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Macroeconomics > Lec/HW Pre Test 1 > Flashcards

Lec/HW Pre Test 1 Flashcards

1
Q

What are the three general requirements/institutions needed for economic growth?

A
  1. Rule of Law
  2. Private Property
  3. Political Stability
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2
Q

How many recessions have there been in the last 60 years?

A

11

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3
Q

Are recessions inevitable?

A

Yes

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4
Q

What is the generally accepted definition of a recession?

A

Two consecutive quarters of a downturn in GDP.

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5
Q

What is “utility?”

A

The satisfaction we receive from the consumption of a good or service.

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6
Q

Define “Marginal” with respect to economics.

A

Extra, additional, change

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7
Q

What is a budget deficient?

A

You spend more money than you receive.

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8
Q

When you have a national budget deficit over a large period of time you get ____.

A

Increasing national debt.

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9
Q

What are the three choices of economic system?

A
  1. Demand-driven (market)
  2. Command and control
  3. Mixed (1 and 2)
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10
Q

What are the six traits of a capitalistic system?

A
  1. Limited government involvement in the economy.
  2. Private property
  3. Systems of Markets and Prices
  4. Self Interest
  5. Competition
  6. Free enterprise

Larry Pays Simon Significant Compensation on Friday.

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11
Q

What is the stabilizing force in a capitalistic system?

A

The system of markets and prices.

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12
Q

Prices are a _____!

A

Signal

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13
Q

What is the driving force of economic growth in a capitalistic system?

A

Self-interest

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14
Q

What is the regulating force in a capitalistic system?

A

Competition

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15
Q

True or False

Physical capital is the same as economic capital.

A

True

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16
Q

True or False
Money is a resource.
Government is a resource

A

False

False

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17
Q

What is a parameter?

A

A value that ties or unites multiple variables.

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18
Q

What is a non-price determinant?

A

Something other than price that can alter supply or demand.

An example would be tastes and preferences (e.g. iPhone vs Samsung Galaxy)

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19
Q

What are the three laws of supply and demand?

A
  1. Law of Demand
  2. Law of supply
  3. Law of product equilibrium
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20
Q

What is the law of product equilibrium?

A

In a free enterprise, market forces will continually work via self-interest to direct price and quantity to the point where demand and supply intersect (equilibrium point).

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21
Q

True or False (Test Q)

A change in the quantity demanded does not mean that there is a change in demand.

A

True

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22
Q

True or False (Test Q)

A change in the quantity supplied does not equal a change in the supply.

A

True

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23
Q

Does a demand schedule tell you the market price?

A

No

24
Q

A change in demand will result in a ____ of the demand curve.

A

Shift.

25
Q

When the price is above the equilibrium price you will have a ______.

A

Surplus

26
Q

When the price is below the equilibrium price you will have a _____.

A

Shortage

27
Q

A change in a parameter results in a _____ of a given supply or demand curve.

A

Curve shift.

28
Q

What are the non-price determinants of supply?

A
  1. Technology and productivity
  2. Regulation
  3. Price of resources/inputs
  4. Price of other goods and expectations on future prices.
  5. Taxes and subsidies
  6. Number of sellers/producers in the given market

Timothy Regularly Pays Petter Taxes Nightly

29
Q

What are some examples of price ceilings?

A
  1. Rent control

2. Gas Prices

30
Q

What are some examples of price floors?

A
  1. Minimum wage.

2. Cost of grain/corn/etc.

31
Q

Whenever you have rent control you have a transfer of income from _____.

A

Landlord to the tenant.

32
Q

Economics is

A

The study of how limited resources are allocated to satisfy unlimited wants.

33
Q

Until​ 2008, the people of the fictitious nation of Dor relied mainly on private car companies to determine how many automobiles to produce. After​ 2008, the people of Dor have been relying on the Dor government to determine how many automobiles to produce. This represents a shift in the economic system of Dor from _____.

A

Market System to Central Planning.

34
Q

Economists assume that an individual acts as if motivated by ______.

A

self-interest.

35
Q

The ceteris paribus assumption means _____.

A

all other things being equal.

36
Q

Factors of production include ___.

A

Land, labor, physical​ capital, human capital, and entrepreneurship.

37
Q

Opportunity cost is _____.

A

Is the value of the next best alternative as a result of choosing some given alternative.

38
Q

A production possibilities curve represents _____.

A

All possible combinations of output that could be produced assuming fixed productive resources and their efficient use.

39
Q

A production possibilities curve that is bowed outward​ (from the​ origin) represents the concept that _______.

A

Production of additional units of one good requires that increasing quantities of the other good be given up.

40
Q

True or False

The production possibilities curve will shift outward​ (upward, and​ or, to the​ right) when economic growth occurs.

A

True

41
Q

The term​ “marginal utility” most closely aligns with which of the following​ phrases?

  1. Total Satisfaction
  2. Average cost
  3. Additional cost
  4. Additional satisfaction
A

Additional satisfaction

42
Q

True or False

Per our lecture​ notes, the most common shape of the production possibilities curve is convex.

A

False

NOTE: The PPC is almost always drawn concave to the origin.

43
Q

Which of the following economist suggested the concept of the invisible hand in regards to​ self-interest?

  1. Adam Smith
  2. Milton Friedman
  3. John Maynard Keynes
A

Adam Smith

44
Q

Per the lecture​ notes, which of the following most closely defines economic​ capital?

  1. A manufactured aid to production
  2. A computer
  3. A manufacturing margin
  4. Storage capacity
A

A manufactured aid to production

45
Q

Which of the following can be described as​ “human” resources?

  1. Entrepenurial Ability
  2. Labor
  3. Human Capital
  4. All of the above
A

All of the above

46
Q

Which of the following is not characterized as a​ “resource”?

  1. Entrepenurial Ability
  2. Money
  3. Land
  4. All of the above
A

Money

47
Q

Why do economists avoid making the distinction between wants and needs​?

A

The term need is subjective making it difficult to distinguish between something someone wants and something they need.

48
Q

When an individual proclaims the need for a new​ car, the person typically means:

  1. That without a new​ car, their life cannot go on.
  2. They want something they currently do not have.
  3. That having such a possession would be nirvana
  4. That their ability to get around will cease.
A

They want something they currently do not have.

49
Q

Which of the following best demonstrates the concept of​ scarcity?

  1. A grocery store placing a limit on the number of items that can be bought.
  2. Michael has enough money to buy a book or a CD but not both.
  3. During WWII, meat was rationed.
  4. Before a blizzard, snow shovels sell out and more cannot be attained until after the store.
A

Michael has enough money to buy a CD, or a book, but not both.

50
Q

Voluntary exchange ____.

A

Makes both parties to a trade better off.

51
Q

True or False

Markets that are temporarily out of equilibrium will always return to equilibrium immediately.

A

False

52
Q

Given the existence of relative​ scarcity, resources can be rationed by ____.

A
  1. Government Mandate
  2. A system of prices
  3. Queuing (standing in line)
53
Q

True or False

Government-enforced prices such as price ceilings disrupt the rationing function performed by prices in a market system.

A

True

54
Q

The city of New Haven has decided to impose rent controls on office buildings in the city. As a result of​ this, the new rent ceiling is _____ than equilibrium rent and there will be a ____ of rental offices.

A

lower

shortage

55
Q

What is the main economic effect of price​ ceilings?

A

An effective price ceiling will lead to a shortage.

56
Q

What is the economic effect of price​ floors?

A

Surpluses

Macroeconomics (17 decks)

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