Changing the way you learn

Question	Answer
Because human wants are insatiable and unlimited while available resources are limited, people are said to face the problem of	Scarcity
The question of "How are goods and services produced?" most closely addresses which of the following issues?	Should Ford use expensive industrial robots or inexpensive Mexican autoworkers to produce SUVs?
In order to make a rational choice, people must	compare marginal costs and marginal benefits.
Match statement to their type: [Increase in interest rates decreases investments]	Positive
Match statement to their type: [The only way to bring the economy out of a recession is to decrease taxes]	Normative
What would be an example of a consumption good or service? (Select 2)	Jake buys an iPhone., Rhianna gets a haircut.
The largest share of total production in the United States is	consumption goods and services.
The difference between consumption and capital goods is that	capital goods are used to produce additional goods while consumption goods are not.
Which of the following correctly lists the categories of factors of production?	land, labor, capital, and entrepreneurship
Which of the following is NOT directly related to human capital?	an MRI machine
Capital is a factor of production. Which TWO of the following are examples of capital?	An accounting software for a retail store, a drill press in your local machine shop
In the circular flow model,	both firms and households buy or sell in different markets.
Production efficiency is represented by ________ a production possibilities frontier.	all points on
Consider a production possibility frontier with books and tables. A combination of 1000 books and 500 tables is on the frontier. Which of the following are true? (Select two)	Production of 700 books and 400 tables is attainable but inefficient., Production of 1000 books and 600 tables is unattainable.
The production possibilities frontier illustrates which of the following economic ideas?	all of the above
Gasoline prices increase by 50 percent and other things remain the same. As a result, there is	a decrease in the quantity of gasoline demanded.
A change in the demand for apples could result from any of the following EXCEPT	a change in the price of an apple.
If the demand for used cars decreases after the price of a new car falls, used cars and new cars are	substitute goods.
Hot dogs and hot dog buns are complements. If the price of a hot dog falls, then	the demand for hot dog buns will increase.
Classify the following goods as inferior or normal: [As income increases, demand for bus rides decreases. Hence, bus rides are]	Inferior Goods
Classify the following goods as inferior or normal: [As income increases, demand for movie tickets increases. Hence movie tickets are ]	Normal Goods
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?	The supply of cheese decreases.
If the automobile workers' union successfully negotiates a wage increase for its members, how does the wage hike affect the supply of automobiles?	The supply decreases.
Using the data in the table below, if the price of a stapler is $8, then there is ________ of staplers and the quantity of staplers demanded ________ the quantity of staplers supplied.	a surplus; is less than
Suppose the current price of a pound of steak is $6 per pound and the equilibrium price is $9 per pound. What takes place?	There is a shortage, so the price rises and quantity demanded decreases.
If consumers buy a large number of plug-in electric cars, the equilibrium price of electricity will ________ and the equilibrium quantity of electricity will ________.	rise; increase
Suppose that the price of flour used to produce bagels increases. Hence the equilibrium price of a bagel ________ and the equilibrium quantity ________.	rises; decreases
Suppose that the price for flour, which is used to produce bagels, increases. In the market for cream cheese,	Demand deceases, quantity supplied decreases and price falls
When personal computers were first produced, the price was very high. As time passed, the price of personal computers fell because	there were technological advances in the production of personal computers.
Gross Domestic Product measures the	market value of the final goods and services produced in a given year within a country.
Which of the following is included in U.S. GDP? i. the rental value of homes owned by U.S. citizens ii. the production of Suburban SUVs by GM in its plant in Mexico iii. tickets sold by U2 for concerts held in the United States	i and iii
Which of the following is a final good or service?	a new replacement muffler installed by Midas Mufflers
In measuring GDP, which of the following is included?	the value of increases in business inventories
Total expenditure equals total income	because firms pay out everything they receive as income to the factors of production.
Which two of the following does GDP measure? (Select 2)	Total expenditure, Total income
After calculating net domestic product at factor cost, to calculate GDP using the income approach, in part we must add	indirect taxes and depreciation.
________ is most likely to contribute to an improvement in our living standard.	An increase in real GDP
The CPI is calculated by the Bureau of Labor Statistics on a frequency of every	month.
The reference base period for the CPI has an index number of According to the CPI basket, the largest item in the households' budgets is	housing.
The CPI market basket	weights the goods and services according to the budget of an average urban household.
Which of the following is true?	To be classified as employed, you must work at least 1 hour per week at a paid job or 15 hours or more as an unpaid worker in your family business.
A marginally attached worker i. does not have a job and has not looked for one in the last month. ii. is available and willing to work. iii. must work at least 1 hour per week.	i and ii
Since 1960, the labor force participation rate in the United States has	increased for women and decreased for men.
Which TWO of the following help explain the increase in the U.S. labor force participation rate for women?	There was an increase in the educational level of women., Technological change in the home increased the time available for work outside the home.
Which type of unemployment is a permanent and healthy phenomenon in a dynamic economy?	frictional
The type of unemployment that arises from a decrease in real GDP is called	cyclical unemployment.
Full employment occurs when	cyclical unemployment is zero.
When the unemployment rate is greater than the natural unemployment rate, real GDP is	less than potential GDP.
When the CPI rises ________, the inflation rate is ________.	rapidly; high
Which of the following is a bias in the CPI? (Select 3)	new goods bias, commodity substitution bias, D) outlet bias
If prices have increased since the base period, then	real GDP is smaller than nominal GDP.
The economic growth rate is measured as the	annual percentage change of real GDP.
Labor productivity is equal to the quantity of	real GDP produced by one hour of labor.
Sustained increases in the standard of living depend on	increases in labor productivity.
Advances in technology and growth in human capital ________ because ________.	shift the productivity curve upward; labor and capital become more productive
Money is best defined as	anything accepted as a means of payment.
Which of the following is NOT among the primary functions of money?	indicator of supply
If you shop for a car online and compare car prices across dealerships, money is functioning as a	unit of account.
Which of the following is money?	checkable deposits
If Joe withdraws a $100 bill from his checking account and Jack deposits another $100 bill in his savings account, by how will M1 and M2 change?	M1 will decrease, but M2 will remain the same.
A commercial bank's main goal is to	maximize the wealth of its stockholders.
Which of the following is a thrift institution?	a savings and loan association
The Fed is a central bank and as such	provides banking services to banks but not individuals.
Conducting the nation's monetary policy is the duty of the	Federal Reserve System.
The main policy making body of the Federal Reserve System is the	Federal Open Market Committee.
Which of the following is a policy tool of the Fed? (Select 2)	setting the required reserve ratios, conducting open market operations
Open market operations are the	purchase or sale of government securities by the Fed.
If the Fed engages in quantitative easing, it has likely	decreased the federal funds rate to almost zero by buying large sums of securities.
When the Fed ________ securities in an open market operation, banks' reserves ________, and therefore lending ________.	buys; increase; increases
The quantity of money demanded	is the money that people choose to hold.
The opportunity cost of holding money is that you	forego interest on an alternative asset.
The relationship between the nominal interest rate, the real interest rate, and the inflation rate is that the	nominal interest rate is equal to the real interest rate plus the inflation rate.
Inflation is known as a ________ because it ________.	tax; redistributes goods and services from households and businesses to the government
The "shoe-leather costs" of inflation are the costs from	time spent trying to spend money quickly.
The aggregate supply curve shows the relationship between	the quantity of real GDP supplied and the price level.
The aggregate supply curve slopes ________ because a ________ in the price level brings a ________ in the real wage rate.	upward; rise; fall
Which of the following shifts the aggregate supply curve rightward?	increase in potential GDP
Which of the following does NOT shift the aggregate demand curve?	a change in the money wage
If firms' expectations about the future become pessimistic so that they think future profits will be lower, then	aggregate demand decreases and the AD curve shifts leftward.
Match the events to the resulting changes [Change in investment expenditure]	Shift of AD curve
Match the events to the resulting changes [Change in potential GDP]	Shift of AS curve
Match the events to the resulting changes [Change in price level]	Movement along AS curve
A change in any component of aggregate demand creates a larger change in overall aggregate demand. This is the ________ effect, and it means, for example, that a(n) ________ in consumption will cause an even larger ________ in AD.	multiplier; decrease; decrease
In the figure below, the economy is at an equilibrium with real GDP of $16 trillion and a price level of 110. At this point there is	a recessionary gap.
Demand-pull inflation starts with	an increase in aggregate demand.
The short-run Phillips curve is a curve that shows the relationship, other things being constant, between ________ and ________.	the inflation rate; the unemployment rate
If the economy is at full employment, then the inflation rate	is equal to the expected inflation rate.
Suppose an economy experiences a permanent increase in its expected inflation rate. As a result, there is	an upward shift of the short-run Phillips curve.
If the federal government has a budget surplus, then it is definitely the case that	tax revenues exceeds government outlays.
The national debt is the amount	of debt outstanding that arises from past budget deficits.
What two parts of the government determine the federal budget? (Select 2)	the President, the Congress
Fiscal policies that move the economy toward potential GDP without a change in policy are called	automatic stabilizers.
If the government reduces expenditure on goods and services by $30 billion, then aggregate demand	decreases by more than $30 billion and real GDP decreases.
To eliminate a recessionary gap, the government can ________ government expenditures on goods and services or ________ taxes.	increase; decrease
Which of the following is a monetary policy goal? (Select 2)	keeping the inflation rate low, attaining maximum employment
Which of the following is a potential monetary policy instrument for the Fed?	federal funds rate
When the Fed buys government securities, banks' reserves ________, the quantity of money ________, and the federal funds rate ________.	increase; increases; falls
If the Fed fears inflation, then the Fed	will sell government securities in the open market.
If the AS and the AD curve intersect at a level of real GDP that exceeds potential GDP, then the appropriate monetary policy is one that ________ the federal funds rate and ________ aggregate demand.	raises; decreases
The fundamental force that generates international trade is	comparative advantage.
When a country imports a good, the ________ to consumers is ________ the ________ to producers.	gain; larger than; loss
After a tariff is imposed, consumers must pay a price equal to the	world market price plus the tariff.
What is the dumping argument for protection from international trade?	Foreign producers selling below cost to drive domestic firms bankrupt must be stopped.
Which question is a basic question economists need to answer?	For whom are goods and services produced?
Match each core idea of economic thinking to its definition. Answer options may be used more than once or not at all.	Benefit - What is gained when a person gets something Rational - A decision that uses the available resources to best achieve the objective of the person deciding Opportunity - What must be given up to get something Incentives - A reward or a penalty that encourages or discourages action
A company has the production possibilities of bicycles and helmets in a month as follows: Bicycles________ Helmets 900______________ 0 800_____________200 600____________ 400 350____________ 600 100____________ 800 0_______________1000 Which production numbers show an attainable and efficient production for this company?	600 bicycles, 400 helmets
Which scenario could the manager have set up to create this higher production? A fast food restaurant produces 85 hamburgers and 100 trays of French fries each hour. The manager has not made any tradeoffs in production but is producing many more hamburgers and French fries than last month. Assume the production possibilities curve has not changed. Which scenario could the manager have set up to create this higher production? Note: This new production combination lies on the restaurant's production possibilities curve.	The old combination was within the production possibilities curve.
What are two factors of production that affect how goods and services are produced?	Land Entrepreneurship
What is true regarding human capital?	Human capital affects the quality and productivity of labor.
Which situation increases current demand of a good?	The expectation of a higher future price
If the demand for used cars decreases after the price of new cars falls, what is true about the used and new cars?	They are both substitute goods
How is the quantity of demand affected when there is an increase in demand, assuming supply is constant?	The price will increase and the quantity will decrease.
Which situation increases the supply of gasoline?	A decrease in the price of a resource used to produce gasoline, such as crude oil
Which situations increases the supply of a product? Choose 2 answers	Lower prices for the resources used to produce the product A higher price for the product
What can cause an increase in the quantities supplied of ballpoint pens?	When there is an increase in demand.
A sugar cane farm was affected by a devastating hurricane that decreased the supply of sugar by 50 percent. Because of the reduced supply of sugar, the chocolate cake industry in Country A was only able to produce half the number of last year's cakes. What effect will this decrease in sugar supply have on the chocolate cake's market equilibrium?	The price of chocolate cake must increase in order to maintain market equilibrium.
What happens to the consumer surplus as the allocation of resources becomes more efficient and approaches the production possibilities frontier?	The consumer surplus is more likely to decrease than to increase.
You prepare dinner for you and your family. Which statement is true concerning gross domestic product (GDP)? Your service in preparing the meal is valued at a cook?s wage and added to GDP. None of what you bought to prepare for dinner is included in GDP. Only the market value of ingredients that you purchased this year is added to GDP. The difference between the cost of the ingredients that you purchased this year and the market value of the dinner is added to GDP.	The market value of your dinner is added to GDP.
Which item would be excluded from Canada's gross domestic product (GDP) measure?	Gasoline purchased in the United States by a tour bus operator from Quebec
Classify the descriptions as a feature of real gross domestic product (GDP) or nominal GDP. Answer options may be used more than once or not at all. Nominal GDP Nominal - Expressed in terms of prices in that same year Real - Allows the quantities of production to be compared across time Real - Expressed in terms of the prices of a base year Real - A more accurate measure of how much the standard of living is rising	Real GDP
Which factor is included when analyzing gross domestic product (GDP)?	Income per person
How frequently does the Bureau of Labor Statistics conduct its survey of the consumer price index (CPI) market basket to determine CPI?	Monthly
Which events are causes of inflation? Choose 3 answers	The price of crude oil rising by 30% overnight Salaries rising faster than productivity Prices of consumer durable goods rising
Which condition must exist for full employment to occur?	The absence of cyclical unemployment
How will the gross domestic product (GDP) be affected when unemployment is higher than the natural unemployment rate? Choose 2 answers	The real GDP will be below potential GDP. The real GDP minus the potential GDP will be negative.
A call-center employee has been laid off because of an economic recession. Which type of unemployment does this illustrate?	Cyclical unemployment
What is job rationing?	When the real wage rate is set above the full-employment equilibrium level
What is an efficiency wage?	A real wage set above the full employment equilibrium wage rate.
What do sustained increases in the standard of living depend on?	Increases in labor productivity
What would be a reason for an increase in labor productivity growth?	An increase in people?s human capital
Economic growth in Cuba has been slow. What can best explain the slow growth?	Lack of incentive mechanisms and economic freedom
Which statement is true regarding private investment when government has a budget surplus? Private investment is greater than saving. Private investment is less than saving. Private investment is equal to saving.	Private investment is less than government saving.
What are some of the contributing causes of government running budgetary deficits? Rapid increases in the government spending not offset by increases in tax revenues Rapid decline in social welfare programs Rapid decreases in the government spending	A reduction in unemployment, decreasing government spending
What is an example of financial capital?	Bonds
What is this an example of?	Physical capital A shipping company puchases trucks and airplanes.
Cisco is considering opening a financial institution that accepts savings deposits from only its employees and makes loans to only its employees. What is the best description of this financial institution?	Credit union
What is the goal of a commercial bank?	To maximize its stockholders? wealth
What is the function of money that is being applied when we put a price tag on goods and services?	Unit of account
What is an open market operation?	The purchase or sale of government securities by the Federal Reserve
Who regulates the quantity of money circulating in the economy?	The Federal Reserve
What can the Federal Reserve System immediately adjust in order to influence the interest rate?	Reserves of the banking system
What are open market operations?	Purchase or sale of government securities by the Federal Reserve
How does the quantity of money demanded relate to the nominal interest rate?	If the rate rises, the quantity of money demanded drops, and if the rate drops, the quantity of money demanded rises.
What are confusion costs?	A cost that makes the economy behave a bit like a casino in which some people gain and some lose and no one can predict where the gains and losses will fall.
What is the result of an increase in price level, other things remaining the same? When households hoard assets or spend too much time trying to estimate future inflation rates. A given percentage increase in the quantity of money which brings an equal percentage increase in the price level. The difficulties that arise when prices are changing so quickly that it is hard to compare marginal benefits to marginal costs.	Increase in the quantity of real GDP supplied
Moving along the aggregate supply curve, what is the result when the price level increases?	The real wage rate falls, and there is an increase in the quantity of real GDP supplied.
Match each change with how it impacts aggregate demand. Answer options may be used more than once or not at all. decrease aggregate Government purchases decrease Net exports decrease Investment increases	increase aggregate
Assuming that gross domestic product (GDP) stays constant, what happens in terms of the business cycle when aggregate demand increases?	The economy expands and inflation may occur.
Why do money wage rates rise in a demand-pull inflation?	A decrease in aggregate demand creates a labor shortage.
What is likely to occur when gross domestic product (GDP) equals planned expenditure?	The economy will be at equilibrium.
How is an expenditure multiplier determined?	By calculating the change in equilibrium expenditure multiplied by the change in autonomous expenditure
When would a lower inflation rate occur on a short-run Phillips curve?	When there is a higher unemployment rate
What are the policy targets of the Phillips curve?	Inflation rate and unemployment rate
Which parties decide on the federal budget?	President of the United States and the United States Congress
When tax revenue equals outlays	Balanced budget
If government expenditures on goods and services increased by $20 billion, what would happen to aggregate demand?	It would increase by more than $20 billion.
Classify the following actions as either increasing or decreasing aggregate supply. Answer options may be used more than once or not at all. decrease aggregate supply Decrease in unemployment Increase of infrastructure projects Decrease in investment Increase in income taxes	increase aggregate supply
Which factor is a key part of achieving maximum employment?	Attaining the highest sustainable growth rate of potential GDP
What is the best indication that the Federal Reserve is achieving its goal of price level stability?	A yearly core inflation rate that is closer to 1 to 2
What would happen to aggregate expenditures if the Federal Reserve raised the federal funds target rate?	Short term real interest rates would likely decrease. Net exports would likely rise. Investments would likely rise. Consumption expenditures would likely decrease.
What is one strategy the Federal Open Market Committee (FOMC) uses to fight inflation?	Taking actions that will increase real gross domestic product (GDP)
What happens after a nation starts importing a good from overseas?	The domestic price of the good falls.
In what way do consumers lose and gain from a tariff? Choose 2 answers	Consumers pay for the tariff when purchasing the product. Consumers receive a product of increased quality. Consumers receive the benefits of the tariff through public services that the revenue pays for. Consumers gain more options when purchasing the product.
If supporters of restrictions on imports argue that protection is needed to preserve a strategic industry, which argument is being used?	Save domestic jobs argument
4 Stages of a business cycle	1. Recession 2. Recovery 3. Growth 4. Decline
The Federal Open Market Committee consists of how many people? How often do they meet?	12 members / They meet every 6 weeks or 8x/yr
What is the main purpose of "Operation Twist"?	To lower long term interest rates & stimulate long term borrowing & investments.
3 vital functions that money is expected to perform?	Medium of exchange, unit of account, store of value
Who is a discouraged worker?	People who believe there are no jobs for them.
Which term characterizes the situation where the current unemployment rate is equal to the natural unemployment rate?	Full employment
Which costs would be labeled uncertainty costs?	Costs associated with predicting long-term inflation
What happens to the business cycle when aggregate demand increases?	The economy expands and inflation may occur
Which consumer gain results from a tariff imposed on a good?	Products of increased quality
Why do money wage rates rise when an economy has demand-pull inflation?	An increase in aggregate demand creates a labor shortage

Next up

FTC1 Assessment

Description

Resource summary

Similar

	Created by Heather Guibault over 7 years ago