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Flashcards in Test 1 (practice) Deck (37):
1

Things that are valuable are things that are ___________________

-

2

Costs that are paid in money are called:

explicit costs

3

Opportunity cost is the cost:

of what we give up when we make a decision

4

Globalization is defined as:

the economic integration of nations

5

5. When globalization has been effective historically, it’s been because it was based on:

technological advances such as steamships or the internet

6

On the __________ is the economist’s word for making
decisions based on the costs or benefits of one more of something.

Margin

7

(True/False) Mercantilism believes that trade is a form of war, no different than fighting with
guns

True

8

_______________ was the name of the person who taught us that competition is required for
markets to work correctly.

Adam smith

9

England made the American colonies and India produce raw materials, sell them only to England, then buy finished products back from England. This means England:

was using Mercantilism to make themselves richer at our expense

10

(True/False) Comparative advantage requires that countries limit trade to targeted
industries only.

False

11

Supply and demand says if there is a shortage of school teachers:

the price of school teachers is too low

12

look at graph in the practice exam

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13

(True/False) An export requires that money enter your country and flow out of another.

true

14

Foreign ___________ is the economist’s term for money of other countries.

exchange

15

The sale of oranges from the US to Japan would show up in the ___________________ account
of the US Balance of Payments?

current

16

The purchase of AMC Theaters by China would show in the ______________________ account
of the Balance of Payments

financial / capital financial.

17

The ________________ is the name of the bank that was created in Bretton Woods.

International Monetary fund.

18

(True/False) An increase in imports to the US from China should raise the value of the dollar
against the Yuan.

False, lower the value

19

The entire balance of payments (all parts) adds up to

0

20

(True/False) Prior to Bretton Woods, most world trade was paid for in gold.

True

21

Exchange rates set by the market are called ________ exchange rates.

floating

22

(True/False) The Bretton Woods system made the US dollar the key currency in the world.

True

23

If the US has a trade deficit, how will it be corrected if markets are free to work?

the dollar will fall

24

GDP measures:

total production in the economy.

total expenditure as well.

25

_____ GDP is adjusted for inflation

Real

26

_________ GDP is GDP divided by the population

per capita

27

(True/False) China has the second largest total GDP of any country in the world.

True

28

(True/False) China is not in the top 20 countries in GDP per person in the world.

True

29

GDP equals:

C + S + T

30

The first part of an expansion is sometimes called the:

recovery

31

The labor force is the:

employed plus the unemployed

32

A __________ worker is someone who wants a job, but has given up looking for one.

discouraged

33

The unemployment rate is the percentage of the ___ that is unemployed.

labor force

34

___________________ unemployment is composed of people who are voluntarily changing jobs

Frictional

35

The unemployment rate takes into account
a. part time versus full time work
b. people working in jobs for which they are over-qualified
c. retirees who are working just to get out of the house
d. none of the above

none of the above

36

If free trade can benefit everyone, why do some countries still manipulate their trade? How
do they do it?

They do not care about the other one
they just want to become richer

37

List two categories of goods that are not included in GDP. Explain why comparing GDP
between countries is not really a good idea

1. Things that are traded
2. Things that are illegal.
1. The size of the stuff that we do not
measure is not good
2. It is not measure of people who are
happy its the measure of stuff
3. Differences in prices, difference in
population. We are guessing on all
this stuff