Economics – Flashcards with Answers

Unlock all answers in this set

Unlock answers
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
answer
The following table containes a demand schedule for a good. Price Quantity Demanded $10 100 $20 ?
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
Get an explanation on any task
Get unstuck with the help of our AI assistant in seconds
New