Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
200 Cards in this Set
- Front
- Back
|
Markets answer the For whom? question of allocation by:
|
Enabling owners of more valuable resources to purchase more goods.
|
|
|
The notion that every action as multiple consequences, some wanted and some unwanted, is the:
|
Seventh rule of complexity.
|
|
|
An important implication of the scarcity problem is:
|
pursuing one activity prevents pursuing another.
|
|
|
The activities that are most important to the economic study of opportunity cost are:
|
Production and consumption.
|
|
|
If you argue that waht is true of a person is also true for the economy, then you are committing the fallacy of:
|
composition
|
|
|
If you contend that a Governor's plan to build a new highway is bad fo the state's economy because the Governor drives an imported car and has a serious case of body odor, then you are committing the fallacy of:
|
Personal attack
|
|
|
The economic goal of stability means that
|
There is little or no inflation.
|
|
|
An economic goal that seeks to distribute income in a fair manner is
|
equity
|
|
|
When government seeks to control economic activity by enacting laws and rules, it is undertaking ______ policy.
|
Regulatory
|
|
|
A primary problem of government policies, or a reason that government policies might not be effective, is:
|
complex government bureaucracies.
|
|
|
Suppose an industrious student decides to organize a study group by reserving a meeting room, compiling study materials, and attracting fellow students. The student organizing the session would fall into the resource category of:
|
entreprenuership
|
|
|
The entrepreneurship resoulce is best defined as the:
|
Special sort of human effort that assumes the risk of organizing production.
|
|
|
A free resource means that it
|
can produce more than people want.
|
|
|
An explicit opportunity cost is
|
an out-of-pocket, of monetary payment to compensate for a foregone alternative.
|
|
|
The slope of the production possibilities curve is the:
|
Opportunity cost of the good measured on the horizontal axis.
|
|
|
An important benefit of production possibilities analysis is that it:
|
sets the stage for answering the What? question of allocation.
|
|
|
If the economy's production possibilities curve shifts outward due to an increase in the quantity or quality of resources, then we know that it has:
|
Economic growth.
|
|
|
Unemployment means
|
An economy is able to produce more of one good without producing less of other goods.
|
|
|
A strategy that is most likely to result in an outward shift of the production possibilities frontier in the long run is:
|
building more factories and fewer cars.
|
|
|
A strategy that is most likely to result in an outward shift of the production possibilities frontier in the long run is:
|
encouraging capital investment at the expense of consumption.
|
|
|
A model is a(n):
|
abstract representation of the real world.
|
|
|
Demand is the willingness and ability
|
to buy a range of quantities of a good at a range of prices.
|
|
|
The law of supply indicates that:
|
a change in price causes a change in quantity supplied.
|
|
|
When a change in the price of a good causes a change in the quantity of the good demanded because the real purchasing power of buyers' incomes has changed, this is the best attributed to the:
|
income effect.
|
|
|
A demand schedule indicates that ______ corresponds with ______.
|
A higher demand price, a smaller quantity demanded.
|
|
|
Buyers are willing and able to purchase any price-quantity combination that puts them:
|
in the demand space.
|
|
|
In that donuts and brownies are substitutes in consumption, an increase in the price of donuts will cause:
|
an increase in the demand for brownies.
|
|
|
An example of a ceteris paribus demand factor is:
|
preferences.
|
|
|
Competition tends to be less among suppliers than demanders due to:
|
the scarcity problem.
|
|
|
The scarcity problem suggests that competition is:
|
less among suppliers than demanders.
|
|
|
The law of demand is the:
|
inverse relationship between the demand price and the quantity demanded.
|
|
|
The market force that pushes the price lower is:
|
demand.
|
|
|
The market is in a state of disequilibrium:
|
if there is either a shortage or a surplus.
|
|
|
The intersection of the supply and demand curve indicates:
|
market equilibrium has been achieved.
|
|
|
The fourth of six steps in the comparative statics adjustment process for a market is:
|
the price changes.
|
|
|
A market will experience a decrease in price and an increase in quantity if:
|
the number of sellers in the market rises.
|
|
|
Equilibrium price decreases when:
|
demand decreases and supply increases.
|
|
|
A market will experience a decrease in price and an indeterminant change in quantity if:
|
demand decreases and supply increases.
|
|
|
If the quantity exchanged in a market is less than the equilibrium, then the:
|
demand price is greater than the supply price.
|
|
|
One of the three sources of market inefficiency is related to the:
|
fourth rule of competition.
|
|
|
the price elasticity of demand is:
|
The percentage change in quantity demanded resulting from a percentage change in demand price.
|
|
|
Stretchability is to rubber as elasticity is to:
|
Quantity demanded.
|
|
|
If demand and supply are relatively elastic then a tax on this market will be:
|
effective for resource allocation.
|
|
|
A legally mandated maximum price imposed on a market is a:
|
price ceiling.
|
|
|
Point elasticity is a measure of elasticity:
|
for infinitesimally small changes in two variables.
|
|
|
Suppose the price of chocolate-covered bananas subsequently increases from 200 to 280. Using the midpoint formula, then the coefficient of elasticity is approximately:
|
3.2
|
|
|
Suppose the price of chocolate-covered bananas decreases from $1.10 to $0.90 per banana and the quantity demanded increases from 95 bananas to 105 bananas. If other things remain the same, the coefficient of elasticity using the midpoint formula is:
|
0.5
|
|
|
A relatively inelastic demand exists if a 10 percent change in the price of a good results in a percentage change in quantity demanded that is:
|
greater than 0 but less than 10.
|
|
|
The percentage change in quantity supplied resulting from a 1 percent change in supply price is the:
|
price elasticity of supply
|
|
|
An important determinant of elasticity is the:
|
proportion of budget
|
|
|
Consumer demand theory indicates that consumption decision are based on a comparison of:
|
benefits and costs.
|
|
|
The measurement of utility is most comparable to the measurement of:
|
beauty
|
|
|
Suppose that watching 6 consecutive hours of Star Trek reruns provides me with the following total utility: 4, 7, 9, 10, 9, 7. If I have only one hour available to watch Star Trek reruns, then the maximum utility that I can receive is:
|
4
|
|
|
Suppose that watching 6 consecutive hours of Gilligan's Island provides me with the following total utility: 5, 9, 12, 14, 15, 14. If I have only one hour available to watch Gilligan's Island reruns, then the maximum utility I can receive is:
|
5
|
|
|
The law of diminishing marginal utility is:
|
A principle stating that marginal utility declines with increased consumption.
|
|
|
Suppose that watching 6 consecutive hours of Gilligan's Island reruns provides me with the following total utility: 5, 9, 12, 14, 15, 14. The marginal utility I receive from the fifth hour is
|
1
|
|
|
The slope of the total utility curve is:
|
marginal utility
|
|
|
The intersection of the marginal utility curve and the horizontal axis indicates:
|
zero marginal utility.
|
|
|
Uncontrained utility maximization would imply that the:
|
demand price is zero.
|
|
|
The consumption decision to purchase a hamburger is most likely based on the utility received from:
|
french fries
|
|
|
The resource category that uses business firms to organize production is:
|
entrepreneurship
|
|
|
A business is a:
|
profit-motivated organization that cobines resources for the production of goods and services.
|
|
|
Profit maximization is the process of:
|
obtaining the greatest possible difference between revenue and cost.
|
|
|
The difference between total revenue and the total opportunity cost of production is:
|
normal profit
|
|
|
A relatively recent type of legal business organization with limited liabliity of owners that avoids double taxation, but with restrictions on who can be an owner is:
|
limited liability company.
|
|
|
A legal business type characterized by limited liability is:
|
S Corporation.
|
|
|
In the United States, one of the industries in which partnerships tend to be most predominant is:
|
Mining.
|
|
|
In the United States, the industry in which you are most likely to encounter a corporation is:
|
Manufacturing
|
|
|
In terms of the circular flow, the payments made by the business sector for employing inputs through resource markets is termed:
|
national income
|
|
|
A market structure characterized by a large number of small firms selling similar but not identical products is:
|
Monopolistic Competition
|
|
|
For most production activity capital is considered a(n)
|
fixed input
|
|
|
An input that can change in the short run is a(n)
|
variable input
|
|
|
For ______ quantities of production in the short tun, ______ marginal returns occurs when marginal product _______.
|
large, decreasing, decreases.
|
|
|
For ______ quantities of production in the short tun, ______ marginal returns occurs when marginal product _______.
|
small, increasing, increases.
|
|
|
Decreasing marginal returns is indicated in the marginal product curve by:
|
Negative Slope
|
|
|
The peak of the marginal product curve corresponds with:
|
the transition from increasing to decreasing marginal returns.
|
|
|
Decreasing returns to scale result if:
|
A given proportional increase in all resources results in a less that proportional increase in production.
|
|
|
In long-run production, the law of diminishing marginal returns is replaced by:
|
Returns to scale.
|
|
|
Long-run production results when:
|
all inputs are variable.
|
|
|
The principles of production are most important for an understanding of:
|
Supply price.
|
|
|
An example of an economic cost that is not an accounting cost is a(n):
|
normal profit.
|
|
|
Accounting profit is:
|
the difference between revenue and accounting cost.
|
|
|
The conversion of the total product curve to the total variable cost curve involves:
|
measuring input quantity in cost terms.
|
|
|
Total variable cost is variable with respect to changes in:
|
the quantity of output.
|
|
|
Suppose a firm incurs $300 in average total cost and $250 in average variable cost. In this case, average fixed cost is:
|
$50.
|
|
|
Suppose The Wacky Willy Company produces incurs $350 in total cost and $300 in total variable cost when producing 10 Stuffed Amigos and $380 in total cost and $330 in total variable cost when producing 11 Stuffed Amigos. In this case, marginal cost of the 11th Stuffed Amigo is:
|
$30.
|
|
|
Changes in production that result when all resources are change proportionally in the long run are:
|
returns to scale.
|
|
|
The slope of a long-run average cost curve with diseconomies of scale is:
|
positive.
|
|
|
In the first of the three stages of production the:
|
average variable cost curve has a negative slope.
|
|
|
Marginal cost, mathematically, is the slope of the:
|
total cost curve.
|
|
|
The structure of a particular market is most likely influenced by the:
|
minimum of the short-run average total cost.
|
|
|
The generation of economic profit is:
|
generally greater for firms with more market control.
|
|
|
On the continuum of market structures, oligopoly is:
|
in the range that has fewer competitors and more market control, but not at the extreme.
|
|
|
If OmniMotors Car Company, a well-known oligopoly firm, agrees with the other big firms in the industry, to raise prices and limit production, then it is exhibiting the oligopoly characteristic of:
|
collusion.
|
|
|
If the total cost incurred by a perfectly competitive firm for producing the first five units of output is $5, $8, $10, $13, and $20, and the going market price is $4 per unit, then the total revenue received at the profit-maximizing production level is:
|
$16.
|
|
|
The profit curve is derived by plotting the:
|
vertical difference between the total revenue and total cost curves.
|
|
|
A monopoly's marginal cost curve above the average variable cost curve is:
|
not its short-run supply curve.
|
|
|
A monopolistically competitive firm does not have a short-run supply curve because it does not satisfy the condition that:
|
price is equal to marginal revenue.
|
|
|
Oligopoly is not efficient because:
|
the price charged is too high.
|
|
|
A series of federal laws designed to prevent monopoly actions that reduce competition are commonly termed:
|
antitrust laws.
|
|
|
The physical and mental human effort used in the production of goods and services
|
labor.
|
|
|
Markets that exchange the productive services of resources are:
|
factor markets.
|
|
|
The fact that my employment as an economics instructor is based on the demand for students taking economics course is an application of the notion of:
|
derived demand.
|
|
|
The change in the quantity of output produced resulting from a change in the quantity of factor input used is:
|
marginal product.
|
|
|
For any buyer with market control in the factor market the marginal factor cost curve:
|
is positively-sloped and lies above the factor supply curve.
|
|
|
Supply to a firm also can be the market supply if the __________ side of the market is controlled by a __________.
|
buying, monopsony
|
|
|
The geographical mobility of the space of the land used to locate the factory where The Wacky Willy Company produces Stuffed Amigos tends to be:
|
generally quite bad.
|
|
|
If several new leisure time activities arise in and around the Shady Valley area, causing employees of The Wacky Willy Company to reconsider the amount of time they spend working at the production of Stuffed Amigos, then the primary factor supply determinant at work is:
|
other prices.
|
|
|
The balance between factor demand and factor supply creates:
|
equilibrium in the factor market.
|
|
|
Marginal revenue product is found by multiply:
|
marginal physical product and marginal revenue.
|
|
|
The state of the market that exists if the quantity supplied exceeds the quantity demanded in the factor market is:
|
surplus.
|
|
|
Surplus in the labor market is commonly termed:
|
unemployment.
|
|
|
Monopsonistic competition is a market structure characterized by a:
|
large number of firms buying similar but slightly different inputs.
|
|
|
A market structure dominated by a small number of large buyers with a great deal of market control is:
|
oligopsony.
|
|
|
A characteristic of a perfectly competitive factor market is:
|
freedom of entry and exit.
|
|
|
If the marginal revenue product for a perfectly competitive employer of labor is equal to the going market wage, then:
|
efficiency is achieved.
|
|
|
The two curves most important for the analysis of the employment decision by a monopsony are:
|
marginal factor cost and marginal revenue product.
|
|
|
The marginal factor cost curve for a monopsony is __________ and __________ the factor supply curve.
|
positively-sloped, above
|
|
|
In general, a monopoly seller in a factor market:
|
employs less factor quantity than a perfectly competitive factor market.
|
|
|
If the bargaining power in a bilateral monopoly for labor is about equal between the seller and the buyer, then the wage is likely to be:
|
closer to the perfectly competitive wage.
|
|
|
Two of the four expenditures on gross domestic product that were approximately equal in 1997 were:
|
investment and government purchases.
|
|
|
The business sector includes:
|
all businesses in the economy.
|
|
|
Long-run production problems are most likely to arise due to:
|
the supply side of the economy.
|
|
|
Inflation is most closely associated with the macro goal of:
|
stability.
|
|
|
A business-cycle contraction tends to cause a(n):
|
low or falling inflation.
|
|
|
A business-cycle expansion tends to cause a(n):
|
increase in real gross domestic product.
|
|
|
On the spectrum of political philosophies, conservative Republicans tend to:
|
view the best government as the least government.
|
|
|
Supply-side policies tend to be preferred by people who:
|
are anti-government.
|
|
|
One of two reasons for differing political views is:
|
people have vested interests in government policies.
|
|
|
One of two reasons why competing macroeconomic theories exist to explain the same phenomenon is:
|
macroeconomic theories contain unverifiable world views.
|
|
|
Inflation is percentage changes in the:
|
price level.
|
|
|
One reason that the unemployment of labor is a primary focus of macroeconomics is the:
|
ease of counting unemployed workers.
|
|
|
A problem resulting from cyclical unemployment is:
|
more social problems and lower worker self esteem.
|
|
|
If stabilization policies maintain unemployment that is greater than natural unemployment, then the economy will have
|
cyclical unemployment.
|
|
|
A notable feature or characteristic of the Consumer Price Index is that it:
|
measures the prices of a market basket of goods from a base year.
|
|
|
A price index is commonly used to measure:
|
the price level.
|
|
|
The proportion of the civilian labor force that is unemployed but actively seeking employment is the:
|
unemployment rate.
|
|
|
If the total population is 200 million, with 45 million workers employed and 5 million workers unemployed, then the unemployment rate is:
|
10 percent.
|
|
|
The economy is most likely to experience __________, during a business-cycle __________.
|
an increase in the unemployment rate, contraction
|
|
|
Republicans historically have tended to support policies favored by people who prefer:
|
higher rates of unemployment and lower rates of inflation.
|
|
|
A notable period of economic bad times in the United States was:
|
the decade of the 1930s.
|
|
|
Irregular, nonperiodic fluctuations in aggregate economic activity are:
|
business cycles.
|
|
|
The early part of a business-cycle expansion is often termed the:
|
recovery.
|
|
|
In terms of business cycles, the long-run trend is most closely associated with:
|
full employment.
|
|
|
The onset of a business-cycle contraction in the coming year is best indicated by:
|
leading economic indicators.
|
|
|
A new contraction doesn't begin until the end of the old contraction is indicated by:
|
lagging economic indicators.
|
|
|
An important implication of the investment cause of business-cycle instability is that:
|
fiscal policy is an appropriate way to stabilize the economy.
|
|
|
The investment explanation of business-cycle instability is based on the proposition that:
|
the volume of the circular flow shrinks when investment declines..
|
|
|
The appropriate stabilization policy to correct an inflationary business-cycle expansion is:
|
contractionary monetary policy.
|
|
|
Expansionary fiscal policy includes:
|
decreasing taxes.
|
|
|
The aggregate market analyzes the relation between:
|
real production and the price level.
|
|
|
The expenditures included in aggregate demand are:
|
consumption, investment, government purchases, net exports.
|
|
|
According to the net-export effect, a lower price level causes a(n):
|
decrease in the price of exports relative to imports.
|
|
|
High or rising rates of inflation are most likely associated with a(n):
|
inflationary gap.
|
|
|
The combination of markets that exchange factors of production is termed:
|
resource markets.
|
|
|
In the short-run aggregate market, the discovery of new oil reserves will generate __________ in real production and __________ in the price level.
|
an increase, a decrease
|
|
|
In the short-run aggregate market, a decrease in aggregate demand will generate __________ in real production and __________ in the price level.
|
a decrease, a decrease
|
|
|
An inflationary gap can be generated by a:
|
rightward shift of the AD curve.
|
|
|
The stabilization policy best suited to correct the problems of a business-cycle expansion is:
|
contractionary policy.
|
|
|
The standard equation for specifying aggregate expenditures is:
|
AE = C + I + G + (X-M).
|
|
|
In the context of fiscal policy, the difference between taxes and transfer payments is termed:
|
net taxes.
|
|
|
One of the three tools of fiscal policy is:
|
government purchases.
|
|
|
Factors other than income that affect aggregate expenditures are termed:
|
aggregate expenditures determinants.
|
|
|
The C + I + G line is derived by:
|
adding government purchases to the C + I line.
|
|
|
If the aggregate market has an inflationary gap then:
|
the inflation rate is probably high or rising.
|
|
|
Aggregate demand and aggregate supply are the two sides of the:
|
aggregate market.
|
|
|
Expansionary fiscal policy can include:
|
decreasing taxes.
|
|
|
The formula for the simple expenditure multiplier is:
|
1/(1-MPC).
|
|
|
Contractionary monetary policy:
|
is designed to reduce inflation.
|
|
|
Policy lags are commonly divided between:
|
Inside lags and outside lags.
|
|
|
Accurately matching the precise value of a good is best accomplished with the money characteristic of:
|
divisibility.
|
|
|
For an asset to function as money it must have:
|
value in exchange.
|
|
|
What a bank owns are its:
|
assets.
|
|
|
If a bank has $100,000 in checkable deposits, $20,000 in excess reserves, and it is required to keep 10 percent of deposits in reserve, then required reserves are:
|
$10,000.
|
|
|
The banking system is able to make new loans equal to:
|
a multiple of total excess reserves of the system.
|
|
|
The deposit expansion multiplier is the:
|
change in checkable deposits triggered by a change in reserves.
|
|
|
A permanent position on the Federal Open Market Committee is held by the President of the __________ Federal Reserve District Bank.
|
New York.
|
|
|
The Federal Reserve monetary policy tool of open market operations involves:
|
buying and selling U.S. Treasury securities.
|
|
|
The proper monetary policy to close an inflationary gap is:
|
increasing reserve requirements.
|
|
|
When the Federal Reserve buys U.S. Treasury securities in the open market, then commercial banks:
|
have more deposits with the Federal Reserve.
|
|
|
A condition that must exist for market equilibrium to achieve efficiency is:
|
no market failures.
|
|
|
The overall government sector generally has greater combined expenditures on __________ than on __________.
|
transfer payments, transportation
|
|
|
Public goods cannot be allocated efficiently by markets due to what is termed the:
|
free-rider problem.
|
|
|
The free-rider problem indicates that:
|
everyone is allowed to consume of public goods even those who do not voluntarily pay.
|
|
|
A tax in which the proportion of income paid in tax is the greater for higher income levels is termed a(n):
|
progressive tax.
|
|
|
If Roland Nottingham has an increase in his income from $100,000 to $110,000 and the income taxes he pays increases from $15,000 to $22,000, his average tax rate at the original income level is:
|
15 percent.
|
|
|
The share of a tax paid by buyers is the:
|
difference between the original price and higher demand price achieved after the tax.
|
|
|
If a market generates an allocation of resources such that value of goods produced is equal to the value of goods not produced, the result is said to be:
|
efficient.
|
|
|
One of four key sources of government sector inefficiency is:
|
rational ignorance among voters.
|
|
|
The study of public choice is most concerned with:
|
government inefficiency.
|
|
|
Domestic producers lose from international trade due to:
|
lower prices.
|
|
|
The losers of international trade include:
|
foreign consumers.
|
|
|
As a general rule, a surplus in the capital account corresponds with a:
|
deficit in the current account.
|
|
|
In the study of international trade, the general ability to produce one good at a relatively lower opportunity cost that other goods is termed
|
comparative advantage.
|
|
|
If the domestic price of sundials in terms of turnips is higher in the United Provinces of Csonda than in the Republic of Northwest Queoldiola, then:
|
Northwest Queoldiola is likely to export sundials to Csonda.
|
|
|
A country with a relatively low price is responsible for the __________ curve in the international market.
|
export supply
|
|
|
A managed flexible exchange rate policy means that the foreign exchange market:
|
is allowed to adjust to equilibrium levels, but within specified limits.
|
|
|
If the exchange rate in the foreign exchange market is fixed above the equilibrium exchange rate, then a likely result is:
|
a balance of payments deficit.
|
|
|
The __________ is an agency of the United Nations that was created in 1945 to monitor and stabilize foreign exchange markets and to prevent countries from manipulating exchange rates to gain a competitive trading advantage.
|
International Monetary Fund
|
|
|
When a nation engages in foreign trade, the foreign producers __________ due to __________.
|
benefit, higher prices and greater production
|
