Econ Final

Front 1

Scarcity means:

Back 1

we can't satisfy all our wants
we must make choices

Front 2

True or False
For rich people, there is no scarcity problem.

Back 2

false

Front 3

Name the three productive resources

Back 3

land
labor
capital

Front 4

What kind of statement is 'every child should go to school?'

Back 4

normal statement

Front 5

Ceteris paribus

Back 5

keeping all other factors constant besides the one we want to study

Front 6

Opportunity cost

Back 6

the value of the highest valued alternative forgone

Front 7

Over spring break, you fly to Daytona Beach, Florida and stay in a hotel. Once there, you must decide wheter to spend an afternoon swimming or sailing. The opportunity cost of saiting includes

Back 7

the pleasure of swimming

Front 8

The production possibilites frontier is the boundary between

Back 8

the attainable and unattainable combinations of goods and services

Front 9

Marginal cost

Back 9

number of something cut
divided by the additional number of units obtained

Front 10

Moving from one point to another on a production possibilities frontier implies

Back 10

increasing the production of one good and decreasing the production of another

Front 11

A major earthquake occurs in the central part of the U.S. What impact would this have on the nation's production possibilites frontier and why?

Back 11

It would shift inward because some of the nation's resources, such as capital and labor, would be destroyed

Front 12

A movement from one point on a production possibilities frontier to another represents

Back 12

a trade off

Front 13

If the PPF is bowed outward, the opportunity cost is

Back 13

increasing

Front 14

What is the quantity demanded?

Back 14

the amount of a good people are able and willing to buy during a specific time period and at a given price

Front 15

The law of demand refers to how

Back 15

the quantity demanded changes when the price of the good changes

Front 16

In stores, it is common to find products marked as 'on sale' at a lower price than usual. What explains this behavior?

Back 16

the law of demand is being used to increase the quantity demanded

Front 17

As Americans have a higher income, the demand for health care would

Back 17

increase

Front 18

Gas and cars are complements. When gas prices rise, the demand for cars will

Back 18

decrease

Front 19

People expect that next years auto price would increase. What will happen to the demand for auto this year?

Back 19

increase

Front 20

The phrase 'a change in demand' most directly implies a

Back 20

shift in the demand curve

Front 21

If consumers' preferences for a good increase, then

Back 21

the good's demand curve shifts rightward

Front 22

Ford found a new and more efficient way to produce cars. What will happen to supply?

Back 22

increase

Front 23

Milk can be used to produce cheese or butter. If the price of a pound of butter rises, what happens to the supply of cheese?

Back 23

the supply of cheese decreases

Front 24

With the news that a hurricane may hit TX (important oil production area in the US) next month, what is likely to happen to the supply of oil this month

Back 24

increase

Front 25

In a market, the supply increases and demand decreases. What will be the change to market price and quantity

Back 25

price falls
quantity undecided

Front 26

Price floor may cause

Back 26

surplus

Front 27

Price ceiling may cause

Back 27

shortage

Front 28

The pollution caused by a steel plant is an example of

Back 28

negative externality

Front 29

The argument for government subsidy for flu vaccination is

Back 29

positive externality of the flu vaccination

Front 30

The price elasticity of demand measures

Back 30

how responsive the quantity demanded is to changes in price

Front 31

If the price of a six pack of Pepsi falls from 4 to 3 and the quantity purchased increases 80%, then demand is

Back 31

elastic

Front 32

If a substitute good is easy to find, then demand for a good is

Back 32

elastic

Front 33

If demand is price inelastic and the price is lowered, what of the following occurs

Back 33

the total revenue of the firms selling the product decreases

Front 34

If money wage increases, aggregate supply would

Back 34

decrease

Front 35

If oil price is lower, aggregate supply would

Back 35

increase

Front 36

When the price level is lower, the quantity of real GDP demanded would increase because of

Back 36

the real balance effect

Front 37

When aggregate demand increases, given other things constant, what will happen?

Back 37

price level increases, real GDP increases

Front 38

Oil prices rise by 100%. What are the effects on the economy?

Back 38

price level increases and real GDP decreases

Front 39

Affregate equilbrium occurs when

Back 39

treal GDP demanded equals to the real GDP supplied

Front 40

M1 includes

Back 40

checkable deposits
currency
travelers checks

Front 41

M2 includes

Back 41

currency in circulation
small time deposits
saving deposits

Front 42

Bank reserves include

Back 42

banks deposits with the central bank

Front 43

When a bank calls in a loan of 1 million, how much money is created?

Back 43

1 million

Front 44

Citi bank will get more reserves when

Back 44

the Fed buys bonds from Citi bank

Front 45

If an economy is at a recessionary gap, a proper fiscal policy should be

Back 45

increase government expenditure

Front 46

If an economy is at an inflationary gap, a proper fiscal policy should be

Back 46

increased tax

Front 47

If an economy is at a recessionary gap, a proper monetary policy should be

Back 47

lower interest rate

Front 48

If an economy is at an inflationary gap, a proper monetary policy should be

Back 48

to sell securities in the open market

Front 49

real income

Back 49

= (nominal income)/CPI

Front 50

CPI

Back 50

= (nominal income)/(real income)

Front 51

annual rate of inflation

Back 51

[(CPI in year - CPI in previous year)/
(CPI in previous year)] *100

Front 52

real intreset rate

Back 52

= nominal intreset rate - inflation rate

Front 53

Marginal propensity to consume (MPC):

Back 53

(change in consumption spending)
/ (change in income)

Front 54

Spending multiplier

Back 54

= 1/(1-MPC)

Front 55

Increase in GDP

Back 55

gov spending * spending multiplier

Front 56

Nominal income

Back 56

the actual numner of dollars recieved over a period of time

Front 57

Real income

Back 57

The actual number of dollars recieved adjusted for changes in the CPI

Front 58

Nominal intreset rate

Back 58

the actual rate of intreset without adjustment for the inflation rate

Front 59

Real intreset rate

Back 59

the nominal rate of interest minus the inflation rate

Front 60

Aggregate demand curve

Back 60

the curve that shows the level of real GDP purchased by households, businesses, government and foreginers at different possible price levels during a time period, ceteris paribas

Front 61

real balance effect

Back 61

the impact on total spending caused by the inverse relationship between price level and the real value of financial assets with fixed nominal value

Front 62

Discretionary Fiscal Policy

Back 62

the deliberate use of changes in government spending or taxes to alter aggregated demand and stabilize the economy