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Flashcards in Economics Exam 1 Deck (34):

Unemployment due to changes in the types of skills employers require is called

Structural Unemployment



Price of the basket/
Price of the basket base year


If there is no CPI for a given year then the CPI is



To find percentage change in real income you...

Calculate real income for both years
=nominal/CPI x 100

Subtract current RI by previous RI and divide by previous RI x 100


Unemployment that arises as a result of the time it takes for unemployed people to locate a job utilizing their transferable skills is called

Frictional Unemployment


How to find another's years dollars worth....

1. Calculate percent change in CPI
2. Multiply percent by previous years worth of dollars
3. Add the product to previous years worth of dollars


If tuition is set at 60$ there will be

A shortage at 10 a.m. And a surplus at 8 a.m.


The demand for seats in 10 a.m. Classes at the university is higher than the demand for the seats in 8 a.m. Classes. The supply is fixed. If the university prices classes at the price required to achieve equilibrium at 10 a.m., there will be

A surplus at 8 a.m.


To an economist, freeway congestion is a sign that the price to drive in the freeway is

Below its equilibrium level


If demand to attend college rises, but the tuition stays constant, it follows that the

GPA required to attend the college will probably rise


The lower the price of medical care in general, the higher the __________ medical care and the __________ specific items that makeup medical care

Quantity demanded of;higher the demand for


If the government sets out to make home buying easier for more people by driving lenders to accept __________ down payments and __________ interest rates, the result will likely be a(n) __________ in housing prices



If demand is fixed the line is

Perfectly Horizontal


If supply is fixed the line is

Perfectly Vertical


Law of demand states that price and quantity demanded are

Inversely related, ceteris paribus


Inferior Good

Income goes up, demand goes down

Income goes down, demand goes up


Normal good

As income increases, demand increases

As income decreases, demand decreases


Resource X is necessary to the production of good Y. If the price of resource X rises

The supply curve of Y shifts leftward


The fundamental reason why most supply curves are upward sloping is that

Higher production raises the opportunity costs of production and so price must rise to induce more output


At a price below equilibrium, there is

A shortage


If the supply of and demand for a product both decrease, then equilibrium

Quantity must decline, but equilibrium price may either, rise, fall, or remain unchanged


A rightward shift in supply from S1 to S2 could have been caused by

The granting of a subsidy to the producer


Neutral good

As income increases, you don't but more of a good

As income decreases, you don't buy less of a good


In year 1 the average price of X is $10, and in year 2 the average price of X is $23. Still consumers buy more units of X In year 2 than in year 2. It follows that

Demand for good X could be higher in year 2 than in year 1

Income may have been higher in year 2 than in year 1


A vertical supply curve represents

An independent relationship between price and quantity supplied


If the demand for a good increases by more than the supply of the good increases, then equilibrium price will ______and equilibrium quantity will ______



Law of demand

Law of diminishing marginal utility


To be efficient

Implies that it is impossible to get more of one good without getting less of the other


Economy exhibits productive efficiency if it produces

Maximum output with given resources and technology


Productive IN-efficiency

It is possible to obtain gains in one area without losses in another


To fine combinations of the two good, X and Y, that it is possible for the economy to produce

Graph both combinations given, find the slope .04=.4

Multiply .4 time ____ combinations of X

Subtract the product from ____ Y combination given

Try for all answers


PPF between goods X and Y will be a downward-sloping

Curve that is bowed outward if increasing opportunity costs exists


PPF is a straight line as a result of

Constant opportunity costs


At a price above equilibrium, there is a