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Econ > Econ quiz > Flashcards

Econ quiz Flashcards

1
Q

Barter takes the form of exchanges where ______ of the things being exchanged is/are money.

A

neither

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2
Q

The fact that coins can be issued in different denominations makes them a

A

Unit of exchange

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3
Q

Identify the attributes of money. (Choose all that apply)

acceptability

scarcity

privacy

portability

a statement on it that it is money

a physical manifestation

Divisibility

A

acceptability

scarcity

privacy

portability

divisibility

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4
Q

In order for something to be considered money, it must

A

be generally accepted as a representation of value

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5
Q

Cigarettes were used as currency by prisoners of war in allied prison camps during World War II. Almost everyone smoked and the Red Cross included cigarettes in packages to prisoners. Which attributes of money did cigarettes have? (Choose all that apply)

acceptability

portability

scarcity

privacy

divisibility

Usefulness

A

acceptability

portability

scarcity

privacy

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6
Q

Money facilitates exchanges in a way that is more efficient than

A

barter

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7
Q

The price at which people lend or borrow money is called the ______ rate.

A

interest

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8
Q

The fact that coins do not decay (of fall apart) makes them a good

A

Store of value

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9
Q

A gold-backed form of currency accentuates its

A

scarcity

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10
Q

If a borrower must pay $100 for having borrowed $2000 for a one-year period, his interest rate is what %

A

5

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11
Q

The interest rate that a lending institution publishes or advertises is a______ interest rate.

A

nominal

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12
Q

The fact that coins can be used to get goods from producers to consumers makes them a

A

Medium of exchange

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13
Q

The present value of a future sum is the amount one would have to today so it can grow into that sum by that future date

A

invest

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14
Q

The price one pays to “rent” money from a lender/saver is given as a ______, usually expressed in annual terms.

A

percentage

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15
Q

When a home or auto is purchased, the present value of the fixed monthly payments made over the loan period will ______ the purchase price of the home or car.

A

equal

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16
Q

If the net present value of an investment is positive, then it is ______ to undertake.

A

profitable

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17
Q

Which attributes are considered by economists as functions of money? (Select all that apply)

mechanism to foster patriotism

celebration of leaders

mechanism to control people

medium of exchange

store of value

unit of exchange

A

medium of exchange

store of value

unit of exchange

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18
Q

If a business must pay 8% to borrow funds for a project (e.g., new computer system) with an estimated internal rate of return of 10%, the firm will choose to ______ the project.

A

pursue

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19
Q

n order to compare two dollar amounts paid (or received) apart from one another in time, we use the concept of ______ value.

A

present

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20
Q

As the length of time that a sum is invested increases, the future value of that sum

A

increases

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21
Q

The net present value of an investment is ______ related to the interest rate.

A

negatively

22
Q

A project (e.g., new warehouse) under consideration by a firm will be determined to be profitable if the internal rate of return is ______ the interest rate paid on the borrowed funds.

A

greater than

23
Q

The interest–adjusted value of past payments is called the ______ value.

A

future

24
Q

Microsoft’s Excel spreadsheet program through its ______ function allows users to calculate the payment that, when made over several periods, will pay off a loan.

A

PMT

25
Q

Microsoft’s Excel spreadsheet program allows users to calculate how much they can borrow given their ability to afford a particular payment through its ______ function.

A

PV

26
Q

Suppose the economy’s aggregate demand (AD) curve initially intersects the aggregate supply (AS) curve on the latter’s Intermediate range. In this case, a contractionary fiscal policy will

A

decrease both prices and output.

27
Q

In a diagram displaying an economy’s aggregate demand and aggregate supply curves, an unexpected rightward shift of the AD curve depicts a ______ aggregate demand

A

positive

28
Q

Which form of policy involves cutting taxes and increasing government spending?

A

Expansionary fiscal policy

29
Q

Which actions would be consistent with contractionary fiscal policy? (Select all that apply.)

Multiple select question.

Increasing taxes

Cutting regulations

Increasing regulations

Cutting government spending

Cutting interest rates

Cutting taxes

Increasing interest rates

Increasing government spending

A

Increasing taxes
Cutting government spending

30
Q

Classical economists believe the economy is currently on what point of the aggregate supply curve?

A

Vertical portion

31
Q

In a diagram showing the economy’s aggregate supply (AS) and aggregate demand (AD) curves, suppose a negative aggregate demand shock occurs. In this case, nondiscretionary fiscal policy will push the AD curve back ______ to the right, necessitating some ______ discretionary fiscal policy.

A

partially; expansionary

32
Q

Which one of the following events is most likely to produce a negative aggregate demand shock?

A

A sudden and steep decline in the stock market.

33
Q

Which form of policy involves increasing taxes and cutting government spending?

A

Contractionary fiscal policy

34
Q

The adverse effects of aggregate demand shocks

A

may be offset by a combination of discretionary and nondiscretionary fiscal policies.

35
Q

In a diagram showing the economy’s aggregate supply (AS) and aggregate demand (AD) curves, suppose a positive aggregate demand shock produces an overheated economy. In this case, discretionary fiscal policy can ______ nondiscretionary fiscal policy in shifting the AD curve back to the ______.

A

reinforce; left

36
Q

The debate over whether any fiscal policy will have a real impact on the economy can be said to come down to where on the aggregate demand curve the economy lies.

True false question.

A

False

37
Q

In a diagram showing the economy’s aggregate supply and demand curves, suppose a negative aggregate demand shock produces a recession. In this case, _____ fiscal policy will act first to shift the AD rightward, then to be reinforced by ______ fiscal policy.

A

nondiscretionary; discretionary

37
Q

In the context of the aggregate supply–aggregate demand model, an expansionary fiscal policy is represented as a ______ shift in the AD curve.

A

Rightward

38
Q

A negative (or adverse) aggregate supply shock is represented as a sudden ______ shift in the AS curve.

A

leftward

38
Q

Which form of policy involves cutting taxes and increasing government spending?

A

Expansionary fiscal policy

39
Q

An unexpected event that causes aggregate demand to increase or decrease is known as an aggregate demand

A

Shock.

40
Q

The effectiveness of discretionary fiscal as a stabilization tool is ______ by the presence of various lags associated with its implementation.

A

weakened

41
Q

Suppose the economy’s aggregate demand (AD) curve initially intersects the aggregate supply (AS) curve on the latter’s Classical range. In this case, the application of expansionary fiscal policy will

A

increase prices, but not affect output.

41
Q

Classical economists believe the economy is currently on what point of the aggregate supply curve?

A

Vertical portion

41
Q

In a diagram showing the economy’s aggregate supply (AS) and aggregate demand (AD) curves, suppose a positive aggregate demand shock produces an overheated economy. In this case, ______ fiscal policy will act first to push the AD curve leftward, then needing to be reinforced by ______ fiscal policy.

A

nondiscretionary; discretionary

42
Q

To say that discretionary fiscal policy is biased toward expansion is to say that those who formulate it lean toward _____ spending and ______ taxation.

Multiple choice question.

A

high; low

43
Q

A president worried about an upcoming election will, according to the notion of a political business cycle, push for ______ spending and ______ taxes.

Multiple choice question.

A

more; lower

44
Q

A sudden fall in the price of an important natural resource would be described as a ______ aggregate supply shock, with the AS curve shifting _____ as a consequence.

A

positive; rightward

45
Q

Economic liberals criticized the Obama stimulus package arguing that it ______. (Select all that apply.)

was too large

was too small

focused too little on tax cuts

focused too little on spending increases

A

too small

focused too little on spending increases

46
Q

The fiscal policy lag associated with the time it takes for the enacted policies to affect the economy is known as the ______ lag.

A

operational

Econ (9 decks)

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