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Flashcards in Economics Deck (1072):
1

A pizza oven is best described as which type of factor of production?

capital

2

Flashcards cost $15. Using flashcards results in your not earning $20 in income. What are the accounting, opportunity, and economic costs respectively?

$15. $20, and $35`

3

Coal is an example of what type of resource?

land resource or natural resource

4

A wage is the price paid for what type of resource?

Labor

5

A carpenter uses several tools to make a table out of wood. The tools are an example of what type of resource?

capital

6

The value that is forgone when a choice is made is what type of cost?

opportunity cost

7

Labor resources are sometimes called "_________ capital."

human

8

What is the term for goods that are used to produce other goods?

capital

9

A person who starts a small business is providing what factor of production?

entrepreneurial resources

10

Air is best described as which type of resource?

land resource (or natural resource)

11

What is a free good?

A non-exclusive, non-limitable good: something that one has unlimited access to that everyone can have at the same time, i.e. air.

12

The term "natural resource' is another name for which factor of production?

land

13

The decision-making involved in using resources is what type of factor of production?

entrepreneurial

14

an office building is best characterized as what type of resource

capital

15

mike is a farmer who wants to plant several crops but has only enough to plant one. mike is facing what economic problem

scarcity

16

noah decided to order a hamburger instead of a hotdog, the value of the hamburger is the _____ cost of his decision

opportunity

17

land, labor, capital, and entrepreneurship are the four ___ of production

factors

18

bill gates and demidec have this factor of production in common

entrepreneurship

19

the workers on an assembly line represent what factor of production

labor resources

20

the letters TANSTAAFL stand for what economic principle

there aint no such thing as a free lunch

21

which factor of production can best be said to consist of "things used to make other things"

capital

22

an oil reserve is what type of factor of production

a natural resource

23

vehicles and buildings are examples of what factor od production

capital

24

what are the four factors of production

land, labor, capital, entrepreneurship

25

which factor of production involves organizing the other three factors into production

entrepreneurship

26

a river is an example of which factor o production

land

27

humans have (unlimited/ limited) wants, but the earth has (unlimited/limited) resources

unlimited, limited

28

define opportunity cost

the value of the next best alternative

29

what is a capital good

a good that helps make other goods later that can be used repeatedly

30

what do you call a person who takes advantage of free public goods without paying for a them

a free rider

31

although naturally found, coal as an intermediate good is this type of factor of production

capital

32

what is the basic economic problem

scarcity

33

what is the name of adams smiths most famous book

an inquiry into the nature and causes of the wealth of nations (or just the wealth of nations)

34

this occurs when there just arent enough hours in the day

scarcity

35

one must determine this, or the value of his next best alternative when making a decision

opportunity cost

36

why does scarcity exist

people have unlimited wants and earth has limited resources

37

what does a production possibilities frontier represent

all the efficient and attainable combinations of the production of two goods

38

when a producer decides to move from one point on his ppf to another point, what type of decision is he making

a trade off decision

39

what are two properties of every point along the production possibilities frontier

efficiency and attainability

40

what are twi qualities of any point between a production possibilities frontier and the origin

all points in this region are attainable but inefficient

41

what can we infer about two goods when their production possibilities frontier is nearly a straight line

the resources used to produce one good are close, efficient substitutes for the resources used to produce the other

42

what does the economic cost of a decision include

the explicit costs and the implicit costs

43

what is a free good

a resource that nonrival and non excludable

44

on a ppf for guns and butter, what type of goods does butter represent

consumer goods

45

what law explains the shape of a typical production possibilities frontier

the law of increasing opportunity costs

46

what is the future consequence of a decision

the result that occurs after the present consequence

47

which points on the production possibilities frontier have the highest opportunity costs

the endpoints, where all resources are used to produce only one good or the other

48

what is the intended consequence of a decision

the desured result of a decision, the reason the decision is made

49

what would cause an economic decision to be difficult to make

if there were only a very small difference between the benefits and the costs of the alternative

50

what is the unintended consequence of a decision

the unwanted and unexpected result

51

what is the present consequence of a decision

the result that happened when the decision is made

52

what type of consequences would a president facing reelection most be concerned with in regards to his actions

the present consequences

53

what factors of production are human resources

labor and entrepreneurship

54

which factor of production includes human capital

labor

55

which two factors of production are non human resource

land and capital

56

what is a trade off

a decision to give up something in order ot have something else

57

what is the basic economic problem

scarcity

58

in a market economy, who or what answers the question of how to produce

market forces

59

in a mixed market economy, who or what answers the question how to produce

either by a central authority or by market forces

60

in a command economy, who or what answers the questions how to produce

a central authority

61

do economists think that people act out of self interest

hell yea

62

many production possibilties frontiers compare the production of capital and ____ goods

consumer

63

true or false: self interest is the same as selfishness

nah son

64

self interest is a result of the value of (public/ private) property

private

65

when a nation moves from one point on its production possibilities curve to another, what is it doing

making a trade off between two equally viable and efficient production combinations

66

what does it mean to produce a t a point within the production possibilities curve

not all resources are being used efficiently; the economy could produce more but is not doing so

67

describe the shape of a production possibility curve for two goods that use the same productive inputs

a straight line

68

why does the production possibility hcurve have a downward slope

any increase in the production of one good decreases the production of another

69

Which country is the world's largest exporter of corn?

the U.S.

70

How does a market price act as a signal to producers

by signaling that profit can be made

71

Why might two countries trade when they can each produce the same good for the same relative price?

They can probably benefit from trading other goods

72

What is an absolute advantage

the position of an individual or a nation that can produce a good with the fewest inputs

73

what basic concept underlies the theory of trade

comparative advantage

74

if price elasticity of demand is equal to zero, then demand is...

THIS IS A TRICK QUESTION. ped can never equal zero

75

what is commodity money

a form of money that people value both because it serves as a medium of exchange and because of its intrinsic quality

76

what is the relative price of a good

the opportunity cost of producing it, expressed in units of the next best alternative good

77

what is the major reason that an assembly line can produce an automobile faster than a group of individuals who work in a small garage

In the assembly line, each worker is a specialist in a particular part of the production process

78

what conditions must be met in order for the barter to occur

all participating parties must expect to gain and there must be a double coincidence of wants

79

what is a subsidy

a payment from the government to an individual or group to encourage or support production but without any anticipation of production in return

80

what is a quota

a limit on the quantity of a good that may be imported or exported

81

what are complementary goods

goods that are purchased together such that the demand for one can directly affect the demand for the other. the classic example: hot dogs and hot dog buns

82

what is a tariff

a tax on an imported good

83

what is token money

money whose face value is greater than the cost of producing it

84

What happens to total world output if every nation specializes in the goods in which it has a comparative advantage

total world output increases

85

The (supply/demand) curve for a profit-maximizing firm is equal to its rising marginal cost curve.

supply

86

The law of demand states that quantity demanded is (directly/inversely) related to price.

inversely

87

How are exchange rates determined?

Supply and demand for both currencies naturally sets an equilibrium price.

88

The Paris Conference of 1867 set most of the world on a ____ exchange rate system based on the ____ gold standard.

fixed, gold

89

One ice cream cone may be very satisfying. The next ice cream cone will probably be less so. Ten ice cream cones would probably make a person sick. This example illustrates what economic law?

the law of diminishing marginal utility

90

Complementary goods have a (positive/negative) cross-price elasticity.

negative

91

You can sell 10 hockey pucks at $5 each or 9 hockey pucks at $6 each. Demand in this price range is (elastic/inelastic).

inelastic; $54 is more than $50

92

Suppose that the price elasticity of demand of bread is 0.2, and the price of bread increases by 10%. What will happen to the quantity demanded of bread?

It will decrease by 2%.

93

If the cross-price elasticity between two products is negative, what can be said about the two products?

They are complements.

94

If the cross-price elasticity between two products is positive, what can be said about the two products?

They are substitutes.

95

If a change in price has no effect on the quantity demanded, demand is completely (elastic/inelastic).

inelastic

96

What type of elasticity represents the relationship between the demand for one product and the price of another?

Cross-price elasticity.

97

If demand is elastic, what does this mean for the price elasticity of demand?

The price elasticity of demand is greater than one.

98

What is marginal utility?

the value of consuming an additional unit of a good or service

99

Why can't a supply curve extend infinitely to the right?

At some point, producers will not have enough resources to produce additional units of a good or service, no matter how high the price.

100

The downward slope of the demand curve is explained by the law of ______ marginal utility.

diminishing (or decreasing)

101

In a graph of supply and demand, what does the vertical axis represent?

price

102

True or false: Supply and demand curves are always straight lines.

False (but they are usually drawn as straight lines in economics textbooks)

103

The law of diminishing marginal utility helps to explain the law of (supply/demand).

demand

104

Spaghetti and tomato sauces are (complements/substitutes).

complements

105

What factors affect the supply of a good or service?

productivity changes, taxes, subsidies, expectations, regulation. the number of sellers

106

What factors affect the demand of a good or service?

the number of buyers, consumer, income, tastes and preferences, consumer expectations, the prices of complements and substitute

107

You can sell 10 hockey pucks at $5 each or 9 hockey pucks at $6 each. Demand in this price range is (elastic/inelastic).

inelastic; $54 is more than $50

108

what is the balance of trade

the difference in value between a nation's exports and imports

109

how does the concept of absolute advantage apply to international trade

it doesn't. international trade is based on comparative advantage.

110

what is a resource market

a market in which resources are bought and sold

111

how does the division of labor save time in the production process

workers do not spend any time moving from one task to another, and each worker becomes a specialist in his particular part of the production process

112

when is the best time for two countries to set an exchange rate for an international transaction

at the time of the trade (in order to avoid changes in the exchange rate before the transactions occurs)

113

in general, what happens to people and countries who specialize and trade?

they become independent

114

what is an unfavorable balance of trade

a condition in which a nation imports more than it exports

115

what are three reasons why the division of labor is effective

tasks are assigned according to each worker's preference and abilities, more sophisticated technology can be used, and each worker can become very good at one isolated part of the production process.

116

what is an embargo

a restriction on exports intended for sale in another country

117

what happens to total production for two nations who specialize according to their comparative advantages and then trade?

total production increases

118

how did many Asian economies achieve rapid economic growth in the 1970s and 1980s

their goods were competitively priced because their wage rates and capital costs were low

119

what is money

anything that is generally accepted in return for resources, goods. or services, or for the repayment of debts

120

what is a favorable balance of trade

a condition in which a nation exports more than it imports

121

what is the main reason that a fast food restaurant produces a meal faster than the average person can produce it in his/her kitchen

a fast food restaurant has division of labor, so large scale production machinery is practical

122

what is an exchange

a reciprocal transfer of money or a resource, good, or service in return for a resource, good or service

123

how do people and nations become economically interdependent

by specializing in the production of some goods and trading to obtain others

124

what is an export

a good that is produced domestically but sold to consumers in a foreign country

125

what is a comparative advantage

the position of an individual or a nation that can produce a good for the lowest opportunity cost

126

why is the concept of comparative advantage important to international trade

nations specialize in the production of goods in which they have a comparative advantage and this gives them an incentive to trade with other nations that specialize in the production of other goods

127

why is a barter system inefficient

finding a double coincidence of wants for every transaction is costly and time consuming

128

what condition must be met in order for voluntary exchange to occur

all participating parties must expect to gain

129

what is a trade barrier

a government imposed restriction that prevents or inhibits free trade between countries

130

what good was the subject of an embargo that devastated the US economy in the 1970s

oil ( the embargo was imposed by OPEC)

131

quantity demanded decreases as price increases because higher prices provide a (positive/negative) incentive for consumers

negative

132

on a graph of the supply and demand for a particular god, where is the equilibrium price found

at the intersection of the supply and demand curves

133

what happens to exchange quantity if there is a decrease in demand

exchange quantity decreases

134

as the price of a good increases what typically happens to the quantity supplied

quantity supplied increases

135

what is quantity supplied

the amount of a good that producers are willing and able to sell at a particular price

136

what is the equilibrium price of a good or service

the price at which the quantity demanded equals the quantity supplied

137

what happens to exchange quantity if there is a simultaneous decrease in demand and increase in supply

we cannot tell exactly

138

how is quantity demanded related to demand

demand is the quantity demanded at each price within a range of prices

139

what happens to exchange quantity if there is an increase in demand

exchange quantity increases

140

what area of economics explores how a firm decides what price to charge for its product

microeconomics

141

how do prices act as signals to consumers

they help consumers decide how best to allocate their incomes

142

what happens to the equilibrium price of a good if there is a decrease in supply, ceteris paribus

the price increases

143

as the price of a good decreases, what typically happens to the quantity supplied

quantity supplied decreases

144

how is an internet website an example of a market

a website may be used to bring buyers and sellers together to make an exchange

145

what happens to exchange quantity if there is a simultaneous increase in both supply and demand

exchange quantity increases

146

what happens to exchange quantity if there is a simultaneous decrease in both supply and demand

exchange quantity decreases

147

what is supply

the relationship between the price of a good and the quantity of it that sellers are willing and able to produce and sell

148

what is market demand

the sum of individual demand for every consumer in a market

149

what happens to equilibrium price if there is a simultaneous decrease in both supply and demand

we cannot tell exactly

150

what happens to the equilibrium price of a good if there is an increase in demand ceteris paribus

the price increases

151

what is the market supply of a good

the sum of individual supply for each supplier in a market

152

what happens to the exchange quantity of a good if there is an increase in supply ceteris paribus

the exchange quantity increases

153

what is the market clearing price of a good

the equilibrium price

154

the upward slope of the supply curve is explained by the law of increasing marginal...

cost

155

you can sell 10 hockey pucks at $5 each or 9 hockey pucks at $6 each. Calculate the PED

10% change in quantity demanded/20% change in price PED=1/2=.5

156

income elasticity of demand measures...

responsiveness of demand to consumer income

157

cross elasticity of demand measures

responsiveness of demand for a good to the price of complimentary and substitute goods

158

if price elasticity of demand is equal to one, the demand is...

unit elastic

159

if price elasticity of demand is equal to zero, then demand is...

this

160

what is the most important resource market in the us

the labor market

161

how do most economists feels about free trade

most economists support free trade

162

what happens to the total consumption possibilities for two nations that specialize according to their comparative advantages and then trade

total possible consumption increases

163

what is barter

the exchange of resources goods or services without using money

164

how did japan achieve rapid economic growth in the 1970s and 1980s

by training its workforce well and by applying technology

165

what do we use to avoid the inefficiency of a barter system

money or any other medium of exchange

166

what is a market

a mechanism that brings buyers and seller together for the purpose of making an exchange

167

what is division of labor

the act of dividing the production of a good into simple separate tasks

168

what is fiat money

a form of money that is only valuable as a medium of exchange not as a commodity and only because people believe the issuing government can back its value

169

what kind of money s paper currency

fiat money

170

what happens to the quantity demanded of a good as the price increases

quantity demanded decreases

171

what happens to the equilibrium price of a good if there is an increase in supply, ceteris paribus

the price decreases

172

what is demand

the relationship between the price of a good and the quantity of it that consumers are willing and able to buy

173

how is quantity supplied related to supply

supply is the quantity supplied at each possible price within a range of prices

174

what happens to exchange quantity if there is a simultaneous increase in demand and decrease in supply

we cannot tell exactly

175

what happens to the quantity demanded of a good as the price decreases

quantity demanded increases

176

why is the equilibrium price of a good sometimes called the market clearing price

because when there is an equal number of buyers and sellers, the market is said to clear

177

what happens to the equilibrium price of a good if there is a decrease in demand, ceteris paribus

the price decreases

178

what is quantity demanded

the quantity of a good that consumers are willing and able to buy at a particular price

179

what are of economics explores the individuals preference for a particular good

microeconomics

180

what is the term for a situation in which resources, goods, or services are exchanged

market

181

how are two boys trading baseball cards an example of a market

they are exchanging goods

182

what happens to equilibrium price when there is a simultaneous decrease in demand and increase in supply

equilibrium price decreases

183

what happens to equilibrium price if there is a simultaneous increase in both supply and demand

we cannot tell oops

184

what is the equilibrium quantity of a good or service

the quantity at which sellers ask the price that buyers are willing to spend

185

what happens to equilibrium price if there is a simultaneous increase in demand and decrease in supply

equilibrium price increases

186

what area of economics explores the behavior of individual producers and consumers

microeconomics

187

what happens to exchange quantity if there is a decrease in supply

exchange quantity decreases

188

what area of economics explores the components and behaviors of individual markets

microeconomics

189

how does a market system eliminate the need for buyers and sellers to negotiate over every individual change

with a price system

190

what is individual supply of a good

the supply of an individual producer

191

what is individual demand

the demand of one consumer for a good

192

quantity supplied increases as price increases because higher prices provide a (positive/ negative) incentive for producers

positive

193

if five dollars are worth two franc, then the ____ rate is 2.5 to 1

exchange

194

specialization in trade result in (increased/decreased) production

increased

195

when people specialize, how do they satisfy their wants and needs for goods and services they do not produce?

trade

196

specialization (increased /decreases) efficiency

increases

197

specialization (increases /decreases) dependence on the self-intrest of others.

they become interdependent

198

when individuals specialize, what must they do to satisfy their wants

trade

199

are the workers in an assembly line independent or interdependent?

interdependent

200

what term refers to any situation in which goods, services, or resources are exchanged?

a market

201

trading is simpler with money than with a better system because bartering requires a "double _____ of wants"

coincidence

202

what is the economic term for goods that are produced in a foreign country and purchased by domestic consumers?

imports

203

people tend to specialize in goods in which they have (an absolute advantage/a comparative advantage)

a comparative advantage

204

tim can write more flashcards per hour than sam can. Does tim have an absolute or a comparative advantage in flashcards?

Absolute (he many have a comparative advantage as well, but there is not enough information in the question to determine this)

205

Specialization and trade result in (increased/decreased) consumption

increased

206

specialization leads to (interdependence/independence)

interdependence

207

what is required for specialization to occur?

voluntary exchange

208

who experiences a greater level of interdependence: "jack-of-all-trades" or a specialist?

specialist

209

which is likely to require the most education and skill: division of labor or specialization?

specialization

210

what component of a market economy allows producers to specialize?

voluntary exchange

211

producers tend to specialize in the good or service that they can produce at the lowest _____ cost

opportunity

212

what is the economic term for good that are produced domestically and sold to consumers in another country

exports

213

t/f: barter requires fewer transactions than trade with the use of money?

True

214

What is the term for the unique type of specialization that occurs in an assembly line?

division of labor

215

international trade occurs when one country produces a product and (imports/exports) it to another country

exports

216

What is required for voluntary exchange to occur?

al participating parties must expect to benefit from the exchange

217

t/f: people desire money for its intrinsic value.

false

218

tariffs and quotas are examples of barriers to _____.

trade

219

what term refers to the trade of one good directly for another, without the use of money?

barter

220

A negative cross elasticity of demand tells us that two goods are (complements/substitutes).

complements

221

A positive cross elasticity of demand tells us that two goods are (complements/substitutes).

substitutes

222

Ticket prices go up at Clippers games, and overall ticket revenue increases at the Staples Center. This means that demand in this price range is _____.

inelastic

223

Prices increase on Daewoo automobiles, and quantity demanded plunges to zero. Demand in this price range is _____.

perfectly elastic

224

"% change in quantity divided by % change in price" is the generic formula for ________.

price elasticity of demand

225

If demand for a good is highly elastic, then an increase in price will _______.

significantly decrease quantity demanded

226

What is the formula for price elasticity of demand?

PED = % change in quantity demanded / % change in price

227

If price elasticity of demand is greater than one, then demand is _____.

elastic

228

Pens and pocket protectors are complementary goods. The supply of pocket protectors decreases. What happens to the equilibrium price of pens?

decreases - the price of pocket protectors increases, which causes the demand for pens to decrease; as a result, the price of pens decreases

229

What does price elasticity of demand tell us?

Price elasticity of demand tells us how much quantity demanded will be affected by a change in price.

230

The equilibrium point is at the intersection of what two curves?

the supply curve and the demand curve

231

What does it mean for a market to "clear"?

A market "clears" at the price where the quantity demanded equals the quantity supplied, so there is no surplus or shortage.

232

What effect does a price floor set over the equilibrium price have on a market?

Suppliers supply more, and consumers demand a lesser quantity. A surplus results.

233

Which two curves interest at the point of market equilibrium?

supply and demand

234

What does the market "do" at the point of equilibrium?

it "clears"

235

What is the term for the quantity at which buyers and sellers ask the same price?

equilibrium quantity

236

What usually results from a price floor?

a surplus

237

In a market, what is the "common language" that helps a buyer and seller agree on the value of the resources, goods, and/or services to be exchanged?

price

238

Define "market equilibrium."

The point at which quantity exchanged equals quantity supplied.

239

How do price signals affect markets?

Price signals are instrumental to markets. Depending on prices, consumers decide whether or not to consume and businesses decide whether or not to produce

240

True or false: A market consists of an exchange that takes place at a given location and at a particular time.

False

241

What effect does a price ceiling set below the equilibrium price have on a market?

Suppliers supply less, and consumers demand a greater quantity. A shortage results.

242

A surplus is a normal result of a price (ceiling/floor).

floor

243

What usually results from a price ceiling?

a shortage

244

What do you call a buyer and a seller, exchanging resources, goods, and/or services?

a market

245

What effect does a price ceiling set over the equilibrium price have on a market?

none

246

Rent control is a price (ceiling/floor).

ceiling

247

To keep farmers in business, the government often sets a price (ceiling/floor) on agricultural goods.

floor

248

What is the common economic language that makes comparison of values easier?

prices

249

What determines price in free market economy?

te interaction of supply and demand

250

What is another term for the equilibrium price?

the market-clearing price

251

Does a market have to occur in a physical place?

No

252

Equilibrium is best represented as a (curve/straight line/single point)/

single point

253

What effect does a price ceiling have on demand?

none

254

As the price of a good increases, what happens to the quantity demanded of that good?

quantity demanded decreases

255

In general, as the price of a good decreases, quantity demanded of that good (increases/decreases/stays the same).

increases

256

As price increases, the quantity demanded (increases/decreases).

decreases

257

in a free market, (self-interest) results from the value of private property.

self-interest

258

do economists think people are selfish?

no

259

what law can explain the bowed-out shape of a typical production possibilities curve?

the law of increasing opportunity cost

260

what will cause a production possibilities curve to shift inward?

a decrease in the amount of a factor of production

261

what will cause a production possibilities to shift outward?

an increase in a factor of production

262

describe the shape of a typical production possibilities curve.

bowed outward from the origin

263

what must an economy do in order to consume at a point beyond its production possibilities curve?

it must engage in trade

264

list two qualities of the points along a possibilities curve

1. all points are attainable and 2. all points are efficient

265

what dos PPC stand for?

production possibilities curve

266

what happen to a production possibilities curve when the amount of a factor of production is increased?

the curve expands outward

267

what happens to a production possibilities curve when the amount of a factor of production diminishes in availibility?

the curve shifts inward

268

in which type of economic system are all resources owned by private fims and individuals?

a pure market system

269

is economic regulation more likely to favor producers or consumers?

producers

270

what type of economic system is in place in cuba?

a mostly command/ planned system

271

What country has the most market-oriented economic system in the world?

the United States

272

what drives self-interest in a market economy?

the value of private property and ownership

273

if two countries have similar resources, but one has a command economic system and the other has a market system, which country will most likely have the higher income per capita?

the country with a market system

274

what type of firm has the greatest amount of market power?

a monopoly

275

what country has the most centrally-planned economic system in the world?

north korea

276

in which type of economic system is a person who owns no resource most likely to starve?

a pure market system

277

"pure capitalism" is another name for which type of economic system?

pure market economy, free enterprise system or free market system

278

since the former soviet union dissolved, what type of economic system has been in place in the majority of the resulting independent republics?

mixed market systems; most are trying to increase privatization

279

what does the herfindahl index measure?

the sales concentration among firms in a given industry; the degree of competition in the industry

280

In a market economy, ho is the question of "what to produce"answered?

by market forces

281

what is a horizontal merger?

a merger of two or more firms in the same market

282

What type of economic system is in place un the U.S.?

a mixed market system

283

What is a trade deficit?

a condition in which a nation spends more on imports than what it receives for its exports

284

How does an embargo differ from a tariff or a quota?

Tariffs and quotas are intended to help domestic producers, but embargoes are intended to hurt foreign consumers

285

How do two nations trade when they each use different currencies and different price structures?

Each nation uses an exchange rate to determine the value of its goods in terms of the other country's currency

286

How do political leaders tend to act toward foreign competition with domestic industries?

Many political leaders urge other countries to engage in free trade, but promote protectionist policies in their own countries

287

What is a product market?

a market in which goods or services are bought and sold

288

What kind of money is a gold coin?

commodity money

289

What is a market system?

an economic system in which a group allows market forces and the behavior of buyers and sellers to influence economic decision-making

290

What is an import?

a good produced in a foreign country but purchased by domestic consumers

291

How do rational people decide how to specialize?

People specialize in the production of the good they can produce for the lowest opportunity cost

292

What does a price floor have on demand?

none

293

As the price of a good increases, what happens to the demand for that good?

nothing

294

Define comparative advantage

the ability of one country to produce a good at a lower opportunity cost (with a greater efficiency relative to other goods) than another country

295

True or False: a change in price results in a change in the quantity demanded

True

296

True or False: a change in price results in a change in the demand

False

297

A minimum wage is a price floor or ceiling

floor

298

Movement along the demand curve represents a change in (demand or quantity demanded)

quantity demanded

299

As price increases, the quantity supplied (increases or decreases)

increases

300

For a price ceiling to achieve its purpose, it must be imposed (above or below) market equilibrium

below

301

For a price floor to achieve its purpose, it must be imposed (above or below) market equilibrium

above

302

A shortage is a normal result of a price (floor or ceiling)

ceiling

303

If the government sets a minimum exchange price above market equilibrium, resulting in a quantity supplied in excess of quantity demanded, what has been imposed?

a price floor

304

If the government sets a maximum exchange price below market equilibrium, resulting in a quantity demanded in excess of quantity supplied, what has been imposed?

a price ceiling

305

What effect does a price floor set below the equilibrium price have on market?

none

306

prices go up on demidec CDROM software, and overall revenue stays the same. this means that demand is=n this price range is...

unit elastic

307

the price of one good goes up. as a result, the demand for another good decreases. what is the relationship of the two goods?

the two goods are complements

308

if demeand for a good is relatively inelastic, then an increase in price will

have little effect on quantity demanded

309

if price elasticity is less than one, then demand is

inelastic

310

demand increases and supply decreases. what happens to equilibrium price

increases

311

what are substitute goods?

goods that can replace one another or that are made with essentially the same resources

312

what are complementary goods

goods that are purchased together sch that the demand for one can directly affect the demand for the other. the classic exanple: hot dogs and hot dog buns

313

demand decreases. what happens to equilibrium quantity & price

decreases

314

demand increases and supply increases. what happens to equilibrium price

the change is indeterminate

315

the number of remote control producers shrinks. the supply of remote controls...

decreases

316

remote control producers learn that due to government intervention, the price of remote controls will increase in four weeks. short term supply....

decreases

317

what is the difference between a superior good and a normal good?

nothing- they are the same

318

explain the budget constraint

consumers are forced to sacrifice some wants for others because of limited income

319

what is a durable good

a good for which consumers have more elastic demand. if income changes or prices rise, consumers can reasonably hold off on buying durable goods, such as yachts, houses cars

320

after competition, what happens to demand for flashcards?

it decreases

321

when a person's income goes up, he buys more tomatoes. tomatoes are what kind of good?

normal or superior goods

322

in which type of economic system are consumers free to buy anything they can afford?

a pure market system

323

what type of incentive is an individuals right to private property

positive and non monetary

324

prior to 1978 what type of of economic system was in place in china?

a mostly command system

325

what is market power?

a firms ability to raise prices without losing customers

326

in which type of economic system are sellers free to produce and sell anything they expect to be profitable

a pure market system

327

in a command economy, who or what answers the question of "who will receive the benefits of production?"

a central authority

328

in a mixed market economy, how is the question "what to produce" answered?

by a combination of central authority and market forces

329

what type of economic system was in place in the former soviet union?

a centrally-planned system

330

what are the three main types of economic systems?

traditional, planned/command, and mixed market systems

331

since 1978 what has been the general nature of the changes in chinas economic system?

the government has begun to relinquish some of its strict control and allow an increasing amount of market-oriented economic activity

332

what kind of of industry is most likely to be a target of economic regulation?

any industry in which a monopoly seems possible or desireable

333

what is a concentrated industry?

an industry in which only a few firms are responsible for the majority of sales

334

(Absolute/Comparative) advantages depend on relative costs.

comparative (Economics by Paul Samuelson, p835)

335

In a market economy, who or what answers the question of "who will receive the benefits of production"?

market forces

336

What type of economic system is in place in North Korea?

a mostly command system

337

What are the three basic economic questions that every system must answer?

What to produce (and in what quantity)? For whom to produce? How to produce?

338

What is the most competitive kind of pure economic system?

a market system

339

In a command ecnomy, how is the question of "what to produce" answered?

by a central authority

340

In which type of economic system are all resources owned by the public?

a command/planned system

341

In a market economy, what is a firm's incentive to eliminate competition?

to increase market power

342

In which type of economic system do individuals have government protection for their rights to private property?

a mixed market system

343

In a mixed market economy, who or what answers the question of "who will receive the benefits of production"?

either by a central authority or by market forces

344

What is the least competitive kind of our economic system?

a command/planned economic system

345

What type of economic system is in place in India?

a mixed market system, largely based on tradition

346

what is the intended consqeuence of a decision?

the desired result of a decision; the reason the decision is made

347

what is the unintended consequence of a decision?

the unwanted and inexpected result of a decision

348

what would cause an economic decision to be difficult to make?

if there were only a small difference between the benefits and the costs of the alternatives

349

what is the present consequence of a decision?

the result that happens when the decision us made or soon afterwards

350

what type of consequences would a president facing reelection MOST be concerned with in regards to his actions?

the present consequences

351

what two factors of production are non human resources?

land and capital

352

what is a trade off

a decision to give up something in order to have something else

353

what is the basic economic problem

scarcity

354

in a market economy who or what answers the question of how to produce

either by a central authority or by market force

355

in a command economy who or what answers the question of how to produce

a central authority

356

do economists think people act out of self interest

yes

357

many production possibilties frontiers compare the production of capital and ....... goods

consumer

358

true or false- self interest is the same as selfishness

false

359

self interest is a result of the value of (public/private) property

private

360

when a nation moves from one point on its production possibilities curve

not all resources are being used efficiently the economy could produce more but it is not doing so

361

describe the shape of a production possibility curve for two goods that use the same productive inputs

a straight line

362

why does the production possibility curve have a downward slope

any increase in the production of one good decreases the production of the other

363

the trade off between guns and ..... is often used to refer to the choice between military and civilian goods

butter

364

how does the law of increasing opportunity cost affect the shape of a typical production possibilities curve

it causes it to bow outward

365

a graph that shows all the combinations of guns and butter that a nation can produce is an example of what type of curve

a production possibility curve

366

typically, a nation's production possibility curve is bowed (inward/outward)

outward

367

the production possibility curve us bowed outward due to the law of (increasing/decreasing) opportunity costs

increasing

368

if the production possibilities of two goods can be represented graphically as a straight line what can we infer about the relationship between the two?

the two goods use the exact same combination and amount of productive inputs

369

the supply curve shiftsto the left. is there more or less produced at any given price?

less

370

true or false- a change in the price of substitute goods changes demand for a good

true

371

the slope of the demand curve is

negative

372

what is a non durable good?

a good for which the consumers have mainly inelastic demand. although income may change or prices may rise, consumers cannot sacrifice many non-durable goods

373

the prices of substitutes and complementary goods affect the (supply/demand) for a good

demand

374

cost of production affect (supply/demand) in the market for a good

supply

375

true or false- a change in consumer incomes changes demand for a good

true

376

the demand curve is the graphic representation of the demand.....

schedule

377

the price of the product A increases by 10% as a result the quantity demanded of a product B increases by 5%. what is the coefficient of cross-price elasticity between these two products?

.5

378

if demand is unit-elastic then the price elasticity of demand is equal to

one

379

true or false a change in the number of consumers changes demand for a good

true

380

ticket prices go up at lakers games and overall ticket revenue decreases at the staples center this meeands that demand in this price range is

elastic

381

goods and services that are purchased together are called

complements

382

true or false a change in consumer tastes and preferances changed demand

true

383

elasticity of demand is generally highly (objective/negative)

subjective

384

substitutes have a (positive/negative) cross price elastiticity

positive

385

the price of a producte changes 10% as a result the quanitity demand changes by 25% what is the price elasticity of demand?

2.5

386

if demand is inelastic, what does this mean for the price elasticity of demand

the price elasticity of demand is less than one

387

goods and services that satisfy the same want are called

subsititutes

388

what is marginal costs

the cost of the next unit of production

389

what is the term of the restriction that income places on quanitity demanded

the budget constraint

390

elasticity is the relationship between the change in and the change in quantity demand or supplied

price

391

what is the measure of the responsiveness f demand to consumer income

income elasticity of demand

392

in a graph of supply and demand, what does the horizontal axis represent

quanitity

393

What does price elasticity of demand tell us?

Price elasticity of demand tells us how much quantity demanded will be affected by a change in price.

394

If the price of one good rises, what happens to the demand for its complementary good?

Demand for a complement will increase.

395

Pens and pencils are substitutes. The price of pens decreases? what happens to the equilibrium price of pencils?

decreases, because demand for pencils decreases

396

Demand decreases and supply increases. What happens to equilibrium quantity?

the change is indeterminate.

397

Demand decreases and supply decreases. What happens to equilibrium quantity?

decreases

398

Demand decreases and supply decreases. What happens to equilibrium price?

The change is indeterminate.

399

Supply decreases. What happens to equilibrium quantity?

increases

400

Supply increases. What happens to equilibrium price?

decreases

401

Name some factors that can change supply.

changes in technology, change in the number of suppliers, change in the cost of inputs, and change in expectations of future price changes

402

Technology for producing remote controls improves. The supply of remote controls (increases/decreases/stays the same).

increases

403

Investment represents about __% of GDP in the United States.

15

404

How much was U.S. per capita GDP in 1998?

$31,487

405

Randy decides to leave his job in New York and travel to Morocco, then back to California, where he is looking for a new job. What kind of unemployment is this?

frictional

406

Define the labor force.

Every civilian age 16 or older who has a job or is seeking one. Military personnel and convicts do not count

407

What is the Labor Force Participation rate?

The percentage of the civilian population i the labor force out of everyone who could be in the labor force.

408

What government agency keeps track of unemployment data?

the Bureau of Labor Statistics

409

The Employment Act of 1946 most targeted what kind of unemployment?

cyclical unemployment

410

When did the Employment Act of 1946 expire?

2000

411

About what percentage of workers earning the federal minimum wage are 20 or older?

75%

412

How many times more likely is someone who has not gone to college to earn the minimum wage than someone who has graduated from college?

twice as likely

413

What government agency measures the Consumer Price Index?

the Bureau of Labor Statistics

414

What was the average inflation rate in 2004?

2.68%

415

True or false: full employment is 0% unemployment.

False-- for instance, there is always a certain degree of frictional unemployment.

416

What is bullion?

precious metal

417

What are three common types of unemployment?

frictional, structural, and cyclical

418

How are the fundamental economic questions answered in a traditional economic system?

with tradition and history

419

At what percent unemployment is an economy said to be at "full employment"?

4%

420

What is a "discouraged worker"?

someone who has given up looking for work

421

For an individual to be considered unemployed, does he have to be trying to find a job?

yes

422

Who wrote The Communist Manifesto?

Karl Marx

423

What is structural unemployment?

unemployment that occurs when the economy (usually due to technology) changes in such a way as to decrease demand for certain skills

424

What is cyclical unemployment?

unemployment associated with fluctuations in the business cycle

425

What is the labor force?

all civilians 16 and over who have a job or are seeking one and capable of holding one--thus, for instance, not mentally disabled are part of the labor force

426

What is underemployment?

Being employed at a lower level than education and training suggest would be optimal -- for instance, an engineer working to sell ice cream because of a decline in the availability of engineering jobs

427

Advertising to give your product name recognition and a unique reputation is known as _______.

branding

428

investment is sometimes called___ formation

capital

429

education and training are examples of investments in ___ capital

human

430

workers are what type of capital

human capital

431

what term refers to a wage rate based on worker output

productivity adjusted wage

432

give an example of investment in human capital

training, education, hiring new labor, increasing wages and health benefits technology that helps workers improve effiency

433

net investments is the value of the total investment minus

depreciation

434

true or false, the largest and most steady increase in real wages occurred after the industrial revolution

true

435

beginning with he peak, list the four major phrases of the business cycle

peak, precession, trough, expansion

436

why does aggregate demand increase if more income is distributed to lower income families and less income to higher income families

lower income families spend a great percentage of their incomes on consumption

437

did the median income of households in 1999 increase in every racial group

yes

438

new orders odor capital goods are ____ economic indicator

leading

439

government spendings represents about __% of GDP in the US

20

440

what is an intermediate good

a good that is made rom a resource for use in the production of a final good

441

in which range is the aggregate supply curve nearly vertical

classical

442

in which range is the shape of the aggregate supply curve similar to that of the supply curve of a single good

intermediate

443

list three fundamental economic questions

1. What to produce (and in what quantity)?
2. How to produce?
3. Who will receive the benefits of production?

444

what is a transfer payment from the government

a transfer of funds in which an individual might gain wealth, but nothing has been produced

445

labor cost per unit of output is a (leading/concurrent/lagging) economic indicator

lagging

446

what is the measure of the output of a nation's permanent residents, regardless of where they produce

gross national product

447

what is real gross domestic product

nominal GDP, adjusted for inflation

448

which racial group made the lowest median household income in the us in 1999

blacks

449

barbara eckler and amy brown and american citizens who live and own a smoothie bar in mexico city. is their income part of US gap? how about gnp?

no, yes

450

the length of the average work week is a (leading/concurrent/lagging) economic indicator

leading

451

which actor is on the demand side of the product market in the circular flow model

the household sector

452

are used car sales included in gap measurement

no

453

the equation mv=pq is known as the equation of

exchange

454

what does m stand for in the equation of exchange

money supply

455

what does v stand for in the equation of exchange

velocity of money

456

to increase the money supply in the economy, the federal reserve can (sell or buy) government bonds

buy

457

what is the discount rate

the interest rate the federal reserve charges banks to borrow money

458

what is the federal funds rate

the rate banks charge one another on loans

459

who is represented on the federal advisory council

member banks elect one representative per district

460

how long does each member of the federal advisory council hold office

each one is elected to a one year term and convention has it that each serves three consecutive one year terms

461

open market operations are the buying and selling of

government bonds

462

the reserve ratio is fifty percent what is the simple money multiplier

2

463

the reserve ratio is ten percent how much money is created from fifty dollars

500 dollars

464

how often and where does the federal advisory council meet

four times each year in washington dc

465

the higher the reserve ratio, the (higher/lower) the money multipler

lower

466

banking that employs a reserve ratio is known as _ banking

fractional reserve

467

the reserve ratio is 25% what is the simple money multiplier

4

468

what is the reserve ratio

the percentage of deposits that banks must hold on reserve

469

who sets the reserve ratio

the federal reserve

470

how does the reserve ratio relate to money multiplication

money in excess of required reserves can be loaned out to individual and then spent, deposited, and loaned out again

471

what does the phrase you cant push on a string mean with regard to monetary policy

it is east to slow down the economy through monetary policy, but harder to speed it up since for example high interest rates definitely discourage borrowing but low interest rates may not interest depressed consumers

472

what is the marginal propensity to consume

the percentage of each additional dollar an individual receives that he or she spends

473

what is an automatic stabilizer

an automatic stabilizer is a feedback mechanism that adjusts automatically offset a decrease or increase in aggregate demand. For instance unemployment insurance helps keep demand up during a recession by providing the unemployed with spending money

474

what is moral suasion with regard to the federal reserve

moral suasion occurs when the federal reserve pressures banks to act in a certain way

475

what is the margin requirement with regard to stock purchases

if you buy 100$ share of stock with 10$ of your own money and 90$ borrowed from your stockbroker you are buying stock on the margin the federal reserve can control how much you need to put in cash

476

what does regulation q allow the federal reserve to do

it allows the federal reserve to set the top interest rate that can be paid out by a bank to consumers

477

TRRUE OR FALSE; IN PERFECTLY COMPETITIVE MARKETS, SELLERS HAVE A POSITIVE INCENTIVE TO SELL BELOW THE PRICE OF THEIR COMPETITORS

FALSE

478

IN A MONOPOLISTIC COMPETITIVE MARKET PRICES FALL WITHIN A (WIDE/NARROW) RANGE

NARROW

479

WHAT DOES PERFECT INFORMATION MEAN

ALL CONSUMERS AND PRODUCERS HAVE ACCESS TO ALL INFORMATION ABOUT PRICE AND AVAILABILITY OF THE PRODUCT AND ABOUT ONE ANOTHER

480

ADVERTISING ISAN IMPORTANT STRATEGY IN WHICH TWO MARKET STRUCTURES

MONOPOLISTIC COMPETITION AND OLIGOPOLY

481

WHAT FACTOR IN A MARKET AFFECT THE LEVEL OF COMPETITION

NUMBER OF BUYERS AND SELLERS, NO BARRIERS TO ENTRY OR EXIT, HOMOGENEOUS PRODUCT, PERECT INFORMATION

482

IS PROFIT GUARANTEED TO A REGULATED MONOPOLY

NO

483

A MARKET IN WHICH ONLY ONE FIRM PROVIEDS THE GOOD OR SERVICE IS A...

MONOPOLY

484

WHAT ARE THE CHARACTERISTICS OF AN OLIGOPOLY

A FEW LARGE SCALE SELLERS, HOMOGENEOUS OR SLIGHTLY DIFFERENTIATED PRODUCTS, MUTUAL INTERDEPENDENCE, STEEP BARRIERS TO ENTRY

485

IS A MONOPOLY A PRICE TAKER

NO A MONOPOLY IS A PRICE SEARCHER SEEKING OUT THE PRICE AT WHICH IT CAN EARN THE MOST PROFIT

486

SPECIFICALLY CHARACTERIZE THE STRUCTURE OF THE MARKET FOR PUBLIC UTILITIES

NATURAL MONOPOLY

487

IF ONE FIRM DECIDES TO CHARGE MORE IN PERFECT COMPETITION WHAT HAPPENS

CONSUMERS BUY FROM OTHER PRODUCERS AND THE FIRM'S SALES PLUMMET TO ZERO

488

WHAT TERM REFERS TO WHAT HAPPENS WHEN A MONOPOLY FIRM WITHHOLDS GOODS FROM CONSUMERS IN ORDER TO RAISE THE PRICE

CONTRIVED SCARCITY

489

WHY ARE MONOPOLIES CRITICIZED

THEY CAN CHARGE MORE FOR THEIR PRODUCTS, THEY CAN AFFORD TO BE LESS RESPONSIVE TO CONSUMER DESIRE, THEY BLOCK COMPETITORS FROM ENTERING THE MARKET

490

A MONOPOLY HAS.... SELLERS

ONE

491

MARKETS WITH (HIGH/LOW) BARRIERS TO ENTRY OFTEN RESULT IN MONOPOLIES

HIGH

492

WHAT TYPE OF MARKET STRUCTURE HAS ONLY ONE SUPPLIER

MONOPOLY

493

WHAT DO YOU CALL THE EXCLUSIVE LEGAL RIGHT TO CONTROL INTELLECTUAL PROPERTY

A COPYRIGHT

494

WHAT IS THE DIFFERENCE BETWEEN A PRICE TAKER AND A PRICE SEARCHER

PRICE TAKERS SELL AT THE MARKET PRICE, WHATEVER IT HAPPENS TO BE; PRICE SEARCHERS SELL AT THE POINT OF PROFIT MAXIMIZATION

495

what does it mean for products in perfect competition to be homogeneous

the goods provided by different producers are essentially identical

496

can a patent or copyright create a natural monopoly

yes

497

what do you call the exclusive legal right to make or sell an invention for a given period of time

a patent

498

is dynamic efficiency a positive or negative result of monopolies

dynamic efficiency is generally considered positive. firms have more resources available with which to develop technology and improve resources

499

if one firm in an oligopoly raises its prices, other firms tend to (ignore/match) this increase

ignore

500

true or false. in perfectly competitive markets, all sellers are price takers

true

501

are new car sales included in GDP measurement?

yes

502

how much was the median household income of asians and pacific islanders in 1999?

$51,205

503

in the circular flow model, what is the real flow?

resources, goods, and services

504

define "recession"

a recession is in effect when output falls at least two consecutive quarters

505

exports are (leaks from/injections into) the money flow

injections into

506

short-run growth of output is cyclical, but long-run growth general (increases/decreases).

increases

507

government is one answer to which basic economic question?

who will receive the benefits of production

508

the money supply is a (leading/concurrent/lagging) economic indicator

leading

509

if you mow your parents lawn for free, is it included in GDP measurement?

no

510

what is the difference between the real flow and the money flow?

the real flow is the direction of resources, goods, and services moving from the household sector to the business sector and back again. the money flow is the direction of money (opposite the direction of real flow) as it is used to acquire resources, goods, and services

511

are social security payments directly included in GDP measurement?

no

512

according to classical economics, for how long can the business cycle persist?

indefinitely

513

income is (leading/concurrent/lagging) economic indicator

concurrent

514

whose economic law favors supply-side economic thinking?

say's law

515

is the sale of stocks included in GDP measurement?

no

516

a change in price level causes the aggregate supply to (increase/decrease/stay the same)

stay the same

517

how does the government enter the circular flow of an economy?

money leaks from the circular flow to the government in the form of taxes; the government injects money into the real flow through transfer payments and direct spending

518

which racial group earned the highest median household income in the U.S. in 1999?

asians and pacific islanders

519

are black market transections included in GDP measurement?

no

520

t at higher price levels, people demand a (smaller/greater) quantity of output from the economy?

smaller

521

employment is a (leading/concurrent/lagging) economic indicator

concurrent

522

true or false: if firms expect they will have greater income in the future, they will invest more now, decreasing aggregate demand

true

523

at what point do the aggregate supply and aggregate demand curves intersect?

at the equilibrium price level

524

is the resale of homes included in GDP measurement?

no

525

imports are (leaks from/injections into) the real flow

injections into

526

true or false: a monopoly's marginal revenue curve is equal to its demand curve

false

527

describe the characteristics of monopolistic competition

a large number of sellers, product differentiation, few barriers to entry or exit

528

a producer may become a if it obtains exclusive ownership of a resource

monopoly

529

describe the shape of the demand curve in an oligopoly

kinked

530

which market structure has a large number of sellers offering differentiated products with few barriers to entry

monopolistic competition

531

in a perfectly competitive market the demand curve for individual producers is completely

elastic

532

the u.s. constitution guarantees that people will not be deprived of their private property without __ of law

due process

533

what is a patent

an exclusive right to make or sell an invention over a fixed period

534

what is the term for laws that prohibit agreements requiring employers to hire only union members

right to work or open shop law

535

what is the term for an employer that only hires union labor

closed shop

536

collective bargaining is a tool used by what institution to increase workers wages

labor union

537

what is the difference between saving and investing

saving is abstinence from present consumption. investment is the use of resources for future production

538

what is a copyright

a right to exclusively control intellectual property

539

the market structure of a union

monopoly

540

labor unions often try to increase wages by __ the supply labor

decreasing

541

commons is another name for what type of good

public good

542

what is the term for the price paid for borrowing money for a period of time

interest rate

543

name some methods that labor unions use to raise wages

restricting the supply of labor, collective bargaining, increasing the demand for labor

544

the tragedy of the commons occurs when this type of good is abused

public good

545

money earned today can be spent months or years from now. during that time, money is serving which functions

a store of value

546

what are the three functions of money

a medium of exchange, a unit of account, and a store of value

547

money that is used in a transaction is serving which function

a medium of exchange

548

what does it mean for money to be a unit of account

it serves as a measure of value; goods and services can be compared based on how much money it takes to purchase them

549

the value of money is

instrumental

550

what physical properties must currency have for it to be an effective form of money

it must be durable; easy to transport, handle, and distinguish from other types of money; and difficult to counterfeit

551

about _ percent of the money used for daily transactions is in the forms of coins and currency

25

552

Describe characteristics of a monopoly

one firm, no close substitutes, high barriers to entry

553

What are some examples of artificial barriers to entry?

government regulation, import quotas and tariffs, patents, others

554

What is the structure of the market for automobiles?

oligopoly

555

In a perfect competitive market, demand is perfectly (elastic/inelastic).

elastic

556

True or False: In a monopoly, there are high barriers to entry.

True

557

The auto industry is generally considered to be which type of market structure?

oligopoly

558

What type of market structure has only one buyer?

monopsony

559

A monopolistic competitive market has (one/few/many) sellers.

many

560

How are backpacks an example of monopolistic competition?

There are many producers of backpacks - Osprey, Gregory, Jansport, Eastpak, Lowe Alpine, REI, Arcteryx, among others - each trying to convince users that its products are different from the others.

561

Monopolies have an incentive to maximize profit by restricting (prices/output).

output

562

Why is advertising important in monopolistic competition?

In a monopolistic competitive market, firms compete by differentiating their products.

563

What is contrived scarcity?

Contrived scarcity occurs when a monopoly withholds goods from consumers in order to raise the price.

564

Which market structure has a large number of sellers offering identical products with no barriers to entry?

perfect competition

565

Competition among sellers tends to result in (higher/lower) prices.

lower

566

If there are no barriers to entry or exit, what does it mean for any individual firm?

It can enter or leave the market at any time.

567

As prices increase in a perfectly competitive market, what happens to the number of sellers?

The number of sellers increases because new producers have an incentive to enter the market.

568

Local telephone, electricity, and gas utilities generally have what type of market structure?

monopoly

569

What are two legal grants of exclusive ownership?

patents and copyrights

570

As prices increase in a perfectly competitive market, what happens to the number of buyers?

The number of buyers decreases because some buyers will seek substitutes.

571

If one firm in an oligopoly lowers its prices, other firms tend to (ignore/match) this increase.

match

572

What is the structure of the market for airline travel?

oligopoly

573

Competition among sellers tends to result in (better/worse) quality of goods and services/

better

574

What is a price taker?

a firm that must "take" (accept) the market price

575

A perfectly competitive market has (one/few/many) sellers.

many

576

What is the structure of the market for wheat?

perfect competition

577

Competition among buyers tends to result in (higher/lower) prices.

higher

578

An oligopoly has (one/few/many) sellers.

few

579

the new deal provided a test of whose economic theory

john maynard keynes

580

what does it mean for some of the national debt to be externally held?

external debt is owed to foreign individuals firms banks and govts

581

which economist wrote the general theory of employment, interest, and money?

john maynard keynes

582

if the marginal propensity to consume (MPC) is .8, what is the govt expenditure multiplier

5

583

what might have caused an almost tenfold increase in the national debt between 1935 and 1945?

the new deal's income security and govt spending programs, as well as spending on ww2

584

currently, the national debt is about how much per person in the us?

about 20,000$ perperson

585

what does it mean for some of the national debt to be internally held?

internal debt is owed to parties within the us

586

if a govt spends more than it receives in revenue during a given year, it is running _____

a deficit

587

if a govt spends less than it receives in revenue during a given year, it is running _____

a surplus

588

the national debt increased from under one trillion dollars in 1980 to about how many trillion dollars in 1990?

three

589

what is contractionary fiscal policy?

govt intervention to slow rising inflation

590

what are the two most important tools for the govt in implementing fiscal policy?

govt spending and taxes; either can be increased or decreased

591

increased taxes result in (lower/higher) GPD

lower

592

what does "loose money" mean with regard to the federal reserves?

it means the fed reserve is undertaking policies that encourage the growth of the money supply

593

how does the marginal propensity to consume relate to the multiplier effect?

the MPC indecates the amount of each dollar pumped into the economy that will be re-spent

594

what is expansionary fiscal policy?

govt intervention to increase GDP and decrease unemployment

595

what prompted the creation of the fed reserve

the money panic of 1907

596

which banks must belong to the fed reserve system,?

national banks (banks operating in more that one state)

597

explain the difference between debt and deficit

a budget deficit is the amount by which govt spending exceeds tax revenue in a given year. The natl debt is the total outstanding securities and interest obligations of the fed govt

598

how does the fed reserve manipulate the money supply?

the fed buys and and sells us securities and raises and lowers interest rates in order to stimulate or stifle growth as it deems necessary

599

into how many districts is the fed reserve divided?

12

600

what are the 6 powers granted to the fed reserve by congress?

conduct monetary policy, supervise financial institutions, lend money to financial institutions, serve as a bank for the government, issuer currency,provide services to financial institutions

601

How does the government generally aim to achieve monetary targets?

through manipulation of interest rates via the Federal Reserve

602

What does the Federal Reserve do to help achieve the economic goals stated in the Full Employment and Balanced Growth Act of 1978?

The Fred manipulates the money supply.

603

when economists refer to "the money supply" to which category of money are they normally referring

m1

604

you take out a loan in the amount of $25,000 and end up paying $50,000 over the course of 30 years. what is the principal

$25,000

605

about how much cash is there in circulation per citizen in the us economy

$1,500

606

what does inflation do to the value of money

inflation devalues money

607

prices in kosovo are measured in kumquats. kumquats are being used as a (medium of exchange/ unit of account/ store of value)

unit of account

608

according to the phillips curve, low inflation corresponds to _____ unemployment

high

609

if inflation is at 4%, what nominal interest rate must a lender charge to earn a real interest rate of 5%

9%

610

what is disinflation

a decrease in the inflation

611

high employment + high inflation =

stagflation

612

an unanticipated decrease in the rate of inflation benefits (credits/debtors/ neither)

creditors

613

what is a time deposit

money that must be held in a deposit for a certain length of time, usually in exchange for additional interest

614

m3 consists of what elements

m2 plus eurodollars, time deposits of over $100,000 and certain money market funds which take a long time to return money to investors

615

what are some important characteristics of money if it is to fulfill its roles

portability, recognizability, durability, difficulty of duplication

616

if nomal gdp is $300 billion, and the gdp deflator is 200, what is real gdp

$150 billion

617

what is the prime rate

the interest rate that banks charge their most credit-worthy customers for short term loans

618

define stagflation

a period of high unemployment in a time of high inflation

619

define "Cost-push inflation"

cost-push inflation is the result of rising production costs, which force producers to raise the selling prices of their goods

620

define deflation

a decrease in general price levels

621

mortgage rates have general (increased/decreased) since the early 1980sw

decreased

622

how are the different categories of money, such as m1 and m2, divided

according to liquidity

623

according to the phillips curvre, high inflation corresponds to ____ unemployment

low

624

what is deflation

a general decrease in price levels

625

at higher interest rates, individuals borrow (less/more) money

less

626

l consists of what elements

m3 plus savings bonds, government securities, commercial paper and other obscure financial instruments

627

what is the wealth effect as related to inflatoin

if the price level decreases, people have more money to spend on more things; its as though they are wealthier

628

what curve graphically represents an inverse relationship of inflation and unemployment

the phillips curve

629

what are the two primary markets in the circular flow model of an economy?

product and resource markets

630

using the income approach how id GDP calculated?

GDP= Consumption + investment + government spending + net exports

631

what is the index of leading economic indicators?

a weighted index of twelve economic measurements that can indicate the general direction in which economic growth is moving

632

why is an import leak from the money flow

money leaves our country in exchange for product from another country

633

which sector is on the demand side of the factor markets n the circular flow model

the business sector

634

in a nation of subsistence farmers is GDP per capita an accurate measure of quality of life?

probably not

635

explain how consumer sovereignty works

consumers have needs for resources, good, or services, and their demand gets the circular flow model going

636

the decision between guns and butter is a classic example of which basic economic question

what to produce

637

what do firms pay for the factors of production

wages, rents, salaries

638

hw much was the US nominal GDP in 1990

over $5.74 trillion

639

the business cycle is graphed as a measure of changes in _____ over time

GDP

640

how much was the median household income of white household in the IS in 1999

$42,504

641

name the three types of economic indicators

lading indicators, lagging indicators, and concurrent indicators

642

the choice between mass-production and small-scale production is an example of which basic economic question?

how to produce

643

the rate and magnitude of the circular flow can be equated to ____

GDP

644

aggregate demand measures the relationship of ______

rice level to quantity of output in an entire economy

645

the number of new housing permits issued is a (leading/concurrent/lagging) economic indicator

leading

646

if real flow runs counter-clockqise in the circular flow model, in which direction does money flow?

clockwise

647

on a graph of aggregate demand, what does the vertical axis represent?

gross domestic product

648

what is the most meaningful measure of economic growth?

per capita GDP

649

True or false: if people think price levels are going to fall in the future, they spend less now, bringing down aggregate demand

true=in fact, this actually helps lower the price level !!!!!!!!

650

what does it mean for aggregate supply to be in the classical range?

it means that an increase in aggregate demand will result in an equilibruim of higher prices but no greater quantity of economic output

651

between 1990 and 1998 by what percent did real gross domestic product grow in the US

23.1%

652

What provides the "grease" that helps the economy run smoother by making exchanges easier?

money

653

Most day-to-day transactions take place with what form of money?

demand deposits

654

Interest rates are the cost of (consumption or investment)

investment

655

Derived demands are demands for what

factors of production

656

The demand for labor is an example of a ______ demand

derived

657

A farmer buys farmland solely for the purpose of growing wheat. The demand for the (farmland or wheat) is a derived demand

farmland

658

What term refers to the demand for an input?

derived demand

659

The term derived demand refers to (consumer or producer) demand

producer

660

The economic term "rent" refers to the price of a factor of production whose supply is perfectly (elastic or inelastic)

inelastic

661

Explain the difference between the terms "rent" or "rental"

"Rent" is the payment for a factor with a fixed supply, such as land. "Rental" is the price paid for any good or service over a period of time

662

Rent is the price paid for which factor of production

land

663

What economic term refers to payments for labor?

wages

664

What does a producer pay for the use of labor?

wages

665

What does the producer pay for the use of a capital resource?

interest

666

What is the reward for entrepreneurship?

profit

667

What does the producer pay for the use of natural resource?

rent

668

The degree of income inequality in the United States has (increased or decreased) since the beginning of the 20th century

decreased

669

What is a productivity-adjusted wage?

a wage rate based on the number of units produced

670

What does the Lorenz curve measure?

inequality among income classes

671

What is the measurement of output per unit of input?

productivity

672

If a firm improves its productivity, are prices likely to fall?

yes

673

If input remains the same, but output increases, does productivity increase, decrease or stay the same?

it increases

674

What is human capital?

education, skills, and training of laborers

675

Labor productivity is defined as

output per unit of labor input

676

When input increases but output stays constant

productivity decreases

677

What is the term for higher wages paid to workers unpleasant jobs?

compensating wage differentials

678

The length of life and the consumption of food, clothing, and housing are measurements used to gauge a person's _____ ______ _______

standard of living

679

Investment is spending on which factor of production?

capital

680

What term refer to the extent to which capital has been used up or lost its value

depreciation

681

what is the difference between a depression and a recession?

in a recession output is diminishing for at least two quarters . a depression is a rapid fall in output over a longer period of time, but there is no cutoff point between the two.

682

true or false a change in foreign income shifts aggregate demand

true

683

aggregate demand demonstrates (a direct/ an inverse) relationship between price level and total spending in the economy.

an inverse- people spend more at lower price levels

684

consumption represents about ....% of GDP in the united states

60

685

how much was u.s. nominal GDP in 1998

over $8.51 trillion

686

what is a final good?

a good that is sold in an economy and will not be sold later as any part if another good, nor used to produce another good for sale

687

consumer debt relatice to income is a (leading/concurrernt/lagging) economic indicator

lagging

688

is homemaking included in gdp measurement

no

689

sales are a (leading/concurrent/lagging) economic indicator

concurrent

690

are servers tips included in gdp measurement

reported tips are included in gdp measurement. tips that are unclaimed, however. are not included in gdp even though they are a part of a servers income

691

is homemaking included in GDP measurement?

no

692

changed in inventories are a (leading/concurrent/lagging) economic indictator.

leading

693

what is the index of consumer confidence

based on datat obtained by the conference board, the index of consumer confidence is a measure of consumers expectations for their economic futures

694

what is the nomial gross domestic product

GDP expressed in current dollar values

695

what was the us real median income of households in 1999?

40,816

696

in a free market system how is the for whom question of economics resolved?

goods and services go to the people who are willing to pay the market price for them

697

the choice between hand made production and production by machine is an example of which basic economic question?

how to produce

698

production output is a(leading/concurrent/lagging) economic indicator

concurrent

699

if your neighbor mows your parents lawn for 20 each week, and reports that income to the IRS, is it included in GDP

yes

700

stock prices are a (leading/concurrent/lagging) economic indicator

leading

701

in which range is the aggregate supply Curve nearly horizontal

keynesian

702

the median household income of this racial group in the us was 30,735 in 1999

hispanics

703

what are the two sectors in the circular flow model

the househol sector and the business sector

704

name three ranges of the aggregate supply Curve

keynesian, intermediate, classical

705

are transfer paymens included in GDP measurement

no

706

how do we determine per capita gross domestic product

dividing GDP by total population

707

when a person's income goes up, he buys fewer cans of generic tomato juice. generic tomato juice is therefore what kind of good?

inferior

708

price of hot dogs increases. what happens to demand for hot dog buns?

decreases, because hot dog buns are a complementary good

709

price of salsa decreases. What happens to the demand for tortilla chips?

increases

710

when summer comes, what happens to the demand for lemonade?

increases

711

T or F- a change in the quantity supplied of a good changes demand that good

false

712

T or F- change in the season can change demand

true

713

the price of cottage cheese goes up. what happens to the demand for its substitute, yogurt?

demand for yogurt increases

714

movement of the demand curve represents a change in (demand/quantity demanded)

demand

715

T or F- a change in the price of a good changes demand for that good

false

716

T or F- change in the price of complementary goods changes demand for a good

true

717

define exchange rate

the price of a nation's currency, expressed in terms of the value of another

718

the law of supply states that quantity supplied is (directly/inversely) related to price.

directly

719

the slope of the supply curve is usually _________

positive

720

what is X-inefficiency?

inefficiency that results when a monoply stops searching for ways to keep costs down; services, efficiency, and productivity, may not improve because there is no incentive.

721

who regulates monopolies in the US?

federal trade commission

722

what is the structure of the markets for breakfast cereal

oligopoly

723

natural monopoly occurs in markets where the demand curve intersects the average cost curve at a quantity where average costs are (rising/falling)

falling

724

in a perfectly competitive market, should a firm advertise

no, the product is completely homogeneous

725

in monopolistic competitive market, there are (few/many) barriers to entry

few

726

what markets in the real world are the closest to perfect competition

the markets for commodities such as wheat

727

welfare loss due to monopoly is also known as________ loss

dead weight

728

price, marginal revenue and marginal cost are equal for a profit-maximizing firm in which market structure

perfect competition

729

T or F- a monopoly experiences a downward sloping demand curve

true

730

what is the term for a market controlled by just a few firms?

oligopoly

731

monopolies occur in markets where production involves economics of ________

scale

732

which organization replaced GATT in 1995?

the world trade organization

733

most of the governing rules used by the world trade organization come from which round of gatt negotiations

the uruguay round

734

economics analysis of tariffs shows that the gain in tax revenue and the increase in profits by domestic producers is (more/less) than the economic loss to consumers

less

735

what is a trade sanction

a trade penalty imposed by one nation or another

736

how does a country pay for a trade deficit

it must either run down its assets or owe money

737

by conention, the president of the world bank is always

european

738

when was gatt founded

1947

739

if a developing country seeks support for building a hydroelectric dam, it is more likely to turn to the.. for a loan of funds

world bank

740

in what year was the uruguay round of gatt talks completed

1993

741

what free trade organization is headquartered in geneva, switzerland

world trade organization

742

by convention, managing director of the imf is always

european

743

what was the goal of gatt

for member countries to meet regularly to discuss trade and reduce barriers to trade

744

the united states emerged from world war 1 as a new _ nation

creditor

744

the united states emerged from world war 1 as a new _ nation

creditor

744

the united states emerged from world war 1 as a new _ nation

creditor

744

the united states emerged from world war 1 as a new _ nation

creditor

744

the united states emerged from world war 1 as a new _ nation

creditor

745

an attorney who is also the fastest typist in town might still hire a typist instead of typing her own notes. why would this be to her advantage

they typist might have a comparative advantage in typing. even though the attorney is a better typist, she gains more by spending her time on legal work and hiring someone else to type

745

an attorney who is also the fastest typist in town might still hire a typist instead of typing her own notes. why would this be to her advantage

they typist might have a comparative advantage in typing. even though the attorney is a better typist, she gains more by spending her time on legal work and hiring someone else to type

745

an attorney who is also the fastest typist in town might still hire a typist instead of typing her own notes. why would this be to her advantage

they typist might have a comparative advantage in typing. even though the attorney is a better typist, she gains more by spending her time on legal work and hiring someone else to type

745

an attorney who is also the fastest typist in town might still hire a typist instead of typing her own notes. why would this be to her advantage

they typist might have a comparative advantage in typing. even though the attorney is a better typist, she gains more by spending her time on legal work and hiring someone else to type

745

an attorney who is also the fastest typist in town might still hire a typist instead of typing her own notes. why would this be to her advantage

they typist might have a comparative advantage in typing. even though the attorney is a better typist, she gains more by spending her time on legal work and hiring someone else to type

746

with one hour of labor, country A can produce either one shirt or 4 apples. with the same amount of labor country B can produce either two shirts or 10 apples. which country has the absolute advantage in shirts

country b

746

with one hour of labor, country A can produce either one shirt or 4 apples. with the same amount of labor country B can produce either two shirts or 10 apples. which country has the absolute advantage in shirts

country b

746

with one hour of labor, country A can produce either one shirt or 4 apples. with the same amount of labor country B can produce either two shirts or 10 apples. which country has the absolute advantage in shirts

country b

746

At present, fifty Canadian dollars are worth (less/more) than fifty American dollars.

less

746

with one hour of labor, country A can produce either one shirt or 4 apples. with the same amount of labor country B can produce either two shirts or 10 apples. which country has the absolute advantage in shirts

country b

747

how are exchange rates determined

supply and demand for both currencies naturally sets an equilibrium price

747

how are exchange rates determined

supply and demand for both currencies naturally sets an equilibrium price

747

how are exchange rates determined

supply and demand for both currencies naturally sets an equilibrium price

747

how are exchange rates determined

supply and demand for both currencies naturally sets an equilibrium price

747

how are exchange rates determined

supply and demand for both currencies naturally sets an equilibrium price

748

how does a country pay for a trade deficit

it must either run down its assets or owe money

748

how does a country pay for a trade deficit

it must either run down its assets or owe money

748

how does a country pay for a trade deficit

it must either run down its assets or owe money

748

how does a country pay for a trade deficit

it must either run down its assets or owe money

748

how does a country pay for a trade deficit

it must either run down its assets or owe money

749

the united states emerged from world war 1 as a new _ nation

creditor

750

an attorney who is also the fastest typist in town might still hire a typist instead of typing her own notes. why would this be to her advantage

they typist might have a comparative advantage in typing. even though the attorney is a better typist, she gains more by spending her time on legal work and hiring someone else to type

751

with one hour of labor, country A can produce either one shirt or 4 apples. with the same amount of labor country B can produce either two shirts or 10 apples. which country has the absolute advantage in shirts

country b

752

how are exchange rates determined

supply and demand for both currencies naturally sets an equilibrium price

753

how does a country pay for a trade deficit

it must either run down its assets or owe money

754

the united states emerged from world war 1 as a new _ nation

creditor

754

the united states emerged from world war 1 as a new _ nation

creditor

754

the united states emerged from world war 1 as a new _ nation

creditor

755

an attorney who is also the fastest typist in town might still hire a typist instead of typing her own notes. why would this be to her advantage

they typist might have a comparative advantage in typing. even though the attorney is a better typist, she gains more by spending her time on legal work and hiring someone else to type

755

an attorney who is also the fastest typist in town might still hire a typist instead of typing her own notes. why would this be to her advantage

they typist might have a comparative advantage in typing. even though the attorney is a better typist, she gains more by spending her time on legal work and hiring someone else to type

755

an attorney who is also the fastest typist in town might still hire a typist instead of typing her own notes. why would this be to her advantage

they typist might have a comparative advantage in typing. even though the attorney is a better typist, she gains more by spending her time on legal work and hiring someone else to type

756

with one hour of labor, country A can produce either one shirt or 4 apples. with the same amount of labor country B can produce either two shirts or 10 apples. which country has the absolute advantage in shirts

country b

756

with one hour of labor, country A can produce either one shirt or 4 apples. with the same amount of labor country B can produce either two shirts or 10 apples. which country has the absolute advantage in shirts

country b

756

with one hour of labor, country A can produce either one shirt or 4 apples. with the same amount of labor country B can produce either two shirts or 10 apples. which country has the absolute advantage in shirts

country b

757

how are exchange rates determined

supply and demand for both currencies naturally sets an equilibrium price

757

how are exchange rates determined

supply and demand for both currencies naturally sets an equilibrium price

757

how are exchange rates determined

supply and demand for both currencies naturally sets an equilibrium price

758

how does a country pay for a trade deficit

it must either run down its assets or owe money

758

how does a country pay for a trade deficit

it must either run down its assets or owe money

758

how does a country pay for a trade deficit

it must either run down its assets or owe money

759

the united states emerged from world war 1 as a new _ nation

creditor

759

the united states emerged from world war 1 as a new _ nation

creditor

760

an attorney who is also the fastest typist in town might still hire a typist instead of typing her own notes. why would this be to her advantage

they typist might have a comparative advantage in typing. even though the attorney is a better typist, she gains more by spending her time on legal work and hiring someone else to type

760

an attorney who is also the fastest typist in town might still hire a typist instead of typing her own notes. why would this be to her advantage

they typist might have a comparative advantage in typing. even though the attorney is a better typist, she gains more by spending her time on legal work and hiring someone else to type

761

with one hour of labor, country A can produce either one shirt or 4 apples. with the same amount of labor country B can produce either two shirts or 10 apples. which country has the absolute advantage in shirts

country b

761

with one hour of labor, country A can produce either one shirt or 4 apples. with the same amount of labor country B can produce either two shirts or 10 apples. which country has the absolute advantage in shirts

country b

762

how are exchange rates determined

supply and demand for both currencies naturally sets an equilibrium price

762

how are exchange rates determined

supply and demand for both currencies naturally sets an equilibrium price

763

how does a country pay for a trade deficit

it must either run down its assets or owe money

763

how does a country pay for a trade deficit

it must either run down its assets or owe money

764

the united states emerged from world war 1 as a new _ nation

creditor

765

an attorney who is also the fastest typist in town might still hire a typist instead of typing her own notes. why would this be to her advantage

they typist might have a comparative advantage in typing. even though the attorney is a better typist, she gains more by spending her time on legal work and hiring someone else to type

766

with one hour of labor, country A can produce either one shirt or 4 apples. with the same amount of labor country B can produce either two shirts or 10 apples. which country has the absolute advantage in shirts

country b

767

how are exchange rates determined

supply and demand for both currencies naturally sets an equilibrium price

768

how does a country pay for a trade deficit

it must either run down its assets or owe money

769

the united states emerged from world war 1 as a new _ nation

creditor

770

an attorney who is also the fastest typist in town might still hire a typist instead of typing her own notes. why would this be to her advantage

they typist might have a comparative advantage in typing. even though the attorney is a better typist, she gains more by spending her time on legal work and hiring someone else to type

771

with one hour of labor, country A can produce either one shirt or 4 apples. with the same amount of labor country B can produce either two shirts or 10 apples. which country has the absolute advantage in shirts

country b

772

how are exchange rates determined

supply and demand for both currencies naturally sets an equilibrium price

773

how does a country pay for a trade deficit

it must either run down its assets or owe money

774

the united states emerged from world war 1 as a new _ nation

creditor

775

an attorney who is also the fastest typist in town might still hire a typist instead of typing her own notes. why would this be to her advantage

they typist might have a comparative advantage in typing. even though the attorney is a better typist, she gains more by spending her time on legal work and hiring someone else to type

776

with one hour of labor, country A can produce either one shirt or 4 apples. with the same amount of labor country B can produce either two shirts or 10 apples. which country has the absolute advantage in shirts

country b

777

how are exchange rates determined

supply and demand for both currencies naturally sets an equilibrium price

778

how does a country pay for a trade deficit

it must either run down its assets or owe money

779

the united states emerged from world war 1 as a new _ nation

creditor

779

the united states emerged from world war 1 as a new _ nation

creditor

779

the united states emerged from world war 1 as a new _ nation

creditor

779

the united states emerged from world war 1 as a new _ nation

creditor

780

an attorney who is also the fastest typist in town might still hire a typist instead of typing her own notes. why would this be to her advantage

they typist might have a comparative advantage in typing. even though the attorney is a better typist, she gains more by spending her time on legal work and hiring someone else to type

780

an attorney who is also the fastest typist in town might still hire a typist instead of typing her own notes. why would this be to her advantage

they typist might have a comparative advantage in typing. even though the attorney is a better typist, she gains more by spending her time on legal work and hiring someone else to type

780

an attorney who is also the fastest typist in town might still hire a typist instead of typing her own notes. why would this be to her advantage

they typist might have a comparative advantage in typing. even though the attorney is a better typist, she gains more by spending her time on legal work and hiring someone else to type

780

an attorney who is also the fastest typist in town might still hire a typist instead of typing her own notes. why would this be to her advantage

they typist might have a comparative advantage in typing. even though the attorney is a better typist, she gains more by spending her time on legal work and hiring someone else to type

781

with one hour of labor, country A can produce either one shirt or 4 apples. with the same amount of labor country B can produce either two shirts or 10 apples. which country has the absolute advantage in shirts

country b

781

with one hour of labor, country A can produce either one shirt or 4 apples. with the same amount of labor country B can produce either two shirts or 10 apples. which country has the absolute advantage in shirts

country b

781

with one hour of labor, country A can produce either one shirt or 4 apples. with the same amount of labor country B can produce either two shirts or 10 apples. which country has the absolute advantage in shirts

country b

781

with one hour of labor, country A can produce either one shirt or 4 apples. with the same amount of labor country B can produce either two shirts or 10 apples. which country has the absolute advantage in shirts

country b

782

how are exchange rates determined

supply and demand for both currencies naturally sets an equilibrium price

782

how are exchange rates determined

supply and demand for both currencies naturally sets an equilibrium price

782

how are exchange rates determined

supply and demand for both currencies naturally sets an equilibrium price

782

how are exchange rates determined

supply and demand for both currencies naturally sets an equilibrium price

783

how does a country pay for a trade deficit

it must either run down its assets or owe money

783

how does a country pay for a trade deficit

it must either run down its assets or owe money

783

how does a country pay for a trade deficit

it must either run down its assets or owe money

783

how does a country pay for a trade deficit

it must either run down its assets or owe money

784

the united states emerged from world war 1 as a new _ nation

creditor

785

an attorney who is also the fastest typist in town might still hire a typist instead of typing her own notes. why would this be to her advantage

they typist might have a comparative advantage in typing. even though the attorney is a better typist, she gains more by spending her time on legal work and hiring someone else to type

786

with one hour of labor, country A can produce either one shirt or 4 apples. with the same amount of labor country B can produce either two shirts or 10 apples. which country has the absolute advantage in shirts

country b

787

how are exchange rates determined

supply and demand for both currencies naturally sets an equilibrium price

788

how does a country pay for a trade deficit

it must either run down its assets or owe money

789

the united states emerged from world war 1 as a new _ nation

creditor

790

an attorney who is also the fastest typist in town might still hire a typist instead of typing her own notes. why would this be to her advantage

they typist might have a comparative advantage in typing. even though the attorney is a better typist, she gains more by spending her time on legal work and hiring someone else to type

791

with one hour of labor, country A can produce either one shirt or 4 apples. with the same amount of labor country B can produce either two shirts or 10 apples. which country has the absolute advantage in shirts

country b

792

how are exchange rates determined

supply and demand for both currencies naturally sets an equilibrium price

793

how does a country pay for a trade deficit

it must either run down its assets or owe money

794

the united states emerged from world war 1 as a new _ nation

creditor

795

an attorney who is also the fastest typist in town might still hire a typist instead of typing her own notes. why would this be to her advantage

they typist might have a comparative advantage in typing. even though the attorney is a better typist, she gains more by spending her time on legal work and hiring someone else to type

796

with one hour of labor, country A can produce either one shirt or 4 apples. with the same amount of labor country B can produce either two shirts or 10 apples. which country has the absolute advantage in shirts

country b

797

how are exchange rates determined

supply and demand for both currencies naturally sets an equilibrium price

798

how does a country pay for a trade deficit

it must either run down its assets or owe moneysdudiudc

799

what is a quota

a limit on the quantity of a good that can be imported or exported

800

what types of behaviors might a trade sanction be intended to punish or stop

terrorism, narcotics trafficking, human rights violations, and proliferation of weapons of mass destruction

801

what does gatt stand for

general agreement on trades and tariffs

802

what is a tariff

a tax on an import

803

protectionalist policies, such as tariffs and quotas, (increase/decrease) the real wages of domestic workers

decrease

804

what do we call the unintended benefits or consequences of a good or activity whose cost is not paid by the producer or consumer

externalities

805

what term is used to describe private investment in and ownership of resources

capitalism

806

in which country was the first joint stock trading company formed

england

807

from what source other than bankers could monarchs borrow money

wealthy merchants

808

according to bullionism what commodities are most important to a nations economic strength

precious metals

809

the blast furnace was designed to reduce iron ore into what type of iron

cast or pig iron

810

when was the first joint stock trading company created

1550s

811

People have (predictable/unpredictable) reactions to incentives.

predictable

812

Global interdependence has (increased/decreased) in the last several decades.

increased

813

What are the four factors critical economic growth?

natural resources, human resources, capital resources, and social values/legal framework

814

What is the term for a good that can be provided to everybody (in a town or nation) at no more cost than the cost required to provide it to one person?

a public good

815

As of 1997, how many developing countries were there?

66

816

A nation's endowment of natural resources helps it to answer which basic economic question?

what to produce

817

Classify the development status of a country with a per capita GDP of $2,500.

less developed

818

What does per capita GDP overlook?

issues related to the distribution of wealth within a country

819

Do economists think people are rational?

yes

820

Canada, the U.S., and Japan are examples of (developed/developing) nations.

developed

821

What constitutes a developing country?

a country with a per capita GDP between $3,000 and $10,000

822

The populations of a less-developed countries tend to be (older/younger) than in developed countries.

younger

823

Rwanda, Nigeria, and El Salvador are examples of (developing/less-developed) countries.

less-developed

824

Developed countries are home to (more/less) than 30 percent of the world's population.

less (19.8% in 1998)

825

What three categories do economists often use to classify nations?

developed economics, developing economics, and less-developed economies

826

People sometime donate their used vehicles to charity. What is one incentive for doing so?

Answers may vary: a tax deduction, the unutterable joy of getting rid of an old lemon, the pride of giving

827

A nation with a per capita GDP of $2200 would be classified as having a (developed/developing/less-developed) economy.

less-developed

828

People sometimes donate their used vehicles to charity. What is one incentive for doing so?

Answer may vary: a tax deduction. the unutterable joy of getting rid of an old lemon, the pride of giving

829

A nation with a per capita GDP of $2200 would be classified as having a (developed / developing/ less-developed) economy.

less-developed

830

Why can per capita GDP be misleading?

Many nations have a majority of people with very low incomes and a small number of people with very high incomes that bring the average up.

831

LDC stands for ______.

less-developed

832

What is the most common economic incentive in a free market economy?

the profit motive

833

At present, fifty Euro are worth (less/more) than fifty American dollars?

more

834

At present, fifty British Pounds are worth (less/more) than fifty American dollars?

more

835

Which is the most significant country in Western Europe not to join the EU or use the Euro?

Great Britain

836

the humphrey hawkins act defines full employment as ___% unemployment

4

837

The Employment Act of ____ gave the government the responsibility of creating and maintaining full employment

1946

838

what is another name for the full employment and balanced growth act of 1978

the humphrey-hawkins

839

what are the three major goals listed in the humphrey-hawkins act

full employment, price stability, and the growth of economic output

840

true or false: the federal reserve can change the prime rate directly

false

841

the federal reserve was founded in -----.

1913

842

what piece of legislation created the Federal Reserve?

the Federal Reserve Act of 1913

843

Between 1997 and 2000, the amount of interest paid on the federal debt (decreased/increased)

decreased

844

which federal reserve group controls the purchase and sale of government bonds

the fderal open market committee

845

how many members are on the federal open market committee

12

846

how are the members of the federal open market committee chosen

7 of the 12 members are the board of govenors and the other five are presidents of federal reserve district banks, with the New York district president always represented.

847

technically each federal reserve district bank is owned by

the banks that belong to the federal reserve system in that district

848

true or false the president of the new york district bank is always a member of the board of governors

false the president of the new york district bank is always a member of the federal open market committee but not necessarily the board of governors

849

what is the tool the federal reserve most frequently uses to adjust the money supply

open market operations the purchase and sale of government bonds

850

a checking account is also known as a_____ deposit.

demand

851

true or false no two members of the federal reserve board of governors can be from the same federal reserve district

true

852

how many smaller branch banks are there in the federal reserve

25

853

which group heads the federal reserve

the board of governors

854

how many members are there on the board of governors of the federal reserve

7

855

how does one member become a member of the board of governors

governors are appointed by the president

856

true or false the federal reserve handles check clearing

true

857

true or false state banks cannot join the federal reserve system

false they can choose to

858

true or false the majority of the nations bank belongs to the federal reserve system

false the figure commonly given is that 1/3 of us banks belong to the federal reserve system this number is probably climbing because of bank expansion and consolidation

859

the fed can indirectly affect the prime rate by changing the .... rate, the rate that member banks charge for overnight loans

discount

860

Young nations are usually (creditor/editor) nations.

debtor

861

Are trade patterns dictated by absolute or comparative advantage in producing a good if it ____

can produce that good at a lower opportunity cost / lower relative price

862

If Country A is more efficient than country B in the production of all goods, is it possible for country A to benefit trading with country B?

yes

863

A trade (surplus/deficit) occurs when the value of exports exceeds the value if imports.

surplus

864

With one hour of labor, country A can produce either one shirt or 4 apples. With the same amount of labor, country B can produce either two shirts or 10 apples. Which country has the comparative advantage in apples?

Country B

865

With one hour of labor, country A can produce either one shirt or 4 apples. With the same amount of labor, country B can produce either two shirts or 10 apples. Which country has the comparative advantage in shirts?

Country A

866

What is a balance of international payments?

an measure of the flow of products and capital resources between a country and the rest of the world

867

Define import.

a good or service produced in a foreign country and purchased by domestic consumers

868

A nation that produces a good with a low opportunity cost is using its absolute/comparative advantage

comparative

869

A trade (surplus/deficit) occurs when the value of imports exceeds the value of exports.

deficit

870

Mercantilist writers argued that trade deficits represented (a favorable/an unfavorable) balance of trade.

an unfavorable

871

In a balance of international payments, exports are listed as (credit/debit) items.

credit

872

The Paris Conference of 1867 set most of the world on ___ exchange rate system based on the ___ standard/

fixed, gold

873

True or false: Mercantilists thought that trade surpluses were good because they meant gold would flow into the home country.

True

874

Mercantilist writes argues that trade deficits represented (a favorable/an unfavorable) balance of trade.

an unfavorable

875

A trade (surplus/deficit) occurs when the value of imports exceeds the value of exports.

deficits

876

What law was passed in 1914 to clarify and strengthen the Sherman Act?

the Clayton Antitrust Act

877

Young nations are usually (creditor/editor) nations.

debtor

878

Are trade patterns dictated by absolute or comparative advantage in producing a good if it ____

can produce that good at a lower opportunity cost / lower relative price

879

If Country A is more efficient than country B in the production of all goods, is it possible for country A to benefit trading with country B?

yes

880

A trade (surplus/deficit) occurs when the value of exports exceeds the value if imports.

surplus

881

With one hour of labor, country A can produce either one shirt or 4 apples. With the same amount of labor, country B can produce either two shirts or 10 apples. Which country has the comparative advantage in apples?

Country B

882

With one hour of labor, country A can produce either one shirt or 4 apples. With the same amount of labor, country B can produce either two shirts or 10 apples. Which country has the comparative advantage in shirts?

Country A

883

What is a balance of international payments?

an measure of the flow of products and capital resources between a country and the rest of the world

884

Define import.

a good or service produced in a foreign country and purchased by domestic consumers

885

A nation that produces a good with a low opportunity cost is using its absolute/comparative advantage

comparative

886

At present, fifty Canadian dollars are worth (less/more) than fifty American dollars.

less

887

A trade (surplus/deficit) occurs when the value of imports exceeds the value of exports.

deficit

888

Mercantilist writers argued that trade deficits represented (a favorable/an unfavorable) balance of trade.

an unfavorable

889

In a balance of international payments, exports are listed as (credit/debit) items.

credit

890

The Paris Conference of 1867 set most of the world on ___ exchange rate system based on the ___ standard/

fixed, gold

891

True or false: Mercantilists thought that trade surpluses were good because they meant gold would flow into the home country.

True

892

Mercantilist writes argues that trade deficits represented (a favorable/an unfavorable) balance of trade.

an unfavorable

893

A trade (surplus/deficit) occurs when the value of imports exceeds the value of exports.

deficits

894

What law was passed in 1914 to clarify and strengthen the Sherman Act?

the Clayton Antitrust Act

895

If an item causes us to use up our stock of foreign currency, it counts as a (credit/debit) in our balance of international payments.

debit

896

if the money supply increases and the price level remains constant, what will happen to gdp

it will increase

897

true or false: milton friedman showed that the velocity of money was fairly stable from the 1940s to 1970

true

898

federal reserve policies are referred to as ____ policies

monetary

899

what does Q stand for in the equation of exchange

quantity of output

900

if the velocity of money increases and the price level is constant, what happens to gdp

gdp increases

901

if the velocity of money increases and the price level increases at the same rate, waht happens to gdp

gdp remains constant

902

the federal advisory council has how many members

12

903

what is the velocity of money

how quickly money circulates from the part to party in the economy; the higher the velocity, the more frequently money is spent

904

what does p stand for in the equation of exchange

price level

905

why is it sometimes difficult to attract foreign investment to less developed countries

political stability is lacking, and risk is high

906

what sorts of social values might be different in a less developed country than in the united states

there might be a different work ethic, or a different belief in the role of the free market, or in the right of women to work, or even in the idea of punctuality

907

states general spend the most money on

education

908

how do birth rates compare in developed versus developing countries

developing countries have much higher birth rates

909

specialization oand trade have (raised/allowed) standards of living in the world

raised

910

less developed countries generally have (higher/lower) birth rates and (higher/lower) literacy rates than developing and developed countries

higher, lower

911

tax revenues are usually intended to provide what type of good

public good

912

what type of goods must be provided by government if they are to exist at an adequate level

public goods

913

what are some examples of less developed countries

bhutan, afghanistan, rwanda, el salvador, bangladesh, nigeria

914

what do incentives cause people to do

risk their resources or manage their private properrty in a productive and or responsible way

915

classify the development status of a country with a per capita gdp of $7500

developing

916

what constitutes a developed country

a country with a per capita gdp of over $10,000

917

what is a less developed country

a country with a per capita gdp of under $3000

918

classify the development of a country with a per capita gdp of $3001

developing

919

which country has officially began measuring "gross national happiness"

bhutan

920

a natino with a per capita gdp of $7000 would be classified as having a (developed/developing/ less-developed) economy

developing

921

Investment represents about _% of GDP in the United States.

15

922

How much was the U.S> per capita GPD in 1998

$31,437

923

Randy decides to leave his job in New York and travel to Morocco, then back to California , where he is looking for a new job. What kind of unemployment data?

frictional

924

Defines the labor force

every ccillian age 16 or older who has a job or is seeking one. Millitary personal and convicts do not count.

925

What is the Labor Force Participation Rate?

The percentage of the iliasm population in the labor force out of everyone who could be in the labor force.

926

What government agency keeps track of unemployment data?

the Bureau of Labor Statistics

927

The EMployment Act of 1946 most targeted what kind of unemployment.

cyclical unemployment

928

When did the Employment act of 1946 expire?

2000

929

About what percentage of workers earning the federal; minimum wage are 20 years or older?

75%

930

How many times more likely is someone who has not gone to college to earn the minimum wage than someone who has graduated form college?

twice as likely

931

What government agency measures the Consumer PiceIndex

teh Bureau of Labor Statistics

932

is a trade deficit always bad

not necessarily

933

real wages increase/decrease as a result of trade

increase

934

a nation benefits by specializing in the goods in which it has a _ advantage

comparative

935

with one hour of labor, country A can produce either one shirt or 4 apples. with the same amount of labor, country B can produce either two shirts or 10 apples. if the two countries trade with each other which will export shirts

country A will export shirts to country B in exchange for apples

936

a nation that is more productive than another nation in a certain good has an absolute advantage/ a comparative advantage in that good

an absolute advantage

937

country A can produce a good at a lower cost than country B. should country A export this good it country B

not necessarily. country a has an absolute advantage in this good, but country B may have the comparative advantage

938

if an item provides us with more foreign currency, it counts as a credit/debit in our balance of international payments

credit

939

the relationship between the value of a nations exports and the value of it imports is called the trade_

balance

940

the U.S. is the largest _ of corn in the world

exporter

941

in a balance of international payments, imports are listed as _ items

debit

942

exchange rate

the price of a nations currency expressed in terms of the value of another

943

comparative advantage

the ability of one country to produce a good at lower opportunity cost with a greater efficiency relative to other goods than another country

944

export

a good or service produced domestically and sold to consumers in another country

945

if the american dollar appreciates versus the japanese yen, it will be worth_ compared to the yen

more

946

absolute advantage

the ability of one country to produce a good more efficiently at a lower cost than another country

947

if country A is less efficient than country B in the production of all goods, is it possible for country A to benefit by trading with country B

yes

948

true or false the wto has en enforcement system

true

949

the wto has about how many members

over 140

950

the united auto nation union opposed or supported the creation nafta

opposed

951

which countryies beling to mercosur

brazil argentina and paraguay and uruguay are full members. Chile and Bolvia are associates

952

Which two countries will join the EU in 2007?

Romania and Bulgaria

953

Name the original 15 countries in the EU

France, Germany, Belgium, Italy, Sweden, Denmark, Austria, United Kingdom, Ireland, Luxembourg, the Netherlands, Spain, Portugal, Greece, Finland

954

The major fear felt by opponents of NAFTA was that it eould result in

a loss of American jobs to less expensive mexican ones

955

The goals of GATT included (increasing or reducing) tarrifs

reducing

956

One goal of NAFTA was to eliminate all _____ among the US, Canada, and MExico over a period of ten to fifteen years

tarrifs

957

What is the current name of the organization formerly known as European Community?

the EU

958

Where is the World Bank headwuartered?

Washington D.C.

959

Many nations imposed trade ________ on South Africa when it was under apartheid system

sanctions

960

What round of GATT talks were completed in 1993?

The Uruguay round

961

Who is the current president of the World Bank (in 2005)?

Paul Wolfowitz

962

What ten european nations joined the EU in 2004?

Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithiuana, Malta, Poland, Slovakia, Slovenia

963

which part of the world trade organization settled trade disputes

the dispute settlement body

964

what is the main european trade association

the EU

965

what was the most signifacnt achievement to emerge from the urugay round

work toward the formation of the WTO

966

what is the term for when pnce ocuntry exports a large number of goods to another country at prices much lower than domestic prices

dumping

967

this is a south american free trade associaiton

mercosur

968

the united states was forced by the WTO to remove tariffs on what calss of goods

steel

969

what is a free trade assocation

a grop of countries that agreed to have free trade

970

if the contry is suffering a currency crisis to which organiation would they turn to for help

The IMF

971

what countireds belong to NAFTA

us, mexico, canada

972

why did the united autoworkers union oppose the creation of nafta

they feared that union workers would lose their jobs to mexico

973

trade sancitons are intended to (help or hurt) the ecnomies of the nations in which they are opposed

hurt

974

which agreement began the development of the andean

the careageana agreement of 1969

975

What federal agency was created to prohibit "unfair methods of competition"

the federal trade commission

976

if an item causes us to use up our stock of foreign currency, it counts as a (credit/debt) in our balance of international payments

debit

977

when was the federal trade commission established

1914

978

in a balance of international payments, exports are listed as (credit/debit) items

credit

979

if an item provides us with more foreign currency, it counts as a (credit/debit) in our balance of international payments

credit

980

the relationship between the value of a nation's exports and the value of its imports is called the trade _____.

balance

981

a tred (surplus/deficit) occurs when the value of exports exceeds the value of imports

surplus

982

The United States emerged from WW1 as a new (creditor/debtor) nation.

creditor

983

in a balance of international payments, imports are listed as (credit/debit) items.

debit

984

define export

a good or service produce domestically and sold to consumers in another country

985

young nations are usualy (creditor/debtor) nations

debtor

986

what is a alance of international payments

an measure of the flow of products and capital resources between a country and the rest of the world

987

how does a country pay for a trade deficit

it mus either run down its assets or owe money

988

what law made it illegal to monopolize any pat of trae r commerce among the several states and outlawed any combination or conspiracy in restraint of trade

the sherman antitrust act of 1890

989

is a trade deficit always bad

not necessarily

990

T/F : Mercantilists thought that rtrade surpluses were good becase they meant gold would flow into the home country

true

991

what is a multilateral trade sanction

a trade restriction imposed by several allies against one or more nations

992

what did the maastricht treaty accomplish

it ended border controls a tariffs and began monetary coordination among members of the European Community

993

what is an embargo

a ban on the trade of a good, or ban on trade with a nation altogether

994

why do protectionists wish to assist infant industries by restricting trade

they believe that infant industries stand a better chance of surviving if established foreign competitors are not allowed to drive out of business

995

the United states has traditionally been a (high-tariff/low-tariff) nation

high-tariff

996

true or false: in the year 2000, the united states lifted some trade sanctions against Cuba on medical and agricultural god.

true

997

what is the official definition of unemployment?

A person is unemployed if he or she is not currently working and is either waiting for recall after being laid of or has actively looked for work in the last four weeks.

998

according to Okun's law, if GDP falls 2% relative to potential GDP, by how much does the unemployment rate increase?

1%

999

What is branding?

Product differentiation; convincing the consumer that a particular firm has a "better" product even though the products in the market may all be quite similar.

1000

What is frictional unemployment?

the unemployment of people who are between jobs.

1001

What is inflation?

a rise in the general price level in an economy.

1002

What is hyperinflation?

an extremely high rate of inflation.

1003

when the prices of factors of production increase rapidly, what kind of inflation is likely to result?

cost-push inflation.

1004

If you're over your head in debt, do you like or dislike inflation?

Like it? you love it.

1005

At higher interest rates, individual save money?

more

1006

credit cards are part of which money supply definition?

None; a credit card transaction is like a short-term lone.

1007

the measures the largest variety of price levels?

GDP deflator

1008

which of the following is the most liquid: a checking account, a savings, or a government bond?

a checking account

1009

Individuals are more likely to invest in stock if interest rates are?

low

1060

A checking account is also know as a _____ deposit.

demand

1061

Name two unemployment/ inflation combinations NOT shown in the phillips curve.

high unemployment and high inflation; low unemployment and low inflation

1062

what constitutes m1?

currency, checking accounts and traveler's checks

1063

how do interest rates give individuals an incentive to save?

interest compensates individuals for putting money in savings.

1064

if you keep all your money in cash, hidden under your bed, do you like or dislike inflation?

dislike

1065

what do the CPI, the PPI, and the GDP deflator have in common?

all are measures of the current price level

1066

interest can be seen as the (price/quantity) of money.

price- interest is the cost of borrowing money

1067

true or false: the U.S. dollar is an example of fiat money.

true

1068

what does inflation do to the price level of an economy?

it raises the pice level

1069

Explain why Gresham's law holds.

consumers hoard currency that is valuable rather than spending it. they spend currency that is less valuable. thus, a real gold coin that is stamped "25 cents" will be hoarded while a regular quarter is spent.

1070

to what does liquidity refer?

the see with which money can be converted to cash.

1071

Define "demand-pull inflation."

Demand-pull inflation is the result of a shortage; demand in excess of supply causes consumers to bid the price level upward.

1072

What is the Gresham's law?

Bad money drives out good money.