question

scarcity is a problem because

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our wants are unlimited and resources are limited

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scarcity

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forces people to make choices

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three basic categories of resources

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land, labor, and capital

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Economics is

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is the study of how people satisfy their needs and wants because of scarcity

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Microeconomics

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how it affects the individual

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Macroeconomics

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policies to create jobs in the nation

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because of scarcity, each economic society must make what choices?

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what to produce. how to produce. for whom to produce.

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opportunity cost

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a good or service that is forgone by choosing one alternative over another

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the law of increasing costs indicates that the opportunity cost of producing a good:

answer

if we move toward the x-axis than we gain less of the y-axis

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When the dot is on the PPC curve the economy is?

answer

Efficient.

question

When the dot on the PPC curve is on the outside of the curve the economy needs to...

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find new resources. find new technology. use them for efficiently.

question

All the points on the PPC are..

answer

Efficient.

question

What cases the PPC curve to shift to the right?

answer

new resources.

question

the law of demand states

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people will buy more if the price goes down. will buy less id the price goes up.

question

the law of demand is illustrated by a demand curve that is

answer

downward sloping.

question

a demand schedule for a good shows

answer

various prices and the various quantities

question

and increase in the quantity demanded of a good is most often due to:

answer

price

question

a demand curve shows the relationship between

answer

price and quantity

question

other things being equal, the effect of an increase in the price of Coca-Cola would cause a

answer

decrease in quantity demanded

question

an increase in the demand for a good means that

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the demand curve has shifted

question

which of the following would shift the demand curve for 35 mm film to the right?

answer

price of the related goods

question

if people expect the price of packaged coffee to rise next week, coffee demand will

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increase

question

if two goods are substitutes in consumption

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an increase in the price in one will lead to a decrease in the demand for the other

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definition of supply

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as the price goes up the quantity supplied increases

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in accordance with the law of supply, both individual and market supply curves are drawn

answer

upward sloping

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what will cause a movement along the supply curve?

answer

price is changing of the good

question

a decrease in supply means:

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the quantity supplied is going to change at every price level

question

what would increase the supply of tomatoes?

answer

input cost

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an increase in the number of producers will

answer

increase supply

question

if more people enter medical school we can expect

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increase in supply of doctors

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the equilibrium price is best defined as the price at which

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when supply equal demand

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price elasticity of demand refers to the ratio of the

answer

percent change in demand/percent change in price

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if demand is price elastic, a decrease in price causes

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increase in demand

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GDP is officially measured by adding together:

answer

total value of all goods and services produced in a country

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What is counted as the final good in the GDP

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the finished good

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what is included in the calculation of GDP

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a legitimate service

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what is included in the GDP

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a finished good or service from that year

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intermediate goods are goods and services used:

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anything used in the production of funding

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personal consumption expenditures include:

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things that the average person purchases

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Gross private domestic investment

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factory machine

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the circular flow model is

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flow of the economy between the house holds and the firms

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in the circular flow model:

answer

households make the factors of productions for the factories ad they use them to make products to sell to the households

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the point at which real output reaches a max during a business cycle is called the

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peak

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the period during which real output falls during a business cycle is called

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retraction

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the phase of the business cycle that follows a recession is known as the

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trough

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who is part of the labor force?

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working or trying to get a job

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if you are not working or trying to find a job you are

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not in the labor force

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one problem with the unemployment rate is that

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there are under payed workers

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the number of people officially unemployed is not the same as the number of people who cant find a job because

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discouraged workers

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unemployment that is of a short duration to allow time to find a new job is

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frictional

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structural unemployment is

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because of mismatch of skills

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eric lost his job because a recession caused his employers sales to fall. this is:

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cyclical

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inflation is an increase in

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the average price level

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losers from inflation include:

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savers, fixed income, lenders offering fixed rate loans

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winners from inflation are:

answer

borrowers of fixed rate loans, lenders of adjustable rate loans, Government debt repayment

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in periods of high inflation businesses have trouble deciding what?

answer

how much to produce

question

The CPI index:

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typical purchases of the urban household

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demand pull inflation is due to

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not enough goods to meet demand

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cost push inflation is due to

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reduction in supply of goods and services

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during periods of hyperinflation, what is the most likely response of consumers?

answer

buy now before the price goes up

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a gov. spending and tax policy to achieve macroeconomics is known as

answer

fiscal policy

question

expansionary fiscal policy may include

answer

increase gov spending

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when the MPC GETS SMALLER, THE SPENDING MULTIPLIER:

answer

the MPC gets smaller than the spending multiplier gets smaller

question

an advocate of supply-side fiscal policy would advocate which of the following?

answer

cut business tax a a means of stimulating output

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the laffer curve is a graph of the relationship between tax rates and

answer

tax revenue

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barter is the

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the direct exchange of goods for goods

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barter requires

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coincidence of wants

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buying coffee with a dollar bill represents the use of money as a

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medium of exchange

question

the statement that Computech's profits totalled $500 million last year represents the use of money as

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a unit of account

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what is not a store value?

answer

a credit card

question

the primary functions of money are

answer

medium of exchange, unit of account, store value

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the ease with which an asset can be converted into a medium of exchange is known as

answer

liquidity

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the characteristics that money should have are;

answer

durable, scarce, portable, uniform, divisible,

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M1 refers to

answer

cash, checks

question

Decisions regarding purchases and sales of Gov securities by the FED are made by who?

answer

FOMC

question

what would be a liability for a bank

answer

deposits

question

the amount of assets that a bank must hold at all times is determined by

answer

required reserves ratio

question

if the fractional reserve system did not exist

answer

wouldnt be able to create more money

question

the required reserve ration for a bank is set by

answer

the FED

question

the buying and selling of GOV bonds by the FED is known as

answer

Open market operations

question

during a period of inflation, the FED is likely to

answer

Sell Bonds

question

if there is a recession the FED would most likely

answer

Lower the RRR

question

what FED action would increase the money supply

answer

lower the discount rate, buy bonds

question

keynes called money people hold to make day to day purchases

answer

transaction

question

keynes called the money people hold in order to pay unforeseen expenses

answer

precautionary

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keynes called the money people hold in order to buy bonds

answer

speculative

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a country that has lower opportunity cost of producing a good

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comparative advantage

question

with the benefits of international trade:

answer

greater: consumption, production, efficiency

question

a tariff is

answer

a tax on imports

question

GATT means

answer

General Agreement on Tariffs and Trade

question

the primary purpose of WTO is to

answer

foster trade

question

the international trade, and infant industry is one

answer

a firm in the early stages of development

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an exchange rate is the number of units of

answer

the amount of a nations currency it takes to a buy another nations currency

question

flexible, or floating exchange rate is determined by the

answer

supply and demand

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