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Flashcards in economics 451-525 Deck (75):
1

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

leading

2

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

the household sector

3

are used car sales included in gap measurement

no

4

the equation mv=pq is known as the equation of

exchange

5

what does m stand for in the equation of exchange

money supply

6

what does v stand for in the equation of exchange

velocity of money

7

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

buy

8

what is the discount rate

the interest rate the federal reserve charges banks to borrow money

9

what is the federal funds rate

the rate banks charge one another on loans

10

who is represented on the federal advisory council

member banks elect one representative per district

11

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

12

open market operations are the buying and selling of

government bonds

13

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

2

14

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

500 dollars

15

how often and where does the federal advisory council meet

four times each year in washington dc

16

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

lower

17

banking that employs a reserve ratio is known as _ banking

fractional reserve

18

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

4

19

what is the reserve ratio

the percentage of deposits that banks must hold on reserve

20

who sets the reserve ratio

the federal reserve

21

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

22

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

23

what is the marginal propensity to consume

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

24

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

25

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

26

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

27

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

28

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

FALSE

29

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

NARROW

30

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

31

ADVERTISING ISAN IMPORTANT STRATEGY IN WHICH TWO MARKET STRUCTURES

MONOPOLISTIC COMPETITION AND OLIGOPOLY

32

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

33

IS PROFIT GUARANTEED TO A REGULATED MONOPOLY

NO

34

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

MONOPOLY

35

WHAT ARE THE CHARACTERISTICS OF AN OLIGOPOLY

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

36

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

37

SPECIFICALLY CHARACTERIZE THE STRUCTURE OF THE MARKET FOR PUBLIC UTILITIES

NATURAL MONOPOLY

38

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

39

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

CONTRIVED SCARCITY

40

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

41

A MONOPOLY HAS.... SELLERS

ONE

42

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

HIGH

43

WHAT TYPE OF MARKET STRUCTURE HAS ONLY ONE SUPPLIER

MONOPOLY

44

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

A COPYRIGHT

45

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

46

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

the goods provided by different producers are essentially identical

47

can a patent or copyright create a natural monopoly

yes

48

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

a patent

49

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

50

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

ignore

51

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

TRUE

52

are new car sales included in GDP measurement?

yes

53

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

$51,205

54

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

resources, goods, and services

55

define "recession"

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

56

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

injections into

57

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

increases

58

government is one answer to which basic economic question?

who will receive the benefits of production

59

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

leading

60

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

no

61

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

62

are social security payments directly included in GDP measurement?

no

63

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

indefinitely

64

income is (leading/concurrent/lagging) economic indicator

concurrent

65

whose economic law favors supply-side economic thinking?

say's law

66

is the sale of stocks included in GDP measurement?

no

67

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

stay the same

68

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

69

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

asians and pacific islanders

70

are black market transections included in GDP measurement?

no

71

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

smaller

72

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

concurrent

73

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

TRUE

74

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

at the equilibrium price level

75

is the resale of homes included in GDP measurement?

no