 5600 bushels of wheat when he hires 4 workers
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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
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average total cost is falling
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When marginal cost is less than average total cost
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$6.43 $-3000
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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...?
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$4
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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?
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long run supply curve lies above average total cost
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The competitive firm's _______________ is the portion of its marginal-cost curve that ________________.
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equal to marginal revenue
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For a firm in a perfectly competitive market, the price of the good is always
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$32
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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?
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price is below the firm's average variable cost
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When a perfectly competitive firm decides to shut down, it is most likely that
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loss of exactly $27
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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
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$110
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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 ...
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Jennifer must earn above a 3.7 GPA in her senior year in order to raise her cumulative GPA to a 3.7
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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?
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Many firms have market power.
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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
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$1,000
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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
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$4800
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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?
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1,000
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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
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10985
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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?
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the average fixed cost is becoming smaller and smaller
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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?
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the total market value of final goods and services produced within a country in a given period of time
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GDP
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falls
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Yoda switches from going to Speedy Lube for an oil change to changing the oil in his car himself, then GDP
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10.
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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
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Loony, a Canadian citizen grows sweet corn in Minnesota and sells it to a grocery store in Canada.
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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.
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200
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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
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total market value of all final goods and services produced
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Production GDP
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consumption + investment + government spending + (exports-imports)
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Expenditure GDP
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the spending by households on goods and services with the expiation of purchases of new housing (food, clothing, CD, DVD, air ticket)
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Consumption (C)
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The spending capital equipment, inventories, and structures, including new housing
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Investment (I)
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The spending on goods and services by local state and federal governments
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Government Purchases (G)
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Net purchase by foreigners exports minus imports
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Net Exports (NX)
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values the production of goods and services at current prices
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Nominal GDP
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values the production of gods and services at constant prices
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Real GDP
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Only Ralph's payments are included in GDP.
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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.
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$3000
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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?
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16 trillion
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In 2012, US GDP was almost
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70 percent of GDP
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In the United States in 2012, consumption represented approximately
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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
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Consumer Price Index
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(Current CPI- Previous CPI)/ Previous CPI
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Compute Inflation
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the interest rate usually reported and not corrected for inflation (never below 0)
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Nominal interest rate
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the interest rate that is corrected for the effects of inflation Nominal interest rate - inflation
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Real interest rate
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3%
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You borrowed $100 for one year. Nominal interest was 5%. During the year inflation was 2%. What was the real interest rate?
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you don't know, have to do forecasting/projection
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How do you know what the real interest rate is next month or next year?
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has to spend more dollars to maintain the same standard of living
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When the consumer price index rises, the typical family
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the CPI
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The inflation rate you are likely to hear on the nightly news is calculated from
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the CPI better reflects the goods an services bought by consumers
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The CPI is more commonly used as a gauge of inflation than the GDP deflator is because
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104
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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
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5 percent
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If the nominal interest rate is 8 percent and the rate of inflation is 3 percent, then the real interest rate is
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6.7 % (march)
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Most recent monthly Unemployment rate in the U.S
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1933: 24.9% 1944: 1.2%
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Historical HI and Low of unemployment
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Bureau of Labor Statistics
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Unemployment is measured by the
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he or she is over 16
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The BLS considers a person an adult if
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he or she has spent some of the previous week working at a paid job
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A person is considered employed if
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he or she is on temporary layoff, is looking for a job, or is waiting for the start date of a new job
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A person is unemployed if
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a full-time student, homemaker, or retiree, is not in the labor force
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A person who fits neither of these categories
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the total number of workers the sum of the employees and the unemployed
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Labor force
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is calculated as the percentage of the labor force that is unemployed unemployed/labor force
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Unemployment rate
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their labor earnings
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To maintain their standard of living, most people rely on
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short-run ups and downs of the economy
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Cyclical unemployment is closely associate with
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Tuuli, who is waiting for her new job to start
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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
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A country's standard of living depends on its ability to produce goods and services.
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What are some countries rich and some are poor?
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(GDPt-GDPt-1)/GDPt-1
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Growth (size of economy)
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Real Per Captia GDP (PCGDPt-PCGDPt-1)/ PCGDPt-1
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Growth (standard of living)
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PCGDP = GDP/population growth of PCGDP = growth of GDP - growth of population
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What is the relation ship between size of the economy growth and standard of living growth?
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over last 50 years delivered impressive growth Chile Singapore, Batswana
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Growth Miracles
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PRODUCTIVIITY
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Why is the standard of living is higher in some countries but not in others?
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plays a key role in determining living standards for all nations in the world
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Productive
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the key determinant of growth in living standards
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Growth in productivity
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average labor productivity * share of population employed
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Real GDP per capita
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how much each worker can produce how many people are working
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Real GDP per person depends on
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2 percent per year
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Over the past century in the US, real GDP per person has grown, on average, by about
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Singapore
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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?
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Ethiopia
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Average income has been stagnant for many years in
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Madagascar
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Which of the following countries had the lowest level of real GDP per person in 2010?
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productivity
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The one variable that stands out as the most significant explanation of large variations in living standards around the world is
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human capital
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Perry accumulated a lot of mathematical skills while in high school, college, and graduate school. Economists include these skills as part of Perry's
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has few natural resources
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Despite its status as one of the richest countries in the world, Japan
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physical capital
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The saws, lathes, and drill presses that woodworkers at Cedar Valley Furniture use to produce furniture are called
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her devious training in survival course
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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
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the spectacular economic growth experienced by South Korea over the years 1960 to 1990
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The catch up effect can help explain
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increases the level of productivity
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In the long run, a higher saving rate
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South Korea
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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
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China
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Which of the following Countries achieved higher economic growth, in part by mandating a reduction in population growth? - Great Britain -China -Australia -France
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takes the form of commodity with intrinsic value (Gold, silver, cigarettes)
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Commodity money
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used as money because of government decree. It does not have intrinsic value. (coins, currency, check deposits)
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Fiat money
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Society faces a short-run tradeoff between inflation and unemployment. Prices rise when the government prints too much money.
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Which two of the Ten Principles of Economics imply that the Fed can profoundly affect the economy?
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The Board of Governors The Regional Federal Reserve Banks The Federal Open Market Committee
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The primary elements in the Federal Reserve System are
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Board of Governors seven president Senate
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The Fed is run by a ________ which has ____ members appointed by the _____ and confirmed by the ____
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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
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The board of governors
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12 Boston, New York, Philadelphia, Richmond, Atlanta, Cleveland, St. Louis, Dallas, Chicago, Minneapolis, Kansas City, and San Francisco Board of Directors in Washington
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Regional Federal Reserve Banks
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meets approximately every six weeks to review the economy
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The Federal Open Market Committee
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-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
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Open Market Operations
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purchases and sells US government bonds
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The Fed
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- 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
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Three Primary Functions of the Fed
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Federal Reserve System
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The central bank
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the financial intermediaries that accept deposits and make loans
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Banks
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individuals and institutions that hold deposits in banks
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Depositors
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individuals and institutions that borrow form the banks
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Borrowers from banks
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deposits that banks have received but have not loaned out
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Reserves
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fraction of deposits that banks hold as reserves
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Reserve ratio
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in a fractional-reserve banking system, banks hold a fraction of the money deposited as reserves and lend out the rest
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fractional reserve
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-open market operations -changing the reserve requirement -changing the discount rate
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The Fed has 3 tools in its monetary toolbox
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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.
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Changing the Reserve Requirement
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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.
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Changing the Discount Rate
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$500 in your savings account
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Which of the following is not included in M1?
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You pay for your oil change using currency
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Which of the following best illustrates the medium of exchange function of money?
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has no intrinsic value
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Fiat money
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was created in 1913 has more than one specific job to perform is an example of a central bank
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The Federal Reserve
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All of the above
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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
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It makes loans to large business firms
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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
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all of the above
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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
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convert Federal Reserve Notes into gold
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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
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open-market operations
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Which tool of monetary policy does the Federal Reserve use most often?
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20 percent assets will increase by $1000 $400
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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...
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% Change in Quantity Demanded / % Change in Price
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Price Elasticity of Demand
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Elasticity equals zero demand line is vertical
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Perfectly Inelastic Demand
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Elasticity is less than 1
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Inelastic Demand
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Elasticity Equals 1
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Unit Elastic Demand
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Elasticity is grater than 1
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Elastic Demand
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Elasticity Equals Infinity
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Perfectly Elastic Demand
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the Fed does not control the amount of none that households choose to hold as deposits in banks
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A problem that the FeD faces when it attempts to control the money supply is that
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the Fed buys a $10,000 bond from the bank or the Fed lends the bank $10,000
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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?
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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.
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The Relationship between Marginal Cost and Average Total Cost
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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.
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Important Properties to remember about MC, ATC curve
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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.
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The Relationship between Short-Run and Long Run Average Total Cost
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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
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Economies of Scale
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the property whereby long-run ATC rises as the quantity of output increases -coordination problems that are inherent in any large organization
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Diseconomies of Scale
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the property whereby long-run ATC stays the same as the quantity of output changes
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Constant Returns to Scale
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the firm should increase its output
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If marginal revenue is greater than marginal cost,
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the firm should decrease its output
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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
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