Econ Final exam - Emi lamb | Library

1

What is the total output (GDP) demanded at different price levels by different groups

Aggregate Demand

Aggregate Supply

1

Why might the aggregate demand curve slopes down because higher prices

Lower consumption by household

Lower investment by firms

Lower net exports

All of the above

1

What are the AD curve shift factors or 'shocks'

Consumer confidence

Business cycles in foreign countries

Government policy responds to shocks

All of the above

1

What is monetary policy?

Money supply

Interest rates

Government spending

Taxes

1

What is fiscal policy?

Government spending

Taxes

Money Supply

Interest rates

1

What is the total output produced at different price levels by different groups?

1

Aggregate supply slopes upwards (short run)

True

False

1

Aggregate supply slopes vertical (long run)

True

False

1

What can shock the LRAS curve?

1

Economics is the study of how society allocates its plentiful resources

True

False

1

Economic growth causes a production possibilities frontier to shift upwards or outward to the right

True

False

1

If a country can make more of a product per hour than another, then they cannot gain from trading with the other country.

True

False

1

Consumer surplus measures the benefit to buyers from participating in a market

True

False

1

A legal minimum on the price of a good is a price ceiling

True

False

1

Prices controls are inefficient because they result in lost gains from trade

True

False

1

What is the limited nature of society's resources?

Scarcity

Incentive

Economics

1

What is incentive?

1

What is opportunity cost?

1

What is efficiency?

1

Draggable item		Corresponding Item
What is a graph that shows the combinations of output that the economy can possibly produce given the available resources and technology?		Circular-flow diagram
What is a visual model of the economy that shows how dollars flow through markets among households and firms?		Production possibilities frontier (PPI)

1

What does the PPI illustrate?

Efficiency

Trade-offs

opportunity cost

unemployment of resources

1

What is the ability to produce a good using fewer inputs than another producer does

1

What is the ability to produce a good at a lower opportunity cost than another producer

1

Gains from trade are based on comparative advantage or absolute?

Comparative

Absolute

1

What is the principle of comparative advantage?

1

What is a market in which there are so many buyers and so many sellers that each has a negligible impact on the market

1

A graph that shows how the quantity of a good demanded depends on the price is the demand curve

True

False

1

The amount of good that buyers are willing and able to purchase is called the quantity demanded

True

False

1

Other things equal, as the price of the good falls the quantity demanded rises and vice versa (curve slopes downward) is the Law of demand

True

False

1

Which way does a demand curve increase on a graph?

Right

Left

1

Which way does a demand curve decrease on a graph

Right 

Left

1

What are the determinants of demand?

1

The supply curve shows how the quantity of a good supplied depends on the price.

True

False

1

The amount of a good that producers are willing and able to sell is the quantity supplied

True

False

1

As the price of a good falls, the quantity supplied falls and vice versa. (curve slopes upwards) is known as?

Law of supply

Law of demand

1

What are the determinants of supply?

1

What is the intersection of supply and demand curves called?

1

When the market price is above the equilibrium price is?

1

When the market price is below the equilibrium price is know as?

1

What three steps are used to analyze how any event influences a market

Fix the 'basket'

Decide which direction the curve shifts

Decide whether the event shifts the supply or demand curve

Compare the new equilibrium with the initial equilibrium 

1

The maximum amount that a buyer will pay for a good is known as? (Consumer)

1

What equals buyers willingness to pay for a good minus the amount they actually pay? (Consumer)

1

How can consumer surplus be computed?

1

The minimum amount that a seller will accept for their goods (producer)

1

What equals the amount sellers receive for their goods minus their willingness to accept

1

How can producer surplus be computed?

1

What is the allocation of resources that maximizes a total surplus (sum of consumer and producer)

1

A legal maximum on the price at which a good can be sold is?

Price ceiling

Price floor

1

If the price ceiling is below the equilibrium price is it binding?

True

False

1

A legal minimum on the price at which a good can be sold is?

Price floor

Price ceiling

1

If the price floor is above the equilibrium price is the price floor binding?

True

False

1

Price controls on goods reduce the welfare of buyers and sellers of the goods

True

False

1

Price controls have deadweight losses because they decrease the quantity traded and shrink the size of the market below the level that maximizes total surplus

True

False

1

The market value of all final goods/ services produced within a country in a given period of time

1

Market value of all final goods/ services produced by U.S residents no matter where they live

1

What does GDP per capita measure?

1

GDP growth measures the direction of an economy

True

False

1

GDP is a perfect measurement of the average persons standard of living

True

False

1

What is nominal GDP

Values output using current prices at the time of sale (not corrected for inflation)

Values output using the prices of a base year (is corrected for inflation)

1

What is real GDP

Values output using the prices of a base year (is corrected for inflation)

Values output using current prices at the time of sale (not corrected for inflation)

1

What does GDP deflator measure?

Supply

Demand

Overall level of prices

Overall decrease of prices

1

How can an economys inflation rate be measured?

Computing percentage increase in the GDP deflator from one year to the next

Computing percentage decrease in GDP from one year to the next

Computing percentage decrease in Nominal GDP from one year to the next

1

A country's standard of living depends on its ability to produce good and services

True

False

1

What are the determinants of productivity?

1

a economy's rate of productivity growth is closely linked to the growth rate of GDP per capita

True

False

1

inflation is the avg change in prices or in the price level (some prices go up while others go down)

True

False

1

What are the different price indexes used to measure inflation?

Consumer price index (cpi)

GDP deflator

Producer price index (PPI)

All of the above

1

What can be calculated by fixing the basket, finding the prices, compute the baskets cost, and choose a base year and compute the index?

1

Substitution bias, introduction of new goods, and unmeasured quality change, are some of the problems with CPI

True

False

1

What is included in CPI but excluded from GDP Deflator?

1

What is included in GDP deflator but excluded from CPI

1

CPI uses fixed basket while GDP Deflator uses basket of currently produced goods and services

True

False

1

real interest rate is corrected for inflation but nominal is not

True

False

1

What is the unemployment rate of a labor force?

1

the % of the adult non institutionalized civilian population either working or looking for work is?

1

the unemployment rate measures the 'hidden unemployment (underemployment, part-time, discouraged workers)

True

False

1

What are the three types of unemployment?

Frictional

Structural

Cyclical

Discouraged

1

A student who just graduated from college but hasn't found a job yet is considered to be

Frictionally

Structurally 

Cyclically

1

a freightliner employee that got laid off because of the recession of 2007-2009 is considered

Frictionally

Structurally 

Cyclically

1

People who lost their jobs as hand-drawn animators because of the popularity of computer generated 3D animation are considered

Frictionally

Structurally 

Cyclically

1

What is the normal rate of unemployment around which the actually unemployment rate fluctuates

1

What are three public policies to address unemployment

Government employment agencies

public training programs

unemployment insurance

funding education

1

Aggregate supply slopes which way in the long run?

1

What does LRAS stand for?

1

What does SRAS stand for?

1

countries specialize based on absolute advantage

True

False

1

economic growth means that a country can produce more of all the goods

True

False

1

as income goes up people buy more of an inferior good, therefore increasing its demand

True

False

1

a binding price floor causes a surplus and is inefficient

True

False

1

Draggable item		Corresponding Item

1

What is any asset that people are generally willing to accept in exchange for goods and services

1

the existence of money makes trading much easier and allows specialization

True

False

1

without money you would have to barter

True

False

1

Money is acceptable to a wide variety of parties as a form of payment for goods and services

1

Money is the yardstick people use to post prices and record debts

1

Money allows people to defer consumption till a later date by storing value

1

The two different types of money are; Commodity and fiat money

True

False

1

The form of a commodity with intrinsic value. Ex; gold coins, cigarettes in POW camps

Commodity money

Fiat money

1

Money without intrinsic value, used a money because of gov't decree

Commodity

Fiat

1

the quantity of money available in the economy is called the money supply

True

False

1

Paper bills and coins in the hands of the public is known as

1

Balances in bank accounts that depositors can access on demand is

1

What are the three categories of money supply in the US?

Monetary base

M1

M2

M3

1

Currency and reserves at the central bank (federal reserve) is?

1

Banks are only required to hold only a portion of the money deposited with them as reserves is?

1

What is the reserve ratio

1

What is money multiplier?

1

What is the difference between M1 and M2

Draggable item		Corresponding Item
M1 + other savings deposits		M1
MB + checking and savings accounts		M2

1

when banks gain reserves, they make new loans, and the money supply expands

True

False

1

An institution that oversees the banking system and regulates the money supply

1

The central bank of the US is known as?

1

The setting of the money supply by policymakers in the central bank.

1

What does the central bank of the US include?

District banks

Federal Reserve Board of Governors

Federal Open Market Committee (FOMC)

All of the above

1

the Fed maintains the bank account of the US treasury and manages govt borrowing

True

False

1

Large private banks do not keep accounts at the Fed, nor can they borrow from the Fed

True

False

1

The Fed controls the money supply, keeps inflation/ unemployment low and stable, and encourages growth

True

False

1

What policy tool can the Fed use to change the money supply?

Reserve requirements

discount rate

open market operations

all of the above

1

The amount that banks must hold when they receive a deposit is reserve requirements

True

False

1

Higher tax rates for higher incomes

Progressive tax

proportional (flat) tax

regressive tax

1

Constant tax rate

Progressive tax

proportional (flat) tax

regressive tax

1

Lower tax rates on higher incomes

Progressive tax

proportional (flat) tax

regressive tax

1

the additional shifts in AD that result when fiscal policy increases income and thereby increases consumer spending

Multiplier effect

crowding-out effect

1

Fiscal policy has another effect on AD that works in the opposite direction

Multiplier effect

crowding-out effect

1

The setting of the level of government spending and taxation by policymakers

Fiscal policy

Expansionary fiscal policy

Contractionary fiscal policy

1

An increase in G and/or decrease in T, shifts AD right

Fiscal policy

Expansionary fiscal policy

Contractionary fiscal policy

1

An decrease in G and/or increase in T, shifts AD left

Fiscal policy

Expansionary fiscal policy

Contractionary fiscal policy

1

changes in fiscal policy that stimulate aggregate demand when economy goes into recession, without policymakers having to take any deliberate action

Automatic stabilizers

Tax system

Stabilizers

1

In recession, taxes fall automatically, which stimulates aggregate demand

True

False

1

In recession, less people apply for public assistance (welfare, unemployment insurance)

True

False

Draggable item		Corresponding Item
Changes in natural resources		AD
Expectations about prices or inflation		AD
Nominal wages		SRAS
Consumption/ investment		SRAS
Capital/ labor/ technological changes		SRAS
Productivity/ input prices		LRAS
Gov't spending/ net exports		LRAS