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78 Cards in this Set
- Front
- Back
What is the opportunity cost of one dozen orchids? |
2.5 Dozen Roses |
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Which of the following is a normative economic statement? |
The price of milk is too high |
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Firms |
sell goods in the product market |
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Households |
purchases final goods and services in the product market |
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If you are considering buying either an Apple iPad or Samsung Galaxy Tab, and you choose the Samsung only because the price is lower, then you consider |
the iPad and the Galaxy Tab to be substitutes |
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If the price is $25, |
there would be a surplus of 300 units |
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Consumers are willing to purchase a product up to the point where |
the marginal benefit of consuming a product is equal to its price |
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What area represents producer surplus at a price of P2? |
A+B+C |
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What is the equilibrium hourly wage (W*) and the equilibrium quantity of labor(Q*)? |
W*=10.50; Q*=590,000 |
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if a minimum wage of $9.50 is mandated there will be a |
shortage of 40,000 units of labor |
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What is the value of consumer surplus after the imposition of the ceiling? |
$230,000 |
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What is the value of the deadweight loss after the imposition of the ceiling? |
$50,000 |
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Who owns a corporation? |
the stockholders |
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Economists refer to the conflict between the interests of shareholders and the interests of top management as |
a principal-agent problem |
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A financial security that represnets a promise to repay a fixed amount of funds is a |
bond |
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Dividends are |
payments by a corporation to its stockholders |
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If a corporate bond with a face value of $2,000 pays yearly coupon payments of $50, what is the coupon rate? |
2.5% |
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A tax imposed by a government on imports of a good into a country is called |
a tariff |
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Domestically produced goods and services sold to other countries are referred to as |
exports |
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______ is the ability to produce more of a good or service than competitors when using the same amount of resources |
Absolute advantage |
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Trade that is within a country or between countries is based on the principle of |
comparative advantage |
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Who has the absolute advantage in picking berries? Who has the absolute advantage in catching fish? |
Bill has an absolute advantage in pciking ebrries and Rob has an absoulte advantage in catching fish |
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Who has the greater opportunity cost of picking berries? |
Rob has a greater opportunity cost than Bill for picking berries |
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A quota is |
a limit placed on the quantity of goods that can be imported into a country
|
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A tax imposed by a government on imports of a good into a country is called a |
tariff |
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Which of the following is not directly counted in GDP? |
intermediate goods |
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Suppose that a simple economy produces only four goods and services: sweatshirts, dental examinations, coffee drinks, and coffee beans. Assume all the coffee beans are used in the production of the coffee drinks. Using the information in the above table, nomnial GDP for this simple economy equals |
$8,750 |
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What is the largest componet of spending in the United States? |
consumption spending |
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Real GDP is GDP in a given year |
valued in the prices of the base year |
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Real GDP for Tyrovia for 2011 using 2005 as the base year equals |
$690 |
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Nominal GDP for Tyrovia in 2011 equals |
$1,140 |
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If nominal GDP is $5 trillion and real GDP is $4 trillion, the GDP deflator |
125 |
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The value of what a U.S.-owned McDonald's produces in South Korea is included in the U.S. _____ and the South Korean ________. |
GNP; GDP |
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The unemployment rate for this simple economy equals |
(100/1000)X100 |
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The labor force particpation rate for this simple economy equals |
(1,000/15,000)*100 |
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Frictional employment is the result of |
the search process of matching workers with jobs |
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Structural unemployment is the result of |
a persisent mismatch between the skills and characteristics of workers and the requirements of the jobs |
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Which of the following prices indices comes closest to measuring the cost of living of the typical household? |
Consumer price index |
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Assume the market basket for the consumer price index has two products- meats and potatoes- with the following values in 2006 and 2011 for price and quantity: The Consumer Price Index for 2011 equals |
141 |
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Consider the following values of the consumer price index for 1996, 1997, and 1998: The inflation rate for 1997 was equal to |
2.5 percent |
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If the nomial rate is 6.5% and the inflation rate is 3.0%, what is the real rate of interest? |
3.5% |
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The quantity of goods and services that can be produced by one worker or by one hour of work is referred to as |
labor productivity |
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Human capital refers to which of the following? |
the accumlated knowledge and skills workers acquire from education and training or from their life experiences |
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Based on this information, what is the level of private saving in the economy |
$4 trillion |
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Based on the information, what is the level of public saving? |
negative $1 trillion (a defict of $1 trillion) |
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Under which circumstance would the government be running a deficit? |
C=$5 trillion T= $5 trillion TR= $1 trillion |
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Borrowers are ________ of loanable funds, and lenders are ____________ of loanable funds. |
demanders; suppliers |
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If frims sell exactly what they expected to sell, all of the following will be true except |
aggregate expenditure will be equal to GDP |
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What is the largest component of aggregate expenditure? |
consumption expenditures |
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Givne the consuption schedule in the table above, the marginal propensity to consume is |
0.9 |
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Given the consumption schedule in the table above, the amrginal propensity to save is |
0.1 |
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Suppose that investment spending increases by $10 million, shifting up the aggreate expenditure line and GDP increases from GDP1 to GDP2. If the MPC is 0.9, then what is the change in GDP? |
$100 million |
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If an increase in investment spending of $50 million results in a $400 million increase in equilibrium real GDp, then |
the multiplier is 8 |
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Monetary policy refers to the actions the |
Federal Reserve takes to manage the money supply and interest rates to pursue its macroeconomic policy objectives |
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The Federal Reserve System's four monetary policy goals are |
price stability, high employment, economic growth, and stability of financial markets and institutions |
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The Rederal Reserve's two main_____________________________ are the money supply and the interest rate. |
monetary policy targets |
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The money demand curve has a |
negative slope because an increase in the interest rate decreases the quantity of money demanded |
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An increase in the interest rate causes |
a movemnet down along the money demand curve |
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In the figure, the money demand curve would move from MDI to MD2 if |
real GDP increased |
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USing the money demand and money supply model, an open market sale of Treasury securities by the Federal Reserve would cause the equilibrium interest rate to |
increase |
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The ability of the Federal Reserve to use monetary policy to affect economic variables such as real GDP ultimately depends upon its abiloty to affect |
real interest rates |
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A decrease in interest rates can __________ the demand for stocks become relativley ___________ attractive investments as compared to bonds. |
decrease; more |
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An increase in the interest rate should _______demand for dollars and the value of the dollar, and net exports should ___________. |
increase; decrease |
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Expansionary monetary policy refers to the __________ to increase real GDP. |
Federal Reserve's increasing the money supply and decreasing interest rates |
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Suppose the economy is in a recession and the Fed pursues an expansionary monetary policy. Using the static AD-AS model in the figure above, this would be depicted as a movement from |
A to B |
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Suppose the Fed lowers its targe for the federal funds rate. Using the static AD-AS model, this situation would be depicted as move from |
A to B |
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Fiscal policy refers to changes in |
federal taxes and purchases that are intended to achieve marcoeconomic policy objectives |
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Which of the following would be classified as fiscal policy? |
The federal government cuts taxes to stimulate the economy |
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Which of the following is an objective of fiscal policy? |
high rates of economic growth |
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Automatic stabilizers refer to |
governments spending and taxes that automatically increase or decrease along with the business cycle |
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Federal government purchases, as a percentage of GDP. |
have risen since the early 1950's |
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The three categories of federal government expenditures, in addition to government purchases, are |
interest on the national debt, grants to state and locla govenrments, and transfer payments |
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Congress and the president carry out fiscal policy through changes in |
government purchases and taxes |
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Fiscal policy is determined by |
Congress and the president |
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Expansionary fiscal policy involves |
increasing government purchases or decreasing taxes |
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GDP Formula |
Y=C+I+G+NX |
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Private Savings |
S=Y-C-T+TR |
|
Public Savings |
S=T-TR-G |