Economics

Question 1

Three general areas of economics

Answer 1

1) Microeconomics
2) Macroeconomics
3) International Economics

Question 2

What causes a change in the demand curve (a shift of demand curve)

Answer 2

A shift in demand curve is caused by changes in factors other than price

Question 3

When a demand schedule is plots on a graph the resulting demand curve will be?

Answer 3

Negatively sloped

Question 4

What are the slopes of the individual and market demand curves?

Answer 4

Negative

Question 5

What does a change in price do for the supply curve?

Answer 5

It changes quantity supplied, which is a movement along the supply curve not a shift.

Question 6

The slope of a supply curve is?

Answer 6

Positive

Question 7

For the supply curve a shift to the left is?

Answer 7

An inward movement

Question 8

Movements of supply curve

Answer 8

Inward (left) - increase in cost of production

Outward (right) - decrease in cost of production

Question 9

What is market equilibrium?

Answer 9

When market supply is equal to market demand

Question 10

What is the elasticity of demand formula?

Answer 10

%change in quantity/% change in price

Question 11

What is unitary elasticity?

Answer 11

When elasticity of demand/supply is equal to 1

Question 12

As an individual acquires or consumes more units of a commodity over a given time period what happens with total and marginal utility?

Answer 12

Marginal utility decreases and total utility increases

Question 13

Law of Diminishing Returns

Answer 13

Concerned with cost of production. As more units of a variable input are added to fixed inputs, a point is reached at which the continued addition of variable knots results in decreasing output per unit of variable input.

Question 14

The average fixed cost curve is not U shaped. True or false?

Answer 14

True. Average total fixed cost drops as quantity increases.

Question 15

Which cost curves have a general U shape?

Answer 15

Average variable cost curve, marginal cost curve, average total cost curve.

Question 16

What are the four most common market structures used for economic analysis?

Answer 16

1) Perfect competition
2) Perfect Monopoly
3) Monopolistic Competition
4) Oligopoly

Question 17

In perfect competition price is always equal to?

Answer 17

Marginal revenue

Question 18

When do firms in perfectly competitive and perfect monopolistic environment produce?

Answer 18

Where MR=MC

Question 19

How do you calculate the gross domestic product deflator?

Answer 19

(Nominal GDP/real GDP)X100

Question 20

Consumer Price Index

Answer 20

Relates prices paid by consumers for a basket of goods and services during a period to the price of basket in a prior reference period. Looks at one changes.

Used by federal government to measure inflation

Question 21

Where is aggregate equilibrium?

Answer 21

Where AS=AD

Question 22

Wholesale Price Index

Answer 22

Relates prices paid for a basket of raw materials, intermediate and finished goods purchased by businesses to a prior reference period

Question 23

Preventative measure for deflation?

Answer 23

Increase money supply, your goal is to stimulate demand

Question 24

Comparative advantage is closely linked to ?

Answer 24

The difference in opportunity costs

Question 25

US and most economies are?

Answer 25

Open

Question 26

What does the International Monetary Fund do? Three areas it can provide aid in

Answer 26

1) currency crisis
2) banking crisis
3) financial debt crisis

Question 27

In what areas does US export more than it imports?

Answer 27

Capital goods, agriculture/food, and services

Question 28

Capital markets consist of three major components

Answer 28

1) stock market
2) bond market
3) money market

Question 29

Worlds major exporters?

Answer 29

1) China
2) Germany
3) US
4) Japan