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MCQ Flashcards

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1
Q

How can data be used for positive statements

A

to test if true or false

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2
Q

Producing an additional unit at a point on PPF where lots of one good is produced will have a higher

A

Opportunity cost

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3
Q

Overall price index=

A

(Weight x number) + (weight x number) etc

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4
Q

Fisher equation questions

A

remember to rearrange

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5
Q

What can it lead to when most banks carry out commercial and investment bank activities

A

Systemic risk as investment banking is risky

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6
Q

To determine whether a tax system is progressive or regressive look at

A

Percentage tax take rather than the actual number in each band, higher band higher % = progressive

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7
Q

What are job vacancies and higher imports a sign of

A

economic boom

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8
Q

Real GDP =

A

Nominal GDP/ price index x 100

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9
Q

Bond Yield
​

A

Annual payment (coupon)/ current market price

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10
Q

Liquid assets are

A

Cash, balances at the central bank and other (liquid assets)

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11
Q

Why does total revenue fall when an already high price is increased further

A

Because the firm is producing near the top of the D curve already and ped is more elastic

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12
Q

At what output does MC= AC using TC

A

When the gradient from the origin is the shallowest IE average costs is at its lowest and that is where MC and AC intersect

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13
Q

If PED for a good is low, what type of gov intervention is unlikely to be effective

A

Any intervention using the price mechanism

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14
Q

Policy to remember that reduces income inequality

A

A minimum wage

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15
Q

What does a higher gini coefficient mean

A

A more unequal country

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16
Q

How to find marginal cost of adding 1 additional worker to workforce

A

1) Find the total cost before increasing workers
2) Find total cost after increasing size of labour
3) Calculate the difference for marginal cost

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17
Q

What does remote working improve

A

Worker productivity and staff retention due to improved work life balance

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18
Q

3rd degree price discrimination identification

A

Same product, diff types of consumers, different prices

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19
Q

NHS is not

A

a natural monopoly

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20
Q

Key thing to remember about nationalisation

A

It is not always of a natural monopoly

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21
Q

What does the IMF do and not do

A

It does…
Give loans to help restore sustainable econ growth, tackle BOP problems and stabilise economies

It does not…

Help finance development projects

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22
Q

If the resale price of an event is higher than the original, what does this new allocation of tickets better reflect?

A

consumers’ utility

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23
Q

When may an alternative policy be needed other than using the price mechanism to allocate a good

A

When a max price below the equilibrium price is used because there will be excess demand

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24
Q

At what type of elasticity would the price drop from a subsidy be the most

A

At a very inelastic PED

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25
When marginal costs is increasing as output increases in the short run, identify that...
The firm is experiencing diminishing marginal returns
26
Remember that an increase in exports by a foreign owned factory in the UK does not necessarily...
Improve its BOP as the profits may be remitted back to the foreign country
27
What change in the exchange rate improves the terms of trade
An appreciation
28
Why does an appreciation improve the terms of trade
Because it makes exports more expensive and the terms of trade = index of export prices / index of import prices
29
Key thing to remember about commercial banks
They manage deposits for firms and consumers
30
Key role of investment banks
Help companies make initial public offerings
31
How does an investment bank trade and invest
On its own account
32
What is a major cause of financial market failure
Info assymetry
33
Remember to differentiate between specific market failure ( financial) and...
government failure such as regulatory capture
34
What is the UK central bank not strict on
How much commercial banks can lend
35
What is a liquidity preference
The desire to hold assets that are easily convertible to cash
36
What happens to the supply of a good in joint supply when its compliment experiences a fall in demand
The supply curve shifts inwards
37
Remember with all Elasticity equations
Q goes on the top
38
Immediate impact of a depreciation
An increase in export profitability
39
Key impact of a depreciation
Doesn't worsen FDI but would decrease the number of foreign workers looking for temporary work as remittances would decrease
40
How can a UK central bank increase the exchange rate
Buy £s to shift the demand curve outwards to cause an appreciation
41
Remember for exchange that a rise in demand for pounds is not the same as ..
- An increase in supply of pounds - Remember, impact on demand for UK pounds or goods influences D, impact on how much we buy influences S
42
What does the UK central bank need to do with £s and $s to cause a depreciation
Sell £s and buy $s
43
Simple terms for appreciation and depreciation
Whatever you sell depreciates and whatever you buy appreciates
44
How does inflation impact the burden of debt
It reduces it
45
How does inflation effect the signalling function of the price mechanism
It makes it less efficient and thus osbcures relative price changes
46
What type of benefit would be likely ineffective in improving the poverty trap
Means tested benefits because if poor people work more they will lose some benefits and also have to pay more tax
47
Impact on inflation and employment of removing trade barriers
Inflation decreases and unemployment increases
48
TVC=
AVC x output
49
TFC=
AFC x output
50
TC=
TFC + TVC
51
Remove total revenue =
Price x quantity
52
IF PED = 0 then demand is
perfectly inelastics
53
What type of fixed costs do and don't change with output
Average fixed costs fall as output increases, Total fixed costs stay the same at all output levels
54
What are bond prices inversely related to
Interest rates
55
Does fiscal policy have an effect on IR
yes
56
What is investment in economics
Spending on capital goods
57
What can a reduction in welfare benefits be described as
A SSP
58
How does buying gov bonds impact the supply of loanable funds
It increases it
59
How does selling gov bonds impact the supply of loanable funds
It decreases it
60
What is a main function of SSPs
Creating incentives to improve economic performance
61
What does price equal for a perfectly competitive firm to maximise profits
MC
62
At what output does diminishing returns set in
When marginal returns adds less than the one before and average product falls
63
How to measure constant returns to scale
The proportional increase in inputs and outputs are the same eg x2 inputs x2 output
64
Remember changes in wages don't...
Shift labour demand/ supply curves
65
Labour Demand refers to
Firms hiring workers
66
Labour supply refers to
Workers willingness to join work
67
To guarantee an improvement of income inequality, what needs to improve
The share of income of the lowest quintile
68
What does it cause when an oligopoly chooses to limit price competition
Market failure
69
What is structural unemployment an example of
A market failure
70
How to calculate real gdp
gdp/ price level x 100
71
Calculate real gdp per capita
real gdp/ population x 100
72
Remember how to find consumer surplus?
Area above equilibirum but below demand curve

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