question

to simplify analysis in economics, supply curves are often drawn as

answer

straight lines

question

on the supply side of the market, when the price of a good increases, the quantity supplied of the good

answer

increases

question

the principle that if at least one input of production is fixed, the marginal productivity of additional variable resources will eventually fall, ask else held constant, is known as

answer

diminishing marginal productivity

question

companies will be willing and able to produce additional units of a good only if the

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price of the good increases enough to cover increasing costs

question

a graphical representation of the relationship between the price of a good, service, or resource and the quantities producers are willing and able to supply is known as the

answer

supply curve

question

a tabular representation of the relationship between the price of a good, service, or resource and the quantities producers are willing and able to supply is known as the

answer

supply schedule

question

when a farmer continues to add pounds of fertilizer to the fixed farm area that she has, eventually

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the additional output for each pound of fertilizer will fall

question

firms will be willing and able to produce more output only when prices rise because

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opportunity cost of production is increasing

question

the factors that cause a shift in the supply curve include

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resource costs and availability, expectations about market conditions, technology, the number of sellers

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the law of ____ tells us that higher prices result in higher quantities being supplied

answer

supply

question

market supply is the

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sum of individual supply curves added together

question

a subsidy to producers

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lowers the cost of producing

question

resources include

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capital, entrepreneurial ability, labor, land

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a payment made by the government that does not necessarily require an exchange of economic activity in return is a

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subsidy

question

the supply curve will shift to the left when producers except

answer

higher prices in the future and there are fewer sellers

question

taxes and subsidies matter because

answer

they stimulate production or collect revenue and have unanticipated effect on other markets

question

the supply _____ displays the supply in a table showing the different prices and their corresponding quantities supplied

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schedule

question

a subsidy to producers

answer

lowers the cost of producing

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the supply curve will shift right if

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the number of sellers increases and producers expect lower future prices

question

a payment made to the government that is the result of economic activity is a

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tax

question

the supply ____ displays in a graph the information found in the supply schedule

answer

curve

question

the supply curve is a _____ representation of the info found in the supply schedule

answer

graphical

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a tabular representation of the relationship between the price of a good, service, or resource and the quantity that individuals and firms are willing and able to buy, all else held constant, describes the

answer

demand schedule

question

when the price of a good rises, we can expect that

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less of the good will be purchased

question

any place where, or mechanism by which, buyers and sellers interact to trade goods, services, or resources is a

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market

question

the law of ____ focuses entirely on the effect of a change in the good's price of the quantity of the product consumed and holds everything else constant

answer

demand

question

a ____ is an intangible product or action that consumers, firms, or government wish to purchase

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service

question

the overall or total demand for a good, service, or resource is

answer

the market demand

question

when we talk about the demand for sunglasses, we are referring to the

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quantity that consumers are willing and able to buy at a variety of different prices, all else held constant

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the law of demand says that lower prices lead to a higher quantity demanded. as a result, the demand curve

answer

should slope down

question

the ____ effect is the effect that a change in the price of a good, service, or resource has on the purchasing power of income

answer

income

question

the market demand represents

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the horizontal summation of individual demand curves

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market ____ is based on the overall preferences of everyone in the market

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demand

question

in economics, the word "curve" is typically used to refer to

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almost any line that graphically represents the relationship between two variables

question

a change in ____ occurs when a nonprice determinant of demand changes

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demand

question

for ____ goods, an increase in income increases demand, and a decrease in income decreases demand

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normal

question

the entire demand curve shifts to the right or left

answer

quantity demanded

question

when there is a change in demand

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the entire demand curve shifts

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the ___ cost associated with one more unit of an activity is the marginal cost

answer

additional

question

someone who is self-interested only performs actions for his or her own benefit

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false

question

the earliest two fundamental steps in learning the economic way of thinking are understanding

answer

how people make choices and how resources and scarcity affect the costs and benefits of choices

question

____ ability involves assuming risk and organizing resources into a productive process rather using resources in production

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entrepreneurial

question

rational decision making is based on three assumptions

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marginal decision making, self-interest, and optimization

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the optimal level of economic activity occurs when

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the marginal benefit equals the marginal cost

question

the more of a good or a service that is consumed in a given time period, the lower the marginal ___ that is associated with each additional unit

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benefit

question

the comparison of the scarcity of one good, service, or resource to that of another is called

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relative scarcity

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combinations inside the production possibilities frontier are

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possible but inefficient

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_____ interest is the idea that people choose to do the things that interest them

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self

question

opportunity cost is

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the value of the opportunity that you give up when you choose one activity instead of another

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combinations of output along the production possibilities frontier are the result of making efficient use of all available

answer

resources

question

a model that concisely describes how goods, services, resources, and money flow back and forth in an economy is the

answer

circular flow model

question

when you decide after studying for three hours that another hour of sleep is more beneficial to you than a fourth hour of studying, you are engaging in

answer

marginal decision making

question

combination lying ____ the production possibilities frontier are possible but inefficient with the current resources and technology

answer

below

question

decreasing marginal benefits describes

answer

the inverse relationship between the marginal benefit associated with the use of a good or service and the quantity consumed

question

individuals and countries specialized because of difference in ____ costs

answer

opportunity

question

the additional cost associated with one more unit of an activity is the

answer

marginal cost

question

the additional benefit associated with one more unit of an activity is the

answer

marginal benefit

question

when the quantity supplied of a good, service, or resource equals the quantity demanded, the quantity traded is known as the

answer

equilibrium quantity

question

the ____ of a good or service is the primary determinant of the quantity demanded by consumers

answer

price

question

the characteristics of equilibrium include

answer

quantity supplied = quantity demanded

question

the nonprice determinants or other factors that affect demand are

answer

held constant for any given demand curve

question

a situation in which the quantity of output supplied is greater than the quantity of output demanded at the current market price is called a

answer

surplus

question

all else equal, when a nonprice determinant of demand changes

answer

the market adjusts to a new equilibrium price and quantity; the demand curve shifts to the left or right; an entirely new demand relationship is created

question

the nonprice determinant or other factors that affect supply are

answer

held constant for any given supply curve

question

the price that balances demand and supply is called the

answer

equilibrium price

question

nonprice determinant are held ____ for any given supply curve

answer

constant

question

a characteristic of demand for a good, service, or resource other than its own market price is

answer

a nonprice determinant of demand

question

an increase or decrease in the quantity supplied at every price is

answer

a change in supply

question

shortages are usually the result of

answer

price controls that do not allow markets to adjust; unforeseen events that disrupt supply

question

the price that consumers pay and that producers receive exactly balances the marginal benefit and marginal cost of consuming and producing a good or service when

answer

the market is in equilibrium

question

shortages and surpluses are represented by the

answer

horizontal distance between the quantity demanded and the quantity supplied

question

the lack of equilibrium results in

answer

increased scarcity and inefficiency in the productions of a good or service

question

a budget is balanced when the government's revenue ____ what the government spends in any given fiscal year

answer

equals

question

which of the following is not an area of most federal spending?

answer

education

question

sources of revenue are the same for federal, states, and local governments

answer

false

question

generally, the budget deficit is calculated and reported _____, and the national debt is the accumulation of budget

answer

yearly

question

the national ____ is the accumulation of deficits and surpluses over time

answer

debt

question

because it places the deficit in better context and allows a comparison across time or across governments from different countries, most economists prefer measuring the deficit:

answer

relative to GDP

question

a budget ____ occurs when a government receives more revenue than it spends in any given fiscal year

answer

surplus

question

a _____ denotes the total level or amount of something at a particular point in time. on the other hand, a ___ is the change to the stock of something that something over a period of time

answer

stock; flow

question

federal budget ___ are rare

answer

surpluses

question

interest on the national debt is a major expenditure for the federal government, which indicates that the federal government

answer

spends more than it receives in revenue, forcing it to borrow to finance its deficits

question

the surplus and/or deficit is a ____ because we measure the surplus or deficit at each fiscal year. nation debt is a ___, showing how much the government owes at a particular point in time

answer

flow; stock

question

budget ____ are calculated and reported on an annual basis

answer

deficit

question

budget ____ are equal to the difference between the government revenue and its expenditures in any given fiscal year

answer

deficits

question

if the demand for loanable funds increases, interest rate ____, which can have big effects on consumers

answer

increase

question

an opportunity cost is associated with the interest payments made on the national ____

answer

debt

question

consumption includes purchases made by ____

answer

consumers

question

examples of transfer payments, or transfer payments, or payments not included in the calculation of GDP, include

answer

medicare interest payments to government creditors, unemployment insurance payments

question

_____ is the largest component of GDP in the US

answer

consumption

question

although consumption is the largest component of GDP, investment is the most ___ component of GDP, which can make planning difficult

answer

volatile

question

in economics, ___ includes purchases of housing, tractors, tools, and factories

answer

investment

question

the dollar value of all the final goods and services that are produced during a fixed period of time is

answer

nominal gross domestic product

question

the two largest component of GDP are

answer

government purchases, consumption

question

gross domestic product equals the total sum of four categories

answer

consumption, gross investment, government purchases, and net exports

question

___ investment occurs when firms invest in new buildings or replacement machines, adding to the capital stock that will allow the economy to produce more in the future

answer

gross

question

nominal gross domestic product measures the dollar value of

answer

all the final goods and services that are produced during a fixed period of time

question

because imports are not produced domestically, they need to be ___ from gross domestic product

answer

subtracted

question

informal market transactions are especially problematic for

answer

developing countries, in which, a large fraction of total production is exchanged in informal markets

question

investment represents the accumulation of new ____

answer

capital

question

when measuring GDP, we classify expenditures into four categories because

answer

we like to know who is consuming what

question

imports constitute around ____% of nominal GDP in the US

answer

17

question

____ are not counted in nominal GDP because they are produced somewhere else

answer

imports

question

in the broadest terms, income is paid to the four resources used to produce goods and services

answer

entrepreneurial ability, capital, labor, land

question

net exports equals ___ minus ___

answer

exports; imports

question

the more productive the nation is

answer

the higher its wages and standards of living are

question

gross domestic product is equal to the total sum of four categories

answer

C + I + G + NX

question

when two countries specialize in producing the goods for which they have a ___ advantage and then trade with each other, total production and consumption increase

answer

comparative

question

net exports are ___ when imports exceeds exports

answer

negative

question

in international trade ___ include airplanes, food, technology, and services such as banking

answer

exports

question

___ sales do not represent new production, just the reallocation of past production that was already counted as part of GDP in another year

answer

second hand

question

in economics ___ does not solely refer to saving money, or buying stocks or bonds

answer

investment

question

a ___ good or service is one sold to the end user and is not used to produce another product for subsequent sale

answer

final

question

___ goods are not part of GDP because they are used up in production

answer

intermediate

question

real GDP tells

answer

how much output was produced in a country, whether more was produced in one year relative to another

question

GDP excludes

answer

goods and services trade through barter, goods and services that are not bought and sold in a market, activities that occur outside formal markets

question

____ GDP measures the constant dollar value of all final goods and services produced in a country during a fixed period of time

answer

real

question

whether you use the income approach or the expenditures approach to calculating nominal GDP, you should arrive at the same number as shown in the

answer

circular flow model

question

real GDP per ___ is the same as real GDP per person

answer

capita

question

real GDP tells

answer

whether more was produced in one year relative to another, how much output was produced in a country

question

real GDP measures the dollar value, adjusted for __ of all final goods and services produced in a country during a fixed period of time

answer

inflation

question

although we commonly use the expenditures approach to measure gross domestic product, we can also measure GDP by using the __ approach

answer

income

question

investments can be

answer

postive, negative, and zero

question

in economics, consumption is classified into one of 3 categories

answer

consumer nondurables, services, consumer durable

question

economists prefer real GDP to nominal GDP production because

answer

they want to measure the actual production that occurred, not the current dollar amount of that production

question

which is true

answer

in general having more capital is desirable, capital wears out and needs to be replaced

question

how much of gross domestic product is used for investment

answer

1/5 or less

question

some economies started to grow faster than ever before staring in the

answer

late 1600s

question

an example of how existing resources can become more productive is

answer

coffee pickers who are younger and fitter

question

the growth rate of real GDP is calculated by

answer

new GDP - old GDP /// old GDP all x 100

question

by allocating time and resources to schooling instead of another activity, you will have more human __ in the future, increasing your productivity

answer

capital

question

economic growth can occur in three way, they are

answer

the country obtains additional resources, new technologies increase productivity, existing resources become more productive

question

starting in the late 1600s, as economies started to grow

answer

the standards of living of the people within them grew also

question

knowing how __ an economy is growing can give us an idea of how big it will be in the future

answer

fast

question

those opposing NAFTA argued that

answer

it would hurt growth, employment would decline because US workers could not compete with lower wage mexican workers

question

____ growth is calculated using real GDP or real GDP per capital

answer

economic

question

the production possibilities frontier model is a realistic model of economic growth in the real world

answer

fasle

question

the rule of 72

answer

does not provide answers that are 100% accurate related to the years needed to double

question

the opportunity cost of having more capital and being more productive in the future is reduced __ today

answer

consumption

question

china is allocating less of its output toward consumption and more toward

answer

the production of new capital

question

for the majority of human history, the story of the average person is one of absolute poverty

answer

true

question

the notion that developing countries can catch or converge with developed countries is one of the key insights of a branch of economics called ___ economics

answer

development

question

economic growth results from choices we make as a society

answer

true

question

a ____ amount of capital stops a country from achieving its full potential

answer

small

question

when it comes to growth rates, small changes can have big impacts, and steady growth over time can change the world

answer

true

question

scottish philosopher adam smith wrote his boon an inquiry into the nature and causes of the wealth of nations

answer

to try to explain the changes and improvements in people's lives by 1770

question

there are ___ returns to capital for an economy

answer

diminishing

question

once workers in the economy have plenty of capital, adding more capital will

answer

not be helpful and will not contribute to economic growth

question

there are diminishing returns to __ for an economy

answer

capital

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