Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Economics > ECON201 - Exam 1 - Review > Flashcards

ECON201 - Exam 1 - Review Flashcards

1
Q

What is Economics best defined as?

A

A social science concerned with how individuals, institutions and society make optimal choices under conditions of scarcity.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

The economizing problem is one of deciding how to make best use of what?

A

Limited resources to satisfy virtually unlimited wants.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

The main function of the entrepreneur is to what?

A

Innovate

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Macroeconomics approaches the study of economics from the viewpoint of what?

A

The entire economy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

According to economists, economic self interest is what?

A

A reality that underlies economic behavior

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

The assertion that “there is no free lunch” means what?

A

That all production involves the use of scarce resources and thus the sacrifice of alternative goods.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

A man buys a $1000 item and sells it a year later for $1000. Though he didn’t lose money he is upset because he could have earned a 3% interest rate if he put the money in a saving account. This analysis incorporates the idea of what?

A

Opportunity Costs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Economics is concerned with how _______ , _______, and ______ make _______ ________ under conditions of _________.

A

individuals, institutions, society, optimal choices, scarcity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Economic models emphasize what?

A

Basic economic relationships by purposefully simplifying the complexities of the real world.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

The production possibilities curve illustrates what?

A

That if all the resources of an economy are in use, more of one good can be produced only if less of another good is produced.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What is an economic explanation for why college-age movie stars do not attend college?

A

The opportunity cost in terms of reduced income is too great.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

A point inside of the production possibilities curve but illustrates what?

A

Unemployment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Does upgrading the quality of a nations human resources produce an outward shift of the production possibilities curve?

A

Yes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Does the reduction of unemployment produce an outward shift of the production possibilities curve?

A

No

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Does an increase in the quality of a society’s labor force produce an outward shift of the production possibilities curve?

A

Yes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Does the improvement of a society’s technological knowledge produce an outward shift of the production possibilities curve?

A

Yes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

The simple circular flow model shows what?

A

Households are on the buying side of both product and resource markets.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

The two basic markets shown by the simple circular flow model are what?

A

Product and resource.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

In terms of the circular flow diagram, businesses obtain revenue through the ______ market and make expenditures in the _____ market.

A

Product; resource

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

What is an example of a limitation of the simple circular flow model?

A

The determination of product and resource prices is not explained.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What is demand?

A

The quantity of a good that costumers are willing and able to purchase at a certain price during a specific period of time.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What is the Law of Demand?

A

All else equal, as the price falls the quantity demanded rises and vice versa.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Change in quantity demanded does what?

A

Involves movement along the demand curve due to change in price.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Change in demand does what?

A

Involves a shift of the entire demand curve to the right or left due to change in one or more of the determinate of demand.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

Determinants of demand.

A

Changes in taste,
Number of buyers,
Consumer income,
Price of related goods, expectations

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

Definition of supply?

A

The quantity of goods that producers are willing and able to make available for sale at each of possible prices during a specific period of time.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

Law of Supply

A

As the price rises the quantity supplied rise. As the price falls the quantity supplied falls.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

Change in the quantity supplied does what?

A

Involves movement along the supply curve due to a change in the price.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

Change in supply.

A

The key idea is that costs are a major factor underlying the supply curve. Therefore anything that affects cost usually shifts the supply curve.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

Define Surplus

A

When price is greater than market clearing price, suppliers are willing to supply more than the customer are willing to buy; hence, market shortage with is also known as excess supply.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

Define shortage

A

When price is less than market clearing price, customers are willing to purchase more than the producers are willing to supply; hence, market shortage which is also known as excess demand.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

Define equilibrium

A

By trial and error, market participants will eventually arrive at market clearing price. Only at this market clearing price that the quantity the producers are willing to produce is identical to the quantity consumers are willing and able to purchase.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

One reason that the quantity of a good demanded increases when its price falls is that the:

A

Lower price increases the real incomes of buyers enabling them to buy more.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

Will a change in the price of close-substitute product J cause the demand for product K to change?

A

Yes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

Will an increase in consumer incomes cause the demand for product K to change?

A

Yes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
36
Q

Will a change in the price of K cause the demand for product K to change?

A

No

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
37
Q

Will a change in consumer tastes cause the demand for product K to change?

A

Yes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
38
Q

If products C & D are close substitutes, an increase in the price of C will:

A

Shift the demand curve of D to the right

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
39
Q

If products A & B are complements and the price of B decreases the:

A

Demand for A will increase and the amount of B demanded will increase.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
40
Q

College students consume lots of ramen and macncheese. When they finish school their consumption of these goods frequently decline. This suggests ramen noodles and macncheese are:

A

Inferior Goods

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
41
Q

By “increase in demand” we mean that:

A

The quantity demanded at each price in a set of prices is smaller.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
42
Q

The law of supply indicates that:

A

Consumers will offer more of a product at high prices than they will at low prices.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
43
Q

The law of demand states that

A

price and quantity demanded are inversely related

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
44
Q

The location of the product supply curve spends on

A

Production technology

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
45
Q

The relationship between quantity supplied and price is _______

A

Direct

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
46
Q

The relationship between quantity demanded and price is

A

Inverse

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
47
Q

Other things equal, an excise tax on a product will:

A

Increase its price

48
Q

If supply increases and demand decreases

A

Equilibrium price will fall

49
Q

GDP is the:

A

Monetary value of all final goods and services produced within the borders of a nation in a particular year

50
Q

GDP can be calculated by summing

A

Investment, government purchases, consumption, and net exports

51
Q

National income accountants can avoid multiple counting by:

A

Only counting final goods

52
Q

Real GDP is

A

The nominal value of all goods and services produced in the domestic economy corrected for inflation or deflation.

53
Q

Growth is advantageous to a nation because it:

A

Lessens the burden of scarcity

54
Q

More than half the growth of real GDP in the U.S. is caused by:

A

Increases in the productivity of labor.

55
Q

In the _____ phase of the business cycle, the economy will most likely experience rising real output and failing unemployment rates.

A

Expansion

56
Q

The United States’ economy is considered to be at full employment when:

A

about 4-5% of the labor force is unemployed.

57
Q

Assuming an economy has a total population of 300m people, 90m people are under 16/institutionalized, 60m people are not in the labor force and 9m people are unemployed. The unemployment rate is :

A

6%

58
Q

The GDP gap measures the difference between

A

Actual GDP and potential GDP

59
Q

For every 1 percentage point that the actual unemployment rate exceeds the natural rate, a 2 percentage point negative GDP gap occurs. This is a statement of:

A

Oakun’s Law

60
Q

In the Consumer Price Index rises from 300 to 333 in a particular year, the rate of inflation in that year is:

A

11%

61
Q

“Too much money chasing too few goods” best describes:

A

Demand-pull system

62
Q

Suppose the nominal annual interest rate on a 1 year loan is 2% and lenders expect annual inflation to be 1%. The annual real rate of interest is:

A

1%

63
Q

As a consequence of the condition of scarcity:

A

Individuals have to make choices from among alternatives

64
Q

The idea in economics that “there is no free lunch” means that:

A

There are opportunity costs when scarce resources are used for free lunches

65
Q

The opportunity cost of a new public highway is the:

A

Other goods and services that must be sacrificed to construct the new highway

66
Q

Economic models do not reflect the full complexity of reality, but instead are based on:

A

Simplifications

67
Q

The role of the entrepreneur in society is to:

A

Bring the factors of production together and take the risks of producing

68
Q

The production possibilities curve represents:

A

Maximum combinations of products available with fixed resources and technology

69
Q

The law of increasing opportunity costs says that:

A

Along a production possibilities curve, increases in the production of one type of good require larger and larger sacrifices of the other type of good

70
Q

Increases in resources or improvements in technology will tend to cause a society’s production possibilities curve to:

A

Shift outward or to the right

71
Q

Which statement best describes a command economy?

A

The production and allocation of goods and services is determined primarily through government

72
Q

In a market system, well-defined property rights are important because they:

A

Encourage economic activity

73
Q

In the circular economic flow diagram, households:

A

Make consumption expenditures and pay for land, labor, and capital

74
Q

A market demand schedule for a product indicates that:

A

There is an inverse relationship between price and quantity demanded

75
Q

If two goods are close substitutes:

A

An increase in the price of one will increase the demand for the other

76
Q

The law of supply is illustrated by a supply curve that is:

A

Upward sloping

77
Q

Which would cause a leftward shift in the supply curve for car washes?

A

An increase in the price of car washing equipment

78
Q

With allocative efficiency:

A

There is production of that particular mix of goods and services most wanted by society

79
Q

Which is most likely to be observed in a community where legal ceilings are imposed on residential rents?

A

People moving into the community will have difficulty locating residential space to rent

80
Q

A definition of the gross domestic product (GDP) is:

A

The market value of final goods and services produced by the economy in one year

81
Q

Nominal GDP differs from real GDP because:

A

Real GDP is adjusted for changes in the price level

82
Q

The service a homeowner performs when she mows the yard is not included in the gross domestic product because:

A

This is a nonmarket transaction

83
Q

Which is the single most important source of U.S. economic growth?

A

Increases in labor productivity

84
Q

A recession is a decline in:

A

GDP that lasts six months or longer

85
Q

Which industry or sector of the economy would least likely be affected by the business cycle?

A

Services

86
Q

Which is the correct way to calculate the unemployment rate?

A

[(unemployed)/(labor force)] x 100

87
Q

The natural rate of unemployment:

A

Is equal to the total of frictional and structural unemployment

88
Q

If the natural rate of unemployment was 6 percent, the current unemployment rate was 12 percent, and the nominal GDP was $4,000 billion, then according to Okun’s law the economy would have sacrificed:

A

$480 billion in potential output

89
Q

Inflation is a:

A

Sustained rise in the general level of prices

90
Q

If the Consumer Price Index was 166.6 in one year and 172.2 in the next year, then the rate of inflation from one year to the next was:

A

3.4%

91
Q

How large is the U.S. labor force?

A

Approx. 157m workers

92
Q

Market What

A

Decision Makers , Scarcity , Consumption , Production , Voluntary Exchange

93
Q

Market Why

A

Social Welfare, + Sum Gain, No deadweight loss, people are nicer to one another, We have limited capacity to love

94
Q

What do we need Gov. for?

A

To enforce property rights

95
Q

Why do we need Gov. to enforce property rights?

A

Because we are human with a human nature with tendencies toward Hobbian Jungle

96
Q

Consumer good vs. Capital good

A

Consumer- Satisfies our wants directly

Capital - Used as a factor of production in process of producing other goods

97
Q

What does the PPC model do?

A

Shows various combos of possibilities of goods an economy can possibly produce USING ALL OF ITS AVAILABLE RESOURCES during a period of time

98
Q

PPC assumptions

A

full production & employment, fixed technology & resources, only consumer and capital goods

99
Q

Point outside of PPC

A

Unattainable

100
Q

Point inside of PPC

A

Attainable

101
Q

U.S. Average growth rate

A

3.4%

102
Q

U.S. 3.4% growth rate accounted for by what?

A

2/3 Technological progress

1/3 Increase in resources

103
Q

Why do we really not need anything?

A

When the cost is expensive enough we no longer need it.

104
Q

Does self interest equate to being selfish?

A

No

105
Q

What determined the value of a good in exchange?

A

The degree of its relative scarcity

106
Q

+ slope

A

Direct relation

107
Q
  • slope
A

Inverse relation

108
Q

Model

A

simplistic representation of reality

109
Q

What is a Pareto Superior Move

A

A policy that could make at least one person in society better off without making someone else worse off

110
Q

Production Process

A

VALUE ADDED transformation of all resources into goods and services that people are willing to pay for

111
Q

Economy problem

A

Having to make a choice and the consequences of said choice.

112
Q

Increase in supply, Decrease in Supply

A

Shift to the right, shift to the left (price is constant)

113
Q

Determinants of supply

A

Resource prices , # of sellers , Technology , Taxes and subsidies

114
Q

Determinants of demand

A

Tastes (consumer preferences) , # of buyers , Avg. Income , Prices of related goods. (goods and substitutes - direct, Complimentary goods - inverse)

115
Q

Equlibrium

A

Quantity produced = quantity supplied

116
Q

Shortage

A

Price is held below equilibrium price

117
Q

Surplus

A

Price held above equilibrium price

Economics (5 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions