Macro – Flashcard Test Questions

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Anything from which individuals receive utility or satisfaction
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Good
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The satisfaction one receives from a good
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Utility
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Leftward shifter of
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Expectation of lower future income by households is a __ the AD curve
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Increase; right
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Business optimism about future sales tends to __ investment expenditures, shifting the AD curve to the __
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(8,742-8509/8509) x 100
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If Real GDP was $8,742 bil in year 2 and it had been $8,509 bil in year 1, what was the approximate economic growth rate during that period?
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sum of the frictional unemployment rate and the structural
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An economy is producing its Natural Real GDP when the rate of unemployment is equal to the __ unemployment rate
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What cost $100 in 1982 will on average cost $150 MORE in 2013
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Suppose that 1982 is the base year for the Consumer Price Index (CPI) and in 2013 the CPI was 250. What does "250" mean
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Structurally
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Juan lost his job as a nuclear physicist working for a defense contractor. He can not find a job because no firms in the defense industry or any other industry are hiring people with his skills. Juan is __ Unemployed
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SRAS Curve that move the economy to a long- run equilibrium point
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In a self- regulating economy, inflationary and recessionary gaps produce shifts of the
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$1300
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Suppose that nondurable goods spending is $200 bil, durable goods spending is $400 bil, new residential housing spending is $500 bil and spending on services is $700 bil what does consumption equal?
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see card
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Look at the following data: the frictional unemployment rate is 2%, the structural unemployment rate is 3.5%, and the actual unemployment rate is 9.5%. the natural unemployment rate is ( 3.5+2) % and the cyclical unemployment rate is (9.5-5.5)
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increased
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Assume that Ms. Sawyers salary is $75,000 up from $70,000 last year, while the CPI is 225 this year, up from 220 last year. This means that Ms. Sawyers real income has __ since last year
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The services of a real estate broker
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Which of the following is counted in GDP?
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Producing less Real GDP than it does full employment
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If the natural unemployment rate is 5% and the current unemployment rate is 6%, then the economy is
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Exports Minus Imports
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Net Exports equals
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1750 to the early 1900's
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Classical economics refers to an era in the history of economics thought that stretched from about
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a leftward shift of
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Suppose that a drop in stock prices makes people feel less wealthy. This would cause ___ the economy's AD curve
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false
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As interest rates drop, households tend to borrow more and businesses tend to borrow less
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False
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Countries with large GDP must also have a large per- capita GDP
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False
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"Full employment" is said to exist when the actual unemployment rate is zero
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false
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Discouraged workers are not counted as unemployed because they are working
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False
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When foreign real national income rises, domestic real GDP falls, Ceteris Paribus
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true
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In the US, compensation of employees is the largest component of national income
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True
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Depreciation of the dollar against the Japanese yen makes Japanese goods more expensive for Americans
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14, 7, 12
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Each of the governors of the Federal Reserve System is appointed for a term of ___ years. The Board of Governors is comprised of __ members and the FOMC is comprised of ___ members
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Sell; Decrease
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Suppose that the current federal funds rate is below the federal funds target rate. in order to raise the feeral funds rate the Fed will ___ securities on the open market which will ___ the supply of reserves in the market for reserves, pushing the rate closer to the target rate
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Shortage, Surplus, Down, Rise
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Suppose that the bond market and the money market both start out in equilibrium, then the Fed Reserve decreases the money supply. the result will be a __ in the money market and a ___ in the bond market, which will push bond prices___ and interest rates will ___ until a new equilibrium is reached
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Store of Value, Medium of exchange, unit of account
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Which of the following is a correct listing of Money's functions?
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M1+ Time deposits+ savings deposits+ money Market mutual funds
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M2 is comprised of
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to set Tax rates
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Which of the following is not a function of the fed
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Inverse; the interest rate
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The demand for $ curve illustrates the ___ relationship between the quantity demanded of money and ___
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excess
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Reserves held beyond the required amount are called __ Reserves
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the Fed, and now it is as if the money doesn't exist
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Suppose the Fed sells a 50k US Treasury security to martha, a member of the public. If martha writes a check to the fed in order to buy this security, the money in her checking will be transferred to
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lower, rise, raises
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According to the Keynesian transmission mechanism, a rise in the money supply will __ the interest rate, causing a __ in investment demand, which then ___ real GDP
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1914
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The Fed Reserve System began in
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Expansionary Monetary Policy
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Suppose the money market is in the liquidity trap and that the economy is experiencing a recessionary gap. A Keynesian economist would advocate
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Bank deposits at the Federal Reserve + Vault Cash
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Total Bank reserves =
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increase by the amount of the purchase
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If the Fed purchases gov securities from abnks, the reserves of the banking system will immediately
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Bank B; Remain Constant
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When a check is written on an account at Bank A and deposited in Bank B, the reserve account of __ will rise and reserves of the entire banking system will__
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the Federal Reserve Bank of NY
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Open Market Operations are conducted by
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%2.7 trillion
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In March 2014, M1 in the United States was $___ trillion
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false
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The Federal Open Market Committee (FOMC) mets each and every month, each time on a tuesday
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true
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The Price of bonds and interest rates have an inverse relationship
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FALSE
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When a bank borrows money from the Fed, the interest rate that the bank pays the fed for that loan is called the Federal Fund Rate
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False
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When a check is cleared against a bank, the bank will lose checkable deposits and gain reserves
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True
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For a given bank, bank captial (net worth) equals assets minus liabilities
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true
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Excess reserves are the amount by which total reserves exceed required reserves
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False
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Required reserves are a set percentage of total reserves that must be held in cash in a banks vault or in the banks reserve account at the Fed
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false
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The supply Curve for $ is usually horizontal
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...
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Lowering the required reserve ratio raises the simple deposit multiplier
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Increasing; decreasing; decreasing; increasing
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Expansionary fiscal policy actions include__ government spending and/or ___ taxes, while contractionary fiscal policy actions include __ government spending and/or __ taxes
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gov expenditures are greater than tax revenue
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A budget deficit occurs when
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Consumption is dependent upon disposable income
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Which of the following is a basic point in Keynes made about consumption?
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1/(1-MPC)
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How is the multiplier expressed in terms of MPC
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changes in gov expenditures and taxation to achieve particular economic goals
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Fiscal Policy refers to
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Progressive; Proportional; Regressive; Regressive
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In the US, income taxes are a __ tax and medicare is a ___ tax, Sales are a ___ tax and property taxes are a ___ tax
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increase output and lower prices
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Supply side economists believe reductions in marginal tax rates can
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Transmission
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The period that elapses between the passage of legislation reducing taxes and the time the tax cut is put into effect is called the ___ lag
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Consumption rises by less than disposable income rises
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Which statement is consistant with what Keynes believed about consumption and disposable income
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Rise; Fall
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The AD curve shifts to the right with a __ in government purchases or a __ in taxes
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Contractionary Fiscal policy
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Suppose Congress increases income taxes, this is an example of
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17 trillion
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In April 2014, the public debt in the United States is approximately
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Increases; AD to the left
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Suppose the economy's current AD and SRAS curves intersect to the right of Natural Real GDP, Keynesians might advise a policy of tax ___ to shift___
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3%
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If the bottom half of all U.S. income tax payers were allowed to stop paying the income tax entirely and the top 50% continued to pay as they do now, tax revenues to the gov would drop by about
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Away from; can
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John Maynard Keynes drew many economists ___ the classical view. the classical view held that a market economy___ regulate itself to avoid periods of excessive unemployment
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true
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According to Keynes, the economy is inherently unstable and may get stuck in a recessionary gap.
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false
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A structural deficit refers to that part of the deficit that exists as a result of a downturn in economic activity.
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True
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When congress and the president agree to increase income taxes, this is an example of contractionary fiscal policy
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false
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The Laffer curve shows the exclusively direct relationship that exists between tax rates and tax revenues.
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shows relationship between interest rates and consumption
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Consumption Function
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false
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A flat tax is another word for a regressive tax
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true
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A simple Keynesian model is representative of a closed economy, with no foreign sector
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false
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The wait and see lag is the period that elapses between the time fisca policy is enacted and the time it is put into effect
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False
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A tax rate increase always leads to an increase in tax revenue for the government
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better suited for the production of some goods than others
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A PPF is more likely to be a downward sloping curve that is bowed outward than a downward- sloping straight line because most resources are
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decrease; increase
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An increase in the number of sellers of a product will__ the products market equilibrium price and___ the product's market equilibrium quantity
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uses the word "demand" when he should use the word " quantity demanded"
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As the price of apples goes up, the demand for apples goes down" the author of this statement
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Labor consists of the physical, but not mental, talents of people
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Which of the following statements is false
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wants are greater than the limited resources available to satisfy these wants
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Scarcity
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attainable but inefficient
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Points below the PPF are
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decrease; increase
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A decrease in the wages paid to the workers producing good X will tend to __ good X's equilibrium price and __ good X's equilibrium quantity
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the minimum wage will create a surplus of labor
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If the minimum wage law sets a wage floor above the equilibrium wage in the unskilled labor market,
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attainable and productive efficient
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The point where the PPF intersects the horizontal axis(the horizontal intercept) represents a combination of goods that is
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Supply; Leftward; Increase; Decrease
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Resource X is necessary to the production of good Y. if the price of resource X rises, the __ curve for good Y will shift __resulting in a ___ in the equilibrium price of Y and a ___ in the equilibrium quantity of Y
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place more oil on the market this year, this shifting the present supply curve of oil rightward
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Oil producers expect that oil prices next year will be lower than oil prices this year, as a result, oil producers are most likely to
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Market; Government
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in pure capitalism, economic decisions are determined by the ____ In pure socialism, economic decisions are made by the __
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a; straight line if constant opportunity costs exist b; curve that is bowed outward if increasing opportunity costs exist.
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The PPF between goods X and Y will be a downward sloping
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the highest valued alternative one forfeits to attend college
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the opportunity cost of attending college is
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Marginal
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the synonym for additional
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false
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A decrease in unemployment causes the PPF to shift outward ( to the right)
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false
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Macroeconomics deals with issues involving large corporations, while microeconomics exclusively deals with issues involving small businesses
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False
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Supply curves are always upward sloping
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true
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If the government increased licensing requirements foe beauty salons, the supply curve for salon services would shift to the left.
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False Mutha****a!
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Production possibility curves can shift outward but they do not shift inward
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false
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In order for a price floor to be effective it must be set below the equilibrium price
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false
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in economics, Capital is defined as financial assets such as stocks and bonds
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true
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If variable X rises as variable Y falls, then X and Y have an inverse relationship
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false
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An increase in demand means the same thing as an increase in quantity demanded
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false
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When the price of bananas rises, the demand for bananas falls, all else constant
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