Chapter 3 & 4 review
Being upside down on a mortgage loan means
the mortgagee owes more on the house than what the house is worth in the market.
Which of the following is a true statement?
- Privileges are things granted to one individual by a higher-ranking authority. -Our founding fathers argued that the basic rights of life, liberty and the pursuit of happiness were natural rights, endowed by our Creator, not by the government. -Our forefathers believed that governing powers do not out-rank the citizens, rather it is the citizens who grant government officials their "just powers." (ALL THE ABOVE)
If a shortage exists in a market then
- the price is below equilibrium. -the quantity demand exceeds the quantity supplied. - the price will rise in the near future. (ALL THE ABOVE)
Which of the following is a true statement?
-Banks are evaluated by the Consumer Financial Protection Bureau. -The Consumer Financial Protection Bureau uses its own parameters to determine a bank's success or failure. -The Consumer Financial Protection Bureau (CFPB) wiped out Corinthian College's shareholders and creditors by using the college for predatory lending. (ALL THE ABOVE)
Which of the following is a true statement?
-Governmental policies trash the rule of law when it makes decisions for strictly political reasons. -When the federal government bailed out General Motors in 2009, it ignored current bankruptcy laws. -When the federal government bailed out General Motors in 2009, it paid the auto unions in full because of their generous political contributions but shortchanged bondholders. (ALL THE ABOVE)
Which of the following is a true statement?
-Our forefathers were concerned that without proper safeguards, the minority of citizens could be forced to relinquish their sovereignty to the majority. -When the founders of America wrote the Constitution, only white male property owners could vote. -During the 1800s, states gradually dropped property requirements for voting. (ALL THE ABOVE)
Which of the following is a true statement concerning the Sarbanes-Oxley Act?
-The purpose of the act is to prevent business scandals. - The act has given the federal government more power than before to intervene in credit markets. -The act has given the federal government the right to impose penalties on selected companies. (ALL THE ABOVE)
A country can increase productivity by
-automating more. -coming up with new inventions. -expanding economic freedom. (ALL THE ABOVE)
It wasn't until ______ that Henry Ford produced the first Model T Ford automobile.
1909
Which of the following best represents the effects of a decrease in the price of tomato juice, other things being equal?
A downward movement along the demand curve for tomato juice.
Which of the following is true about market equilibrium?
As the price increases, the quantity demanded decreases and the quantity supplied increases.
The most important characteristic of the equilibrium price is that it
Clears the market
A baby boom will have what immediate effect on the disposable diaper market?
Demand increases
If the price of hot dogs increases, what will happen in the market for potato chips, a complementary good?
Demand will decrease.
An Austrian economist would have which opinion concerning price controls?
Price controls are bad because they distort price signals and disrupt the free market.
An increase in the size of the federal government and a decrease in the size of the private sector will tend to increase productivity and increase economic growth.
False
The swiftness or slowness of adjustments in a free market as variables change does not depend on the nature of the market.
False
The whistleblower provision is not a part of the Dodd-Frank Law.
False
A negative relationship means that two variables move in the opposite direction. The fact that price and quantity demanded are related negatively illustrates the
Law of Demand
Between 1945 and 1947, Germany experienced severe price controls and a restrictive economy. Then in 1948 when ______________________ lifted price controls and advocated a free market, the nation prospered.
Ludwig Ehhard
Let's say you are driving the speed limit of 45 MPH when a policeman stops you and threatens to give you a ticket unless you offer him a bribe. This is an example of
The rule of man
A feature of the Dodd-Frank Law is the whistleblower provision.
True
According to the Sarbanes-Oxley Act, executives who approve shoddy records face fines of up to $5 million and 20 years in prison.
True
An Austrian economist would tend to favor market solutions to market problems, assuming a strong moral base. Keynesian economists tend to favor government solutions to economic problems.
True
An unfunded liability occurs when a government passes a law, which will cost money, but instead of the government paying the costs for the law it passes the liability onto someone else.
True
During the 1920s, a larger percentage of people lived on working farms than do today?
True
Impediments slow the market in seeking its equilibrium.
True
Inventions and innovations are two ways to increase productivity.
True
Rent control is an example of an unfunded liability.
True
The Dodd-Frank Law does not honor checks and balances; it eliminates them. For example, the Consumer Financial Protection Bureau (CFPB) is not subject to Congress's "power of the purse," which James Madison knew to be Congress's "most complete and effectual weapon."
True
The Financial Stability Oversight Council (FSOC) enjoys free rein to pick which financial institutions are too big to fail, thereby encouraging investors to direct their financial capital to big, politically connected players at the expense of smaller financial firms.
True
The large and growing U.S. national debt discourages productivity gains.
True
The solution to the problem of pollution is for the government to enforce environmental regulations on all business that pollute.
True
Unlike a tax on something citizens buy, the health care tax is a tax on something citizens choose not to buy.
True
With a national debt approaching $20 trillion, the U.S. government uses much of the country's resources to repay the debt instead of putting the money toward research and development and new capital.
True
Moral hazard occurs when
businesses are bailed out and thus protected from poor business decisions.
An increase in the demand for a good means that
consumers are willing to purchase more of the good at each possible price.
Assume that peanut butter and jelly are complementary goods. An increase in the price of peanut butter will cause the
demand for jelly to decrease
Which of the following would decrease the supply of airline travel?
higher fuel costs
Assuming that clothing is a normal good, an increase in consumer income, other things being equal, would
increase the demand for clothing.
At any price below the equilibrium price, the
quantity demanded is greater than quantity supplied.
A supply schedule shows the relationship between
quantity supplied and price.
Assume that oranges and peaches can both be grown on the same type of land, a decrease in the price of peaches, other things being equal, will cause a (an)
right ward shift of the supply curve for oranges.
A change in demand cannot be caused by a change in
the price of the good itself.
If more people enter medical school, we can expect
the supply of doctors to increase.
A direct relationship between two variables means that as one variable moves in one direction the other moves in the same direction. An inverse relationship means that two variables move in opposite directions. The law of demand states that
there is a negative relationship between the price of a good and the quantity of the good demanded.
Since 2008, many homeowners have found themselves to be upside down on their mortgage. To be upside down on a mortgage means
they owe more on their house than what the house is worth on the market.
Other things being equal, a fall in the price of Coca-Cola will increase the quantity of Coca-Cola demanded.
true
Other things being equal, the effect of an increase in the price of Coca-Cola would cause a (an)
upward movement along the demand curve for Coca-Cola.
