Flashcards in economics 526-600 Deck (75):
imports are (leaks from/injections into) the real flow
true or false: a monopoly's marginal revenue curve is equal to its demand curve
describe the characteristics of monopolistic competition
a large number of sellers, product differentiation, few barriers to entry or exit
a producer may become a if it obtains exclusive ownership of a resource
describe the shape of the demand curve in an oligopoly
which market structure has a large number of sellers offering differentiated products with few barriers to entry
in a perfectly competitive market the demand curve for individual producers is completely
the u.s. constitution guarantees that people will not be deprived of their private property without __ of law
what is a patent
an exclusive right to make or sell an invention over a fixed period
what is the term for laws that prohibit agreements requiring employers to hire only union members
right to work or open shop law
what is the term for an employer that only hires union labor
collective bargaining is a tool used by what institution to increase workers wages
what is the difference between saving and investing
saving is abstinence from present consumption. investment is the use of resources for future production
what is a copyright
a right to exclusively control intellectual property
the market structure of a union
labor unions often try to increase wages by __ the supply labor
commons is another name for what type of good
what is the term for the price paid for borrowing money for a period of time
name some methods that labor unions use to raise wages
restricting the supply of labor, collective bargaining, increasing the demand for labor
the tragedy of the commons occurs when this type of good is abused
money earned today can be spent months or years from now. during that time, money is serving which functions
a store of value
what are the three functions of money
a medium of exchange, a unit of account, and a store of value
money that is used in a transaction is serving which function
a medium of exchange
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
the value of money is
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
about _ percent of the money used for daily transactions is in the forms of coins and currency
Describe characteristics of a monopoly
one firm, no close substitutes, high barriers to entry
What are some examples of artificial barriers to entry?
government regulation, import quotas and tariffs, patents, others
What is the structure of the market for automobiles?
In a perfect competitive market, demand is perfectly (elastic/inelastic).
True or False: In a monopoly, there are high barriers to entry.
The auto industry is generally considered to be which type of market structure?
What type of market structure has only one buyer?
A monopolistic competitive market has (one/few/many) sellers.
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.
Monopolies have an incentive to maximize profit by restricting (prices/output).
Why is advertising important in monopolistic competition?
In a monopolistic competitive market, firms compete by differentiating their products.
What is contrived scarcity?
Contrived scarcity occurs when a monopoly withholds goods from consumers in order to raise the price.
Which market structure has a large number of sellers offering identical products with no barriers to entry?
Competition among sellers tends to result in (higher/lower) prices.
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.
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.
Local telephone, electricity, and gas utilities generally have what type of market structure?
What are two legal grants of exclusive ownership?
patents and copyrights
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.
If one firm in an oligopoly lowers its prices, other firms tend to (ignore/match) this increase.
What is the structure of the market for airline travel?
Competition among sellers tends to result in (better/worse) quality of goods and services/
What is a price taker?
a firm that must "take" (accept) the market price
A perfectly competitive market has (one/few/many) sellers.
What is the structure of the market for wheat?
Competition among buyers tends to result in (higher/lower) prices.
An oligopoly has (one/few/many) sellers.
the new deal provided a test of whose economic theory
john maynard keynes
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
which economist wrote the general theory of employment, interest, and money?
john maynard keynes
if the marginal propensity to consume (MPC) is .8, what is the govt expenditure multiplier
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
currently, the national debt is about how much per person in the us?
about 20,000$ perperson
what does it mean for some of the national debt to be internally held?
internal debt is owed to parties within the us
if a govt spends more than it receives in revenue during a given year, it is running _____
if a govt spends less than it receives in revenue during a given year, it is running _____
the national debt increased from under one trillion dollars in 1980 to about how many trillion dollars in 1990?
what is contractionary fiscal policy?
govt intervention to slow rising inflation
what are the two most important tools for the govt in implementing fiscal policy?
govt spending and taxes; either can be increased or decreased
increased taxes result in (lower/higher) GPD
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
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
what is expansionary fiscal policy?
govt intervention to increase GDP and decrease unemployment
what prompted the creation of the fed reserve
the money panic of 1907
which banks must belong to the fed reserve system,?
national banks (banks operating in more that one state)
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
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