Flashcards About Economics Final Definitions
Flashcard maker : Gabriela Compton
An entrepreneur knits sweaters for sale. THe entrepreneur has a fixed cost of $100 dollars, when he made 10 sweaters in one month, he must spend 15$ on wool. To make 11 sweaters in 1 month, he must spend 17$ on wool, if he has no other costs what is the marginal cost of the eleventh sweater?
2$
A shoe factory has an elasticity of supply of (.5) as the price of shoes rises from $50 to $75. If the factory produced 100,000 shoes, at a market price of $50, how many will be produced at the new price?
125,000
The market price of a slice of pizza has rizen from $1.50 to $2.00. The average pizzeria will respond by making?
50 more slices of pizza a day
What factor has the greatest influence on elasticity and inelasticity of supply?
time
If the supply of a good is inelastic,
producers will not change their quantity supplied by much if the market price doubles
Which of the following is a situation that makes the markt behave inefficiently?
When consumers do not have enough information to make good choices
What happens to a market in equilibrium when there is an increase in supply?
quantity supplied will exceed quantity demanded, so the price goes up
according to figure 6.2 In this market, a price of $1 would be
a price celing
The price of a slice of pizza is $2.50, At the end of the day how many unsold slices of pizza will be left according to figure 6.2?
200
Based on figure 6.2, what is a possible equilibrium price in this market, after it has been affected by a supply shock?
shift to the left $2 and 150 slices
The national debt rose during the R.Reagan term of presidency for all the following reasons except
The cost of running a war
What leads directly to the crowding out effect?
A big federal budget deficit
Which of these statements is a fundamental part of Keynsian economics?
The government can use deficit spending to increase aggregate demand and pull the economy out of a recession
What is one example of an automatic stabilizer?
Foodstamps
Which of these presidents increased top marginal income tax rates during his term in office?
Franklin D Roosevelt
Which of the following is an example of money as a unit of account?
checking the price of a camera at several stores before buying it at the lowest price
What condition is necessary for a rate money system to work?
The government must control the money supply
Which of the following is not an example of M1 money?
a mutual fund
How did big interest rates affect savings and loans in the 1980s?
Savings and loans lost money because they had to pay high interest rates on current deposits but received low returns from low interest loans they had made in the 1970s
Maria makes a deposit of $10,000 into her small town bank savings account, small town bank holds 20% of her deposit, then loans the remaining $8,000 to ben to buy a new car, this practice of retaining only a portion of the deposit on hand is known as
fractional reserve banking
An accurate statement about bonds would be that
They are usually a low risk investment
The dow jones industrial average consists of 30 stocks that are considered representative of the market as a whole
30 businesses
The strength of labor unions had declined in recent years because
some manufacturers have relocated to where labor is cheaper in other countries, or the american south
all of the following are low risk investments except
junk bonds
a stock split is most likely to occur when
the price of a stock becomes too high
If a bond from the franchises greens galore has a coupon rate of 5%, a par value of $2000, and will mature in two years, how much will the company have paid the holder when it retires the debt?
$2,500 (500 plus original 2000)
products that would be used in calculating GDP would include
cars manufactures in Tennessee at a factory owned by a Japanese automotive company
The agency that maintains the national income and product accounts is the
US department of commerce
An example of a durable good would be
a used car
Concern about an international crises has caused consumers to save their money and postpone big purchases. What is the effect on aggregate demand and aggregate supply?
Aggregate demand will decrease, lowering both real GDP and the price level
The amount of money a person has left of his or her income after taxes
disposable personal income
What is the major difference between a corporation and other types of businesses?
A corporation has a separate entity apart from that of the owners and workers
Which of the following represents the percentage of all us businesses that are corporations and the percentage of all goods that corporations sell
20% of businesses, 90% of goods sold
Which of the following is a business organization owned by a group of people for their mutual benefit?
Cooperative
Your running shoes were designed in the US and assembled in a company in asia known as running pro. What type of “company” is it?
Multinational corporation
You own a successful bicycle repair business. You are considering incorporating to
raise money more easily
How are wages for a particular job determined?
By the equilibrium between the supply and demand for workers for that job
Mark is switching from his job as a data entry clerk in an office to a job in a steel mill. One reason his wages will increase significantly in his new job is that
It is more dangerous to work in a steel mill than to work in an office
Tracy, a recent college graduate, earned straight a’s as a history major, is applying for a job as a legal assistant. Although she does not have background in law, she hopes to land the job because of the
screening effect
Emily had been waiting for a promotion to a management position for over five years, when she notices that the men fill most of the higher level jobs in her company. She suspects that her company has a
glass ceiling
Which of these situations is most likely to cause the fed to introduce a tight money supply?
The economy is expanding quickly and inflation is a concern
The most used instrument for controlling week to week exchanges in the money supply is
Open market operations
Which of the following instruments is not used by the federal reserve to change the money supply?
Federal tax code
What is the relationship between interest rates and demand for money?
As interest rates decrease, demand for money increases
Suppose the required reserve ration is 20% a $5 million deposit allows commercial banks to create as much as
$25 million
What happens when a nation’s currency depreciates?
its products become cheaper compared to other nations
Suppose the exchange rate between the US and Japan changes from $1=100 yen to $1=110 yen. What would happen to the price of American goods in Japan?
American products become more expensive in Japan
Which are the main trading partners of the United States?
European Union, Canada, Mexico, Japan
Specialization in a new nation leads to
International Trade
According to the law of Comparative advantage, a country should
specialize and export goods with the lowest opportunity cost
The market basket that is used by the bureau of labor statistics to calculate price is made up of which of the following?
Typical goods and services for an urban household
When an economy is working properly, what is the unemployment rate?
4-6%
According to the cost-push theory, what is responsible for inflation?
Producers raise price to meet increased costs
If Jackson is paid on an interest rate of 10% on his savings, but inflation rate has risen to 20%, the purchasing power of his savings is
decreased by 10%
When Alison, a college math professor, leaves his job at a small, rural job and starts looking for a job at a large urban university, she is
frictionally unemployed
