mid-term

Question 1

What is GDP per capita?

Answer 1

GDP divided by the population

Question 2

In order to achieve modern economic growth, a nations _____ must grow faster than its ______-.

Answer 2

Output, population

Question 3

What is a recession?

Answer 3

An extended period of declining output and living standards

Question 4

What are the main focuses for measuring the health of the macro-economy?

Answer 4

Real GDP, Inflation, Unemployment, Real GDP Inflation interest rates

Question 5

What is nominal GDP?

Answer 5

measures a nation’s output in current year prices.

Question 6

What is the business cycle primarily concerned with?

Answer 6

Changes in the level of overall prices over time.

Question 7

How much is consumption in the US?

Answer 7

About 68% of GDP and it moves relatively little over time.

Question 8

What is GDP?

Answer 8

The value of all final goods and services produced domestically

Question 9

What type of GDP is least likely to overstate or understate actual performance?

Answer 9

Real nominal international, Real classical

Question 10

The demand measure of GDP accounting adds together

Answer 10

Consumption, investment, government purchases, and trade balance

Question 11

What is the current round of World Trade Organization negotiations?

Answer 11

Doha round

Question 12

The slope of the production possibility frontier is determined by the ________________ of expanding production of one good, measured by how much of the other good would be lost.

Answer 12

Opportunity cost

Question 13

What are tariffs?

Answer 13

Taxes that governments place on exported goods for a variety of reasons.

Question 14

When one nation can produce a product at lower cost relative to another nation, it is said to have an __________________ in producing that product.

Answer 14

Absolute advantage

Question 15

The idea behind comparative advantage reflects the possibility that one party

Answer 15

May be able to produce something at a lower opportunity cost than another party

Question 16

What concept provides the basic rationale for international trade?

Answer 16

Comparative advantage

Question 17

The World Trade Organization is committed to…

Answer 17

lowering barriers to trade

Question 18

The primary benefits of international trade include…

Answer 18

the more efficient use of world resources and higher standards of living

Question 19

When might inefficient outcomes occur?

Answer 19

When demand curves do not reflect the total social benefit of producing a good or service

Question 20

What is intellectual property?

Answer 20

The body of law including patents, trademarks and copyrights that protect the right of inventors.

Question 21

What are positive externalities?

Answer 21

Benefits that spillover to a third party or parties

Question 22

What is a shortcoming of the market?

Answer 22

The market demand curve does not always reflect the positive externalities of the good or service.

Question 23

What is an approach to positive externalities?

Answer 23

For the government to levy taxes on the related good or service.

Question 24

The demand curve shows the relationship between…

Answer 24

price and quantity demanded

Question 25

What is income effect?

Answer 25

When the price of a product increases, a consumer is able to buy less of it with a given money income

Question 26

When is a market in equilibrium?

Answer 26

If the amount producers want to sell is equal to the amount consumers want to buy

Question 27

When would a price be too high to clear the market?

Answer 27

When quantity supplied exceeds quantity demanded

Question 28

What is scarcity?

Answer 28

Wants exceed rescources

Question 29

What is macroeconomics?

Answer 29

The study of aggregate decisions made by the economy as a whole

Question 30

What is the business cycle?

Answer 30

Alternating periods of econ. growth & contraction

Question 31

What is the law of demand?

Answer 31

Amount of a good demanded in a time period, increases as its price falls

Question 32

What is a recession?

Answer 32

A decline in real GDP for 2 or more consecutive quarters

Question 33

What is a growth recession?

Answer 33

A period when real GDP grows, but at a rate below the long-term trend of 3%

Question 34

What are externalities?

Answer 34

Costs or benefits of market activity by 3rd party

Question 35

What are private goods?

Answer 35

Only 1 person consumes a good or service

Question 36

What are public goods?

Answer 36

More than one more person consumes goods or services

Question 37

What is a price ceiling?

Answer 37

The maximum amount allowed to be charged by law

Question 38

What is a price floor?

Answer 38

The minimum price allowed to be charged by law

Question 39

What is a consumer surplus?

Answer 39

The difference between the maximum price a consumer is willing to pay and the actual price of the good or service

Question 40

What is a producer surplus?

Answer 40

The difference between the actual price of the good or service and the minimum price the producer is willing to sell the good or service for

Question 41

What is an economic surplus?

Answer 41

Consumer surplus + producer surplus

Question 42

What is a deadweight loss?

Answer 42

The loss of an economic surplus

Question 43

What happens to the equilibrium if the demand increases?

Answer 43

Increases prices and quantity

Question 44

What happens to the equilibrium if the demand decreases ?

Answer 44

Decreases price and quantity

Question 45

What happens to the equilibrium if the Supply increases?

Answer 45

increases quantity and decreases prices

Question 46

What happens to the equilibrium if the supply decreases?

Answer 46

Decreases in quantity and increase in price

Question 47

What are sunk costs?

Answer 47

Incurred costs which cannot be recovered

Question 48

What is absolute advantage?

Answer 48

A company/country can produce a good more efficiently and productively

Question 49

What are consumption expenditures?

Answer 49

Spending of households goods and services

Question 50

What is gross private investment?

Answer 50

Includes final purchases on capital goods, construction, and changes in inventory

Question 51

What is gross national product?

Answer 51

Measures what is produced by domestic businesses abroad and labor abroad

Question 52

What is nominal income?

Answer 52

The number of dollars received in wages, interest, and rent

Question 53

What is real income?

Answer 53

The amount of goods and services the dollars can buy

Question 54

What is deflation?

Answer 54

Decrease in the price level

Question 55

What is hyperinflation?

Answer 55

Rapidly increasing inflation

Question 56

What is frictional unemployment?

Answer 56

Consists of search unemployment and wait unemployment. (between jobs)

Question 57

What is structural unemployment?

Answer 57

Mismatch in workers skills to the skills that are actually needed

Question 58

What is cynical unemployment?

Answer 58

Results from a decline in total spending

Question 59

What is labor productivity?

Answer 59

The value that each employed person creates per unit of his/her output

Question 60

What is convergence?

Answer 60

Pattern in which economies with low per capita income grows faster than economies with high per capita increases

Question 61

What is a recessionary GDP gap?

Answer 61

Amount that equilibrium falls short of full-employment GDP

Question 62

What is a inflationary GDP gap?

Answer 62

Amount that equilibrium GDP exceeds full-employment GDP