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Economics > Final > Flashcards

Final Flashcards

0
Q

Price elasticity is unit elastic at the midpoint of a linear downward sloping demand curve

A

True

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1
Q

The Price elasticity of demand is calculated as

A

The percentage change in quantity demanded divided by the percentage change in price

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2
Q

When quantity is measured in gallons the price elasticity of demand for milk will be blank the price elasticity when the quantity is measured in quarts

A

The same as

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3
Q

The demands for wheat soy beans milk and eggs tend to be

A

Price inelastic

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4
Q

Suppose the cross price elasticity of demand between quinces and muskmelons is five which of the following must be true

A

Quinces and muskmelons are substitute

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5
Q

The slope of a vertical line is

A

Infinitely large

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6
Q

In economics specialization means

A

Focusing efforts on a particular product or single task

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7
Q

A person who can produce more of a good then another person is said to possess a comparative

A

False

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8
Q

On a production possibility frontier showing possible output levels of good a good be the opportunity cost of producing the first 10 units of a will usually be

A

Less than the opportunity cost of producing the second 10 units of A

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9
Q

At various points along the production possibilities frontier

A

The greatest achievable output levels are illustrated

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10
Q

In the market for chewing gum the current price is $.50 per pack and 100,000 packs are sold which of the following events would lead to a new equilibrium price of $.60 and quantity of 90,000 packs?

A

An increase in the price of the ingredients used to make chewing gum

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11
Q

The income in fact of a decrease in the price of potatoes and inferior good is a

A

Decrease in the quantity demanded of potatoes

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12
Q

Why does the supply curve typically slope upward

A

Opportunity cost of production increases as quantity supplied increases

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13
Q

The income effect of a decrease in the price of legal services a normal good is a

A

Increase in the quantity demanded of legal services

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14
Q

According to a 2011 pay scale.com survey among college majors with 10 to 20 years of experience economics ranks second only to computer engineering in terms of the median pay

A

True

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15
Q

A normative economics statement is

A

A statement of what ought to be not what is

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16
Q

The expression there’s no such thing as a free lunch means

A

That resources used up in producing the lunch are not available to satisfy other wants

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17
Q

Profit is the payment received by resource owners for the use of their capital

A

False

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18
Q

all economic models must involve simplifications because

A

Reality is too complex to understand it in its entirety so we must reduce it to a level that we can understand

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19
Q

On which of the following goods would you expect the revenue generated from the M position of a text to be the greatest

A

Hey prescription drug ordered by your doctor

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20
Q

If supply is more elastic then demand is the

A

More tax will fall on consumers

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21
Q

Marginal utility is defined as the

A

Additional satisfaction gain from consuming one More unit of a product

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22
Q

Consumer preferences

A

Our individual a valuations of goods and services

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23
Q

Time has a positive value for most people but their opportunity cost of time differ

A

True

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24
Q

The marginal utility received from each additional unit of a good consume declines other things constant this is a statement of the law of

A

Diminishing marginal utility

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25
Q

Requiring Medicare participants to pay a small fraction of the cost of their medical care

A

Reduces their utilization of healthcare without compromising their health

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26
Q

hey business executive who buys a portable computer so that she can work on airplanes is trying to reduce the cost of traveling

A

True

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27
Q

Basil is maximizing his utility from consuming tea and crumpets if the marginal utility of the last crumpet was 32 units of utility and the prices of tea and crumpets are four dollars and eight dollars respectively what was the marginal utility of the last cup of tea basil consumed

A

16 units

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28
Q

Which of the following represents the best example of a proprietors income

A

The revenue that Janet has left over after she pays all the expenses associated with running her software development business

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29
Q

Which of the following is a reason why government is a participant in the market oriented economy

A

To enforce contracts and protect private property

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30
Q

Restricting imports of Brazilian shoes

A

Raise the price of both Brazilian and domestically produced shoes

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31
Q

If you were to put the following effects of a decrease in demand into the sequence in which they occur which would be last

A

A short run loss forces some firms out of business in the long run

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32
Q

The chances of successful conclusion our greatest when

A

Demand curve and cost curves are similar among the firms in the industry

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33
Q

A formal agreement among the firms in an industry to coordinate their production and pricing decision in order to earn monopoly profits is known as

A

A cartel

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34
Q

In the long run a monopolistically competitive firm

A

Produce where price equals average total cost

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35
Q

To maximize cartel profit the members must allocate output so that the marginal cost for the final unit produced by each firm is

A

Identical

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36
Q

Monopolistic competition is similar to

A

Pure monopoly because the firms face downward sloping demand curve and similar to perfect competition in that the firms can earn only a normal profit in the long run

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37
Q

Oligopolists are more sensitive to the pricing and output policies of their rivals win

A

All firms produce identical products

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38
Q

The principal advantage of the game theory approach is that it allows us to

A

Better understand decision-making when one person’s choices affect another person’s choice

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39
Q

The automobile breakfast cereal and tobacco industries are examples

A

Oligopoly

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40
Q

What do monopolistic competition pure monopoly and perfect competition have in common

A

The rule of profit maximization

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41
Q

Suppose that the only maker of the particular type of horse here clothing exists exits the industry because demand is too low the correct analysis of the situation is

A

The price received by the producer was lower than the average total cost in the long run

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42
Q

In the long run which of the following is not a problem for monopolists earning economic profit

A

I’ll profit will gradually be converted to consumer surplus

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43
Q

Perfectly competitive firm’s and mono pole list firms both maximize profit

A

Marginal cost equals marginal revenue

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44
Q

If a Monopolist engages in the perfect price discrimination

A

The demand curve also becomes the marginal revenue curve

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45
Q

In the long run all of the firms inputs are variable

A

True

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46
Q

If total product for each of five units of labor is 10, 16, 20, 30 and 34 respectively the marginal product of the third unit is

A

Four

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47
Q

For each size of plant in manufacture could build there is a difference

A

Short run average total cost curve

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48
Q

Fixed costs are defined as

A

Costa do not vary as quantity produced increases

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49
Q

For a person who owns and operates in automobile insurance premiums are a blank and maintenance and repairs are a blank

A

Fixed cost variable cost

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50
Q

What is true of marginal cost and marginal returns are increasing

A

It is positive and decreasing

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51
Q

Is marginal product is negative total product must be negative

A

False

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52
Q

If fixed cost at Q =100 is $130 then

A

Fixed cost at Q =200 is 130

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53
Q

Total cost is calculated as

A

Fixed cost plus variable cost

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54
Q

In the long run equilibrium

A

Perfectly competitive firm’s can earn only normal profits

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55
Q

Supposed to perfectly competitive increasing cost industry is in long-run equilibrium in market demand suddenly decreases what might happen to the typical firm in the long

A

It would experience a lower equilibrium price

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56
Q

A perfectly competitive firm’s profit per unit of output equals

A

Price minus average total cost

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57
Q

Commodity products are

A

Uniform or standardize

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58
Q

In the long run a perfectly competitive industry is Allocatively efficient because

A

The opportunity cost of resources needed to produce the last unit of output just equals the marginal value to consume the last unit

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59
Q

Economic theory assumes that the goal of firms is to maximize what?

A

Profit

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60
Q

Pegs kegs sells kegs in a perfectly competitive market because low demand forced price below average variable cost pig has made the short run decision to shut down her current loss is

A

Equal to fixed cost

61
Q

US exports

A

Represent approximately 11% of GDP

62
Q

World output would be maximized if each country

A

Specialize in producing those goods in which it had has a comparative advantage

63
Q

Japan is generally considered an economy close to foreign trade

A

False

64
Q

As a result

of international

A

The last two producers in the importing country is less than the game to consumers in the importing country caused by decrease in price

65
Q

Which country is the United States largest trading partner

A

Canada

66
Q

Which of the following does the United States import

A

Zinc

67
Q

Which of the following does not explain why US wage rates are higher than wage rates in developing country

A

Unstable business conditions in United States

68
Q

When it comes to basic commodities the United States is a net exporter of oil and metals and a net importer of farm crop

A

False

69
Q

The Bretton Woods system

A

Fixed exchange rates in terms of US dollar

70
Q

Purchasing power parity PPP theory states the prices of identical items will equalize internationally an illustration that supports the theory is the fact the price of McDonald’s big Mac is the same around the world

A

False

71
Q

One signal that the US dollar was over valued in the early 1970s was

A

The reoccurring balance of trade deficits in the United States

72
Q

If The British pound appreciates US television stations need fewer dollars to buy episodes of Britain COM from British broadcasting company

A

False

73
Q

Which of the following components of the US balance of payments includes direct investment by Americans in foreign securities

A

The capital account

74
Q

Under a flexible exchange rate system which of the following would not directly affect exchange rate

A

The salary of the president of the United States

75
Q

A rightward shift of the Mexican demand curve for foreign exchange will

A

Make foreign goods more expensive in terms of pesos

76
Q

If the US dollar depreciates relative to the Swiss Frank then?

A

Swiss goods become more expensive in the US

77
Q

When net unilateral transfers are added to the net exports of goods and services the result is called the

A

Balance on current account

78
Q

The exchange rate is the

A

Price of one’s country’s currency in terms of another country’s currency

79
Q

Which of the following represents a perfectly competitive farmers demand curve for hired hand

A

Her MRP curve

80
Q

In the resource market firms demand resources in order to

A

Maximize profit

81
Q

If the price of a resource increases other things constant less of that resource will be hired because

A

Producers will will substitute away from that resource

82
Q

If the demand for tacos increases

A

The demand for corn increases

83
Q

Economic rent is defined as

A

The payment to a resource in excess of its opportunity cost

84
Q

In a perfectly competitive labor market a profit maximizing firm will hire labor up to the point at which the

A

Wage rate equals M RP

85
Q

Leisure is

A

Subject to the law of diminishing marginal utility

86
Q

A stock market crash that reduces the value of an individual’s trust fund would tend to

A

Increase her supply of labor

87
Q

If two accountants have had the same education amount of experience and work at the same type of job for the same profit maximizing firm which charges its clients A uniform hourly fee

A

The one who has a higher marginal product due to ability should be paid more

88
Q

Which of the following would not shift demand curve for union labor to the right

A

Increase supply of products that compete with union made products

89
Q

Jamall maximize utility by allocating his time among leisure market work and household work so that

A

Expected marginal utility per hour is equal among all three

90
Q

A college dean has a blank opportunity cost of blank than a college student working in a minimum wage job

A

Hire and nonmarket work

91
Q

The union participation rate in the United States is

A

Lowest among service workers in the private sector

92
Q

Other things equal the supply of labor will be higher to a job that

A

Has more amenities

93
Q

I’m in aggregate demand and aggregate supply graph the great depression can be pictured as

A

A leftward shift of the aggregate demand curve

94
Q

The aggregate supply curve indicates

A

The quantity of aggregate output the producers are willing and able to supply at each possible price level

95
Q

Which of the following is a flow variable

A

Investment spending

96
Q

According to canes if private sector demand is insufficient to maintain full employment the government should

A

Shock the economy with an increase in aggregate demand

97
Q

In double entry GDP accounting

A

The value of output produced must equal the value of resource payments generated and producing output

98
Q

Which of the following is an injection into the circular flow

A

Exports

99
Q

Limitations of the national income accounting system include

A

Valuing all output at its market price regardless of whether it contributes to a societies economic welfare

100
Q

Which of the following does not help account for the difference between GDP and national income

A

Personal income taxes

101
Q

Inflation is

A

General and continuing rise in the money prices of goods and services

102
Q

Uncertainty about inflation

A

Enhances money’s important as a link between the present and the future

103
Q

Which of the following people would be classified as an employed

A

A person who wants a job as a fashion model but cannot find work in the field

104
Q

Suppose you received a 4% increase in your nominal wage over the year inflation runs about 7% which of the following is true

A

Although your nominal wage rose your real wage decreased

105
Q

Over the last hundred years US labor productivity growth rate experiences largest decline

A

During the Great Depression

106
Q

Many people believe that government should promote

A

Greater happiness

107
Q

The process of adding more capital per worker is known as capital deepening

A

True

108
Q

Labor productivity is measured by

A

Total output divided by total employment

109
Q

What does the marginal propensity to consume Tell us

A

How much additional income is spent on consumption

110
Q

The simple multiplier is eight the marginal propensity to consume is

A

7/8

111
Q

I decline in the US price level other things constant work

A

Stimulate US exports but discouraging imports causing a rightward movement along a given aggregate demand curve

112
Q

If the marginal propensity to consume in your classmates nation is 3/5 and the marginal propensity to save in your country is 1/10 which of the following must be true

A

The spending multiplier is smaller in your classmates nation than in your country

113
Q

If household save 30 billion more at each level of income and the MPC equals 0.9 the aggregate expenditure line will

A

Shift downward by 30 billion

114
Q

Expected price level is assumed to be constant along a given short run aggregate supply curve

A

True

115
Q

Potential output is the amount produced when

A

Firms and workers expectations about the price level are realized

116
Q

If wages are flexible the long run aggregate supply curve is vertical

A

True

117
Q

Which of the following would cause the long run aggregate supply curve to shift rightward

A

Hey technological breakthrough with widespread practical applications that occurs in the micro computer industry

118
Q

Which of the following is a true contractionary gap

A

In the long run this gap clothes when resource of pliers negotiate lower resource payments

119
Q

If government purchases increased and net Taxes decrease

A

Output and employment will increase

120
Q

The difference between the classical approach and the Keenans approach to fiscal policy is

A

Kindians believe that it may be necessary that government increase aggregate demand so as to stimulate output and employment if the economy is to achieve its potential output

121
Q

John Maynard teens believed that

A

Wages and prices were relatively inflexible and interest-rate would not fall fast enough to restore full employment

122
Q

When the government clothes close is an expansionary gap with the change in government spending the blank in government spending leads to blank

A

Decrease a decrease in both real GDP in the price level

123
Q

Discretionary fiscal policy is policy that

A

is an intentional change in taxation our government spending

124
Q

One lesson of the great depression was the potential GDP could

A

Exceed equilibrium GDP

125
Q

One rationale for the sizable wartime deficits run by the US government is at the alternative to defending the country from an aggressor may involve substantial long-term costs

A

True

126
Q

With few exceptions the US federal government has historically run a deficit

A

True

127
Q

Federal budget experience surpluses from

A

1998 to 2001

128
Q

A possible explanation for the persistence of US federal budget deficit is that

A

It is easier politically to increased government spending then to increase taxes

129
Q

Which of the following is true of an annually based federal budget

A

That’s your policy could worsen a contractionary gap

130
Q

Assume an Thomas net taxes rise by 400 the marginal propensity to consume equals three fourths net exports planned investment’s taxes and government purchases are on Thomas and remain fixed as a result savings will initially

A

Fall by $100

131
Q

A decrease in taxes

A

Raises aggregate expenditure by raising disposable income thereby increasing consumption

132
Q

The emergence of the subprime mortgage market following the recession of 2001 made it increasingly difficult for low income individuals to obtain a mortgage

A

False

133
Q

The Dodd Frank Wall Street reform and consumer protection act included all of the following present provisions except for one which is the exception

A

The law gives the federal reserve the authority to establish a reserve requirement for all financial institution

134
Q

The deregulation of US banking in the 1980s lead to

A

Any bank failures as banks began to hold riskier assets

135
Q

The US has more banks per capita than most other countries primarily because it

A

How do restricted branch banking

136
Q

The interest rate charged by the federal reserve bank’s on loans to banking institutions is

A

The discount rate

137
Q

The media effective at banks purchase of US government securities from the Fed is

A

The crease in the feds assets

138
Q

When a check is cleared again spank a after being deposited at bank b

A

Thank 80s liabilities decreased and being bees liabilities increase

139
Q

The majority of the feds liabilities are

A

Federal reserve notes

140
Q

If a banks reserves are exactly equal to the required amount of reserves than it has no excess reserves

A

True

141
Q

What proportion of M1 is accounted for by checkable deposits and travelers checks

A

About 55%

142
Q

From a bank’s point of view it’s deposits or liabilities not asset

A

True

143
Q

An increase in aggregate demand will have a smaller long run effect on real GDP if

A

Economy is already a potential output

144
Q

If the money supply decreases the opportunity cost of holding money blank and people want to blank quantity of money

A

Rises a smaller

145
Q

If the Fed sells US government securities to drain reserves from banks which of the following will probably occur

A

Interest rate will rise in the quantity of money demanded will fall

146
Q

If the Fed wanted to stimulate the economy it might

A

Lower the discount rate to increase the money supply

147
Q

Rational expectations school advocate

A

Passive approach to policy

148
Q

The Fed is not completely independent because

A

Congress could rewrite the laws that create the fed

149
Q

The change in equilibrium price depends on which curve shifts more. If demand shifts more…

A

Equilibrium price increases

150
Q

The change in equilibrium price depends on which curve shifts more. If supply shifts more…

A

Equilibrium price decreases

151
Q

Price elasticity

A

% change in quantity demanded devised by % change in price

Economics (8 decks)

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