Quizzes Flashcards
(101 cards)
0
Q
- Scarcity results when available resources satisfy all desired uses of those resources.
A
False
1
Q
- All output combinations that lie outside a production possibilities curve are attainable with available resources and technology.
A
False
2
Q
- Critics of government regulation argue that government interference in the marketplace stifles the animal spirits of entrepreneurship.
A
True
3
Q
- Government failure occurs when government intervention fails to improve economic outcomes or makes them worse.
A
True
4
Q
- All economies must make decisions concerning what to produce, how to produce it, and for whom to produce.
A
True
5
Q
- The GDP is a measure of the market value of all final goods and services produced in the economy in a given time period.
A
True
6
Q
- The standard of living rises when population growth exceeds economic growth.
A
False
7
Q
- On average over the last century, the U.S. population has grown three times as fast as the U.S. real GDP.
A
False
8
Q
- According to the World Bank, nearly one-third of the people on earth subsist on incomes of less than $2 per day.
A
True
9
Q
- The richest fifth of U.S. households get nearly half of all U.S. income.
A
True
10
Q
- The Great Recession was basically a decrease in consumer activity caused by problems in the financial system.
A
True
11
Q
- The financial system collapse in 2008 was brought on by a series of poor policy and financial industry decisions.
A
True
12
Q
- There are never shortages or surpluses when the price in a market is equal to the equilibrium price for the market.
A
True
13
Q
- Market price is the same thing as equilibrium price.
A
False
14
Q
- When the number of buyers in a market changes, the market demand curve shifts even if individual demand curves do not shift.
A
True
15
Q
- An increase in the price of one good can cause the demand for another good to increase if the goods are complements.
A
False
16
Q
- Public goods are any goods provided by units of local, state, or federal governments.
A
False
17
Q
- The free-rider dilemma occurs in the provision of public goods because an individual can realize the benefits of someone else’s purchase (consumption) of a public good.
A
True
18
Q
- The market tends to underproduce public goods.
A
True
19
Q
- Markets will underproduce goods that yield external benefits and overproduce those that generate external costs.
A
True
20
Q
- Markets will underproduce goods that yield external benefits and overproduce those that generate external costs.
A
True
21
Q
- If a friend helps you with your homework, it will not be calculated in the GDP accounts. But if you hire a tutor who reports the income, the services will be counted in GDP.
A
True
22
Q
- Government spending in the national income accounts refers only to expenditures at the federal level.
A
False
23
Q
- When U.S. net exports are negative, the U.S. consumes more output than it produces.
A
True
24
25. Full employment means everyone in the labor force has a job.
False
25
26. If an 18-year-old male is taking college classes full-time and does not have a job and is not looking for one, he is considered unemployed.
False
26
27. If your real income rises but your nominal income falls, then you benefit from deflation.
True
27
28. In order to achieve price stability, inflation must be zero.
False
28
29. Money illusion results from expectations based on real purchasing power rather than current nominal income.
False
29
30. Redistribution of wealth is a microeconomic effect of inflation.
True
30
31. The core inflation rate involves all price changes including food and energy.
False
31
32. The real interest rate is the rate of inflation minus the nominal interest rate.
False
32
33. The underemployed are not included among the unemployed because they are working.
True
33
34. The undesirable effects of bracket creep can be eliminated by indexing marginal tax rates.
True
34
35. Uncertainty and speculation are microeconomic effects of inflation.
False
35
36. When restaurant prices rise faster than prices of food at grocery stores, real income rises for people who visit restaurants relative to those who cook for themselves.
False
36
37. In the Employment Act of 1946, Congress committed the federal government to pursue a goal of 0 percent unemployment and inflation.
False
37
38. Frictional unemployment stems from an insufficient level of demand in the economy.
False
38
39. The updated version of Okun's Law indicates that a 1 percent increase in the unemployment rate causes a 2 percent decrease in real GDP.
True
39
40. According to the classical view, if consumer demand slowed down,
Prices would increase, and the economy would return to its long-term growth trend.
40
41. Demand-pull inflation is caused by
Excessive aggregate demand in relation to an economy's production capacity.
41
42. Consumption expenditures account for approx. how much of total spending?
2/3
42
43. Assuming the economy is at full employment, a decrease in aggregate demand will most likely cause a change in which of the following types of unemployment?
Cyclical
43
44. When unwanted inventories pile up in retail stores, retail managers will take actions that lead to greater...
Unemployment
44
45. Economic growth would best be represented by a...
Shift outward of the production possibilities curve.
45
46. In a market economy, the people who receive the goods and services that are produced are those who...
Are willing to pay the highest price.
46
47. A U.S firm that outsources jobs would be...
Buying materials from foreign country, buying things made in a country with US parts, building factory in a country and using those workers.
47
48. The term "externalities" refers to...
The negative costs and positive benefits of a market activity borne by a third party.
48
49. A market shortage is...
The amount by which the quantity demanded exceeds the quantity supplied at a given price.
49
50. In a market economy, which of the following is an incentive for producers to produce efficiently?
Profits
50
51. The largest single source of revenue for the federal government is...
Personal income taxes
51
52. Market power may result from all of the following except...
Low barriers to entry
(Patents, control of resources, efficiencies of large scale production, copyrights) those are market power.
52
53. Disposable income is equal to...
Consumption + saving.
53
54. To calculate real GDP, we...
Estimate future prices of goods and services
54
55. According to the text, all of the following are true about outsourcing of jobs except that it...
Ultimately leaves the U.S. worse off
55
56. Why has structural unemployment in the U.S. increased over the last 20 years?
Rapid Technology (skill change), outsourcing, trade with other countries
56
57. The movement of taxpayers into higher tax brackets as nominal incomes grow is...
Bracket creep
57
58. When investment increases, there is usually no impact on household income.
False
58
59. Undesired inventory depletion results in demand-pull inflation.
True
59
60. If there is an inflationary spiral, GDP will fall as inventories rise.
False
60
61. Because saving is a leakage, sudden additional saving results in higher GDP.
False
61
62. Cyclical unemployment originates with an imbalance between injections and leakages, not the absolute size of injections or leakages.
True
62
63. The impact of the multiplier effect depends on the size of the initial change in expenditures.
True
63
64. According to the text, Federal gov spending has a countercyclical impact that helps to stabilize the economy.
True
64
65. Favorable expectations about future sales will cause higher investment.
True
65
66. Total consumption consists entirely of two components: autonomous consumption and income-dependent consumption.
True
66
67. The largest component of aggregate spending is government spending.
False
67
68. Keynes asserted that wealth was the most important determinant of consumer spending.
False
68
69. The four components of aggregate spending are consumption, saving, imports, and taxes.
False
69
70. Unlike the classical economists, Keynes believed that the economy would automatically adjust to full employment.
False
70
71. Equilibrium is unique; it is the only price-output combination that is mutually compatible with aggregate supply and demand.
True
71
72. The profit effect occurs because, in the short run, resource costs typically do not increase as rapidly as the price of goods and services.
True
72
73. The quantity of real output supplied rises as the price level rises.
True
73
74. Keynes argued that policy levers were both effective and necessary.
True
74
75. Changes in the availability of money have little impact on the macro performance of the economy.
False
75
76. During a recession, real output falls.
True
76
77. An economic expansion refers to an increase in the volume of goods and services produced.
True
77
78. Keynes believed that a market-driven economy was inherently unstable.
True
78
79. According to the classical view, the economy will not self-adjust to deviations from its long-term growth trend.
False
79
80. Alternating periods of economic growth and contraction are…
The result of recurrent shifts of aggregate demand and aggregate supply.
80
81. External shocks include all the following except...
Population growth
| Natural disasters, terrorist attacks, wars
81
82. In the early 1900s which of the following was not true?
Government intervention was commonly used to stimulate the economy.
(Says law worked, periods of high unemployment were brief, falling prices limited unemployment)
82
83. Time lags in the design, authorization, and implementation of fiscal policy reduce its effectiveness.
True
83
84. An increase in government expenditure can crowd out consumption and investment expenditure.
True
84
85. If the economy has an inflationary GDP gap, one possible solution is to increase government expenditures.
False
85
86. An income transfer contains less fiscal stimulus than an increase in gov. spending of the same size.
True
86
87. Tax cuts and increased income transfers have the same fiscal stimulus, dollar for dollar.
True
87
88. It is impossible for the government to maintain a balanced budget while using fiscal policy to eliminate a recessionary gap.
False
88
89. A tax increase of $250 will exactly offset a $250 increase in government purchases, leaving aggregate demand unaffected.
False
89
90. All of the following will shift the investment curve except...
Change to the interest rate
| Innovation, tech. improvements, expectation changes
90
91. If business inventories decrease below desired levels then it is likely that a…
Higher price level will occur
91
92. Changes in the supply of money have no impact on the prices of goods and services.
False
92
93. The federal deficit is the total of all state deficits.
False
93
94. Discretionary spending cannot be controlled due to legislative restrains.
False
94
95. Our current debt to GDP ratio is the highest in our nations history.
False
95
96. Foreigners hold about 31% of our nation's federal debt.
True
96
97. Federal agencies and state and local government hold about 45% of our nations debt.
True
97
98. The US money supply has stayed relatively static over the last 30 years.
False
98
99. The primary method of increasing the money supply is to print more currency.
False
99
100. The federal reserve controls the basic money supply.
True
100
101. Money can be defined as anything generally excepted as a medium of exchange.
True
