DAe4final
The unemployment rate is calculated as
(the number of unemployed / the number of people in the labor force) *100%
An example of a fiduciary monetary system is
American one-dollar bills.
The minimum wage is an example of a price ceiling. A. False B. True Part 2 An above-equilibrium minimum wage will result in ________ in the quantity of labor demanded and ________ in the quantity of labor supplied. A. a decrease; a decrease B. an increase; a decrease C. an increase; an increase D. a decrease; an increase
False a decrease; an increase
Which of the following describe the "invention" of banking?
Goldsmiths in the sixteenth century issued gold receipts which entitled its owners to reclaim their gold on demand.
Which of the following statements is true? A. Most individuals earn more when they are older than when they are younger or middle-aged. B. Most individuals earn more when they are younger than when they are middle-aged or older. C. Most individuals earn the same amount whether they are younger, middle-aged, or older. D. Most individuals earn more when they are middle-aged than when they are younger or older.
Most individuals earn more when they are middle-aged than when they are younger or older.
If the federal government has a budget deficit it can finance its spending by Part 2 A. selling municipal bonds. B. selling Treasury bonds. C. selling corporate bonds. D. All the above. Part 3 Which of the following statements is true regarding the national debt and federal government deficits? Part 4 A. There is a positive relationship between the national debt and a federal government budget surplus. B. There is a positive relationship between the federal government budget surplus and a federal government budget deficit. C. There is a positive relationship between the amount of borrowing and a federal government surplus. D. There is a positive relationship between the national debt and a federal government budget deficit.
Part 1 Selling treasury bonds Part 2 There is a positive relationship between the national debt and a federal government budget deficit.
Which of the following actions would cause an increase in the level of reserves in the banking system?
The FOMC instructs the NY trading desk to purchase government bonds on the open market.
In a market system, how are the terms of exchange established? Part 2 A. Consumer advocacy groups establish fair prices for items, and most firms comply because they don't want to anger their customers. B. The forces underlying supply and demand interact to set a price. C. Federal and state legislation establish minimum and maximum prices. D. Industry associations set up acceptable price ranges for their goods, and firms within each industry are required to set price within its relevant range.
The forces underlying supply and demand interact to set a price.
A model is considered "good" if it yields usable predictions that are supported by real-world observations. A. False B. True
True
All of the countries that grant considerable economic freedom have experienced positive rates of economic growth.
True
Cyclical unemployment results from business recessions.
True
The difference between real GDP and nominal GDP for the same year reflects the amount of inflation that occurred during that year
True
The labor force is equal to the number of employed plus the number of unemployed.
True
Unemployment due to the fact that workers must search for appropriate job offers is called frictional unemployment.
True
A black market is a market in which a price-controlled good is sold at an illegally high price. A. True B. False Part 2 As long as a price ceiling is ________ the market clearing price, imposing a price ceiling creates a ________. A. below; surplus B. above; surplus C. below; shortage D. above; shortage
True below; shortage
When the Fed engages in open market operations, it is buying or selling A. U.S. government securities newly issued by the U.S. Treasury. B. capital equipment. C. U.S. government securities. D. loans made to banks to meet the legal reserve requirement ratio. E. gold.
U.S. government securities.
Which of the following describes an inferior good? A. When consumer income decreases, the demand for public transit decreases. B. When consumer income increases, the demand for eggs decreases. C. When consumer income decreases, the demand for aspirin is unchanged. D. When consumer income increases, the demand for tea increases.
When consumer income increases, the demand for eggs decreases.
The accompanying graph depicts the market for unskilled labor. With the market initially in equilibrium, let a minimum wage be set at $8 per hour. The amount of unemployment is now Part 2 A. 40,000 hours of labor. B. 20,000 hours of labor. C. zero. D. 50,000 hours of labor.
Wrong ans: 20,000 hours of labor.
Which of the following will cause the demand curve to shift? A. a change in consumer income B. more firms in the market C. newer technology and improved productivity D. a change in the cost of raw materials
a change in consumer income
The effect of a quantity restriction is
a higher price
The effect of a quantity restriction is A. higher taxes to pay for the quantities of the good that the government must buy and store. B. an increase in quantity supplied. C. a reduction in demand. D. a higher price.
a higher price.
A cost that arises from the production or consumption that falls on someone other than the producer or consumer is called A. a positive externality. B. a public choice impact. C. a negative externality. D. a negative benefit. E. a private good.
a negative externality.
An increase in the price of cigarettes will reduce the amount of cigarettes purchased. This is Part 2 A. a positive economic statement. B. a negative economic statement. C. a normative economic statement. D. an economic assumption.
a positive economic statement.
A monopolist is defined as A. a single supplier of a good or service for which there is no close substitute. B. a large firm, making substantial profits, that is able to make other firms do what it wants. C. a producer of a good or service that is expensive to produce, requiring large amounts of capital equipment. D. a firm with annual sales over $10 million.
a single supplier of a good or service for which there is no close substitute.
If the current price of a good is greater than the equilibrium price, there will be
a surplus of the good and its price will decrease.
Given the existence of relative scarcity, resources can be rationed by Part 2 A. a system of prices. B. queuing, or standing in line. C. political mandate. D. All of the above.
a system of prices. B. queuing, or standing in line. C. political mandate.
In order to be successful, money in a fiduciary monetary system must have
acceptability and predictability of value.
The expenditure approach to tabulating GDP A. adds up the total value of all income earnings during the year. B. adds up the total amount spent on newly produced domestic goods and services during the year. C. excludes investment expenditures because they yield consumption in the future. D. adds consumption expenditures, investment expenditures, government expenditures, interest payment and wages.
adds up the total amount spent on newly produced domestic goods and services during the year.
Prices perform a rationing function by
allocating goods to the buyers who are willing and able to pay the highest price.
The economic way of thinking will
allow you to make better decisions.
The economic way of thinking is best described as A. the collected writings of the economics Nobel Prize winners. B. the glossary of terms at the back of your textbook. C. a set of economic rules handed down from one generation to the next. D. an analytical framework enabling one to reach informed conclusions.
an analytical framework enabling one to reach informed conclusions.
The federal budget is defined as Question content area bottom Part 1 A. an annual statement of U.S. government violations of international laws. B. an annual statement of expenditures and tax revenues of the U.S. government. C. a monthly statement of expenditure laws passed by the U.S. government. D. a monthly statement of whether the U.S. government is in deficit or surplus. E. an annual statement of what policy actions the U.S. government has pursued.
an annual statement of expenditures and tax revenues of the U.S. government.
Tim goes to a design academy to become a toy designer. This is an example of
an investment in human capital.
Positive economic statements ________, and normative economic statements ________. A. relate to whether outcomes are good or bad; are value-free statements B. are value judgements; are factual statements C. are concerned with "what is"; are concerned with "what ought to be" D. are scientific predictions; are purely descriptive
are concerned with "what is"; are concerned with "what ought to be"
If the Fed increases the discount rate, A. banks' assets increase. B. banks find it more profitable to increase their loans to businesses. C. banks pay a lower interest rate if they borrow from the Fed. D. banks pay a higher interest rate if they borrow from the Fed. E. banks increase their lending to the Fed.
banks pay a higher interest rate if they borrow from the Fed
A private cost is a cost of production that is A. always the same as the social cost of production. B. borne by the producer of a good. C. equal to zero if there is an external cost. D. the same as an external cost. E. borne by someone other than the producer of a good.
borne by the producer of a good.
The use of the federal budget to achieve macroeconomic objectives of full employment and sustainable economic growth is
called fiscal policy
Economic models A. include every detail found in the real world. B. can be used to explain or predict economic phenomena. C. are not tested using real-world data. D. assume that all factors in the model change at the same time.
can be used to explain or predict economic phenomena.
A public authority that provides banking services to commercial banks and regulates financial institutions and markets is called a Question content area bottom Part 1 A. mint. B. commercial bank. C. central bank. D. money market fund. E. thrift institution.
central bank
Consider the coffee market shown in the graph at right. A decrease in the demand for coffee will ________ the equilibrium price and _________ the equilibrium quantity. A.increase comma decrease increase, decrease B.increase comma increase increase, increase C.decrease comma maintain decrease, maintain D.decrease comma decrease
decrease, decrease
Real GDP is computed by adjusting nominal GDP for
depreciation.
According to the law of supply, the quantity supplied of any commodity is ________ related to its price, other things being equal.
directly
Government-enforced prices such as price ceilings A. are only imposed on goods where market price has no useful function. B. ration economic resources more efficiently than prices in a market system. C. aid in the rationing function performed by prices in a market system. D. disrupt the rationing function performed by prices in a market system.
disrupt the rationing function performed by prices in a market system.
Of all the characteristics that lead to income inequality, the factor with the largest impact is
education
Goods and services that the United States sells to other nations are called
exports.
The cost of producing an additional unit of a good or service that falls on people other than the producer is the marginal
external cost.
Which type of unemployment is this? A.cyclical unemployment cyclical unemployment B.frictional unemployment frictional unemployment C.structural unemployment structural unemployment
frictional unemployment
Buyers and sellers receive information about what should be bought and what should be produced A. from prices in a market system. B. by listening to TV news programs. C. from newspaper gossip columns. D. from friends and family.
from prices in a market system.
The existence of scarcity requires
hat people must make choices and face trade-offs in using their resources.
Car insurance and cars are complements. If the price of car insurance increases, the
i answered(wrong ans): quantity of cars demanded decreases. Correct answer: demand for cars decreases
Opponents of minimum wage legislation argue that higher minimum wages serve to
increase unemployment, particularly among unskilled minority teenagers.
In order to raise wages above the market level for its workers, a union must
limit the supply of labor in an industry.
Voluntary exchange
makes both parties to a trade better off.
Which of the following is the best example of a public good?
national defense
"We ought to do more for the education of our children." Statements using words like ought or should are A. normative statements. B. irrational statements. C. positive statements. D. empirical statements.
normative statements.
In a zero-sum game
one player's losses are offset by another player's gains.
The inequality of annual income
overstates the amount of lifetime inequality.
All of the following transactions are excluded from the measure of GDP except A. paying your dentist to have your teeth cleaned. B. the purchase of existing shares of Microsoft stock. C. Social Security payments. D. the sale of a used car.
paying your dentist to have your teeth cleaned.
Public goods create a free−rider problem because
people can enjoy the good or service no matter whether or not they pay for it.
A currency will cease to function as money if
people think that they will not be able to use it to exchange for goods and services later.
The tragedy of the commons is the absence of incentives to
prevent overuse and depletion of the common resource.
When demand decreases and the (upward sloping) supply curve remains in the same position, Part 2 A. price rises and equilibrium quantity rises. B. price rises and equilibrium quantity falls. C. price falls and equilibrium quantity falls. D. price falls and equilibrium quantity rises.
price falls and equilibrium quantity falls.
Import quotas are an example of government-imposed A. quantity restrictions. B. price ceilings. C. price floors. D. price lotteries.
quantity restrictions.
All of the following are government imposed quantity restrictions except A. rent controls. B. a ban on a good making it illegal to own the good. C. import quotas. D. licensing certain activities.
rent controls
In a rent controlled market, we would expect to observe
renters moving into the market to take advantage of the lower rents.
Each individual must make choices because A. resources are limited and therefore cannot satisfy one's many competing wants. B. even if one's wants are completely satisfied, insufficient time exists to fully enjoy all of them. C. wants are sometimes mixed up with needs. D. needs are more important than wants.
resources are limited and therefore cannot satisfy one's many competing wants.
Scarcity
results from unlimited wants coupled with limited resources.
The Board of Governors of the Federal Reserve System has
seven members serving for 14−year terms.
In a price system, changes in prices
signal to consumers that some goods are relatively more or less scarce.
The government has a budget surplus if
tax revenue is greater than outlays.
The primary losers from minimum wages are A. teenage and unskilled workers. B. low-wage workers who remain employed. C. high-wage workers. D. the government.
teenage and unskilled workers.
Of the following, who gains from a tariff?
the government of the importing country
Market failure occurs because
the market system does not make individuals responsible for the social costs/benefits of their actions.
The theory of public choice is the study of
the process through which voters, politicians, and other interested parties interact to influence nonmarket choices.
According to the accompanying graph, when the government imposes a price ceiling of $25 A. the quantity of goods that will be traded is 150. B. the quantity of goods that will be traded is 200. C. the quantity of goods that will be traded is 0. D. the quantity of goods that will be traded is 100.
the quantity of goods that will be traded is 100.
Gross domestic product is defined as
the total market value of all final goods and services produced in an economy during a year.
Which of the following is a dissimilarity between the market sector and the public sector decision making?
the type of voting system
Market failure occurs when A. the market system fails to allocate resources to each individual according to their abilities. B. the unrestrained market economy leads to too few or too many resources going to a specific economic activity. C. the market system fails to allocate an equal share of resources to all individuals. D. the market system fails to allocate resources to each individual according to their needs.
the unrestrained market economy leads to too few or too many resources going to a specific economic activity.
Opportunity cost refers to
the value of the next-best alternative.
Which of the following is a similarity between the market sector and the public sector decision making? A. there is an opportunity cost associated with every action B. a dollar voting system is in effect C. governments can resort to using force in their regulation of economic affairs D. goods are furnished to the ultimate consumers without payment required
there is an opportunity cost associated with every action
When an individual proclaims the need for a new car, the person typically means
they want something they currently do not have.
The primary purpose of economic regulation is
to control the price that regulated enterprises are allowed to charge.
The ultimate purpose of economics is
to study how individuals make choices.
A good or resource is excludable if
when you pay for the good or resource, you are guaranteed to be the sole consumer.
Ceteris Paribus means
"other things constant."
Does the richest person in the world face the problem of scarcity?
Yes, because even if you have money you will never be able to satisfy all of your wants and must therefore make choices.
If the Fed engages in an open market sale with a bond dealer, the bond dealer's bank's transactions deposits liabilities will ________ and the money supply will ________.
decrease; decrease
In which of the following cases does the tragedy of the commons occur? i) cattle grazing on private ranches ii) catching lobsters off the coast of Florida iii) raising salmon on salmon farms iv) using legal services provided by the courts
ii) catching lobsters off the coast of Florida
Factors of production include
land, labor, physical capital, human capital and entrepreneurship.