EC
A payment made by the government that does not necessarily require an exchange of economic activity in return is called a:
subsidy
If an increase in the price of good A results in an increase in the demand for good B, then goods A and B are:
substitutes.
If the price of chicken increases and, as a result, you buy more pork and less chicken (even though the price of pork has not changed), then chicken and pork are:
substitutes.
The law that states that as the price of a good, service, or resource rises, the quantity supplied will increase, all else held constant, is the law of
supply
The three different ways of expressing information about the supply of a good - service - or resource are:
supply - supply curve - and the supply schedule.
A graphical representation of the relationship between the price of a good, service, or resource and the quantities producers are willing and able to supply is the:
supply curve.
When you plot the data points from the supply schedule, you create the:
supply curve.
When the number of sellers decreases,:
supply decreases.
When the number of sellers increases,:
supply increases
When the number of sellers increases:
supply increases
The supply curve displays the:
supply of the good in a graph showing the different prices and their corresponding quantity supplied.
The supply schedule displays the:
supply of the good in a table showing the different prices and their corresponding quantities supplied.
A tabular representation of the relationship between the price of a good, service, or resource and the quantities producers are willing and able to supply is known as the:
supply schedule.
Suppose that tomato producers expect prices to fall in the future. This will likely cause current:
supply to increase.
The perceived desirability of consuming a good, service, or resource is the:
tastes and preferences of buyers.
Marginal benefit is:
the additional benefit associated with one more unit of an activity.
The statement "output can increase or decrease without causing the price level to change" is an assumption of:
the aggregate expenditures model.
Seller expectations are:
the anticipated future outcomes that sellers associate with the production of a good, service, or resource.
The consumer price index (CPI) measures:
the average price of a market basket of goods.
In the presence of a tax on suppliers
the cost producing the good or service increases
If there is a change in a nonprice determinant of demand for a good,:
the demand curve shifts.
An increase in demand is depicted graphically as:
the demand curve will shift to the right.
On a hot summer day, we would expect that:
the demand for cold drinks would increase.
Suppose that you only eat hot dogs on a hot dog bun and you never eat hot dog buns without a hot dog. If the price of hot dog buns increases:
the demand for hot dogs decreases.
Without individuals and households that are willing and able to purchase a good:
the demand side of the market cannot exist.
The relative magnitudes of the changes in demand and supply will determine:
the direction of change in price or quantity when both demand and supply shift.
When there is a change in demand,:
the entire demand curve shifts to the right or left.
When considering how changes in tastes and preferences or demographics affect demand, we tend to evaluate:
the entire market.
When a nonprice determinant of supply changes:
the entire supply relationship changes.
When there is a decrease in both demand and supply:
the equilibrium quantity falls, but the change in the equilibrium price is indeterminate.
Assuming that the inflation rate equals zero, a firm will buy capital if and only if:
the expected rate of return on capital is greater than or equal to the prevailing interest rate.
When the supply of a good increases
the good becomes less expensive, ceteris paribus
Along a demand curve, all else is held constant except
the good's own price.
Salaries in the private sector are not included in nominal GDP, but the salaries of government employees ,such as police officers, teachers, and judges are included in nominal GDP. This is because:
the government will not later sell the services for which it pays government employees, but the wage that a private firm pays is incorporated into the product price.
The more productive the nation is,:
the higher its wages and standards of living are.
A market refers to:
the interaction of buyers and sellers of a particular good.
Consumption and government purchases are:
the largest components of GDP
The minimum wage is:
the lowest wage firms can legally pay employees in the labor market.
In the absence of taxes, the slope of the consumption schedule is equal to:
the marginal propensity to consume.
The overall or total demand for a good, service, or resource is:
the market demand.
The price that consumers pay and that producers receive exactly balances the marginal benefit and marginal cost of consuming and producing a good or service when:
the market is in equilibrium.
A good once unaffordable to most people can become an item that almost everyone owns when:
the market supply increases over time.
The lowest wage firms can legally pay employees in the labor market is
the minimum wage
Other things held constant, the demand curve will shift when:
the nonprice determinants of demand change.
One assumption of a demand curve is that:
the number of buyers in the market is constant
Demand for a good, service, or resource will increase when:
the number of buyers increases.
Whether a good is normal or inferior depends on:
the preferences of all consumers in the aggregate.
When two goods are substitutes:
the price of a good and the demand for its substitute are positively related.
The interaction of buyers and sellers in a market is fundamental for the determination of:
the price of goods and services.
Terms of trade refers to
the price of one good or service in terms of another.
The supply curve is a representation of the relationship between:
the price of the product and the quantity supplied.
When a tax is placed on a good:
the price paid by consumers rises, but the price received by producers decreases
Economists use the phrase _____ to refer to the positive gains enjoyed by both buyers and sellers when they trade.
"trade creates wealth"
When a good or service is taxed in the market:
the price rises.
The average real GDP per capita across the world in 2018 was about:
$16,565 compared to the United States where real GDP per capita was about $61,391.
doc 1.7 Below are the prices and output for three years. Using Year 1 as the base year, what is the real GDP for Year 2?
$520 To find real GDP in year 2, multiply the quantity of output in year 2 by the prices in year 1. Real GDP = (12 x $5) + (4 x $40) + (3 x $100) = $520
doc 1.7 Use the prices and output above to answer the question. What is the real GDP for year 3 using year 1 as the base year?
$645 To find real GDP in year 3, multiply the quantity of output in year 3 by the prices in year 1. Real GDP = (9 x $5) + (5 x $40) + (4 x $100) = $645
The income effect refers to:
the purchasing power of income.
When the price of smart phones increases:
the quantity of smart phones supplied will increase
The price of sugar increases. The law of supply states:
the quantity of sugar supplied will increase.
A change in the price of a good will affect:
the quantity of that good supplied to the market.
When the price of a good, service, or resource decreases,
the quantity supplied decreases.
When the price of a good, service, or resource increases:
the quantity supplied increases.
ME When a nonprice determinant of supply changes:
the relationship between the quantity supplied and the price changes.
How much a nonprice determinant changes (and which one changes) will ultimately determine:
the size of the shift in the demand curve.
Mathematically, the expenditures multiplier equals:
1/(1 - MPC).
Roughly how much of gross domestic product is used for investment?
1/5 or less
Imports constitute about:
1/6 of nominal GDP
What is the value of the Consumer Price Index in the base year?
100
DOC 1.11 Use the information in the table above to answer the question. What is the CPI in year 3, using Year 1 as the base year?
114.73 Reason: To find the CPI, first calculate the value of the market basket in year 1 and year 2. The value of the market basket in Year 1 is (5.50)(10)+(1.75)(15)+(4.00)(20) = $161.25. The value of the market basket in Year 3 is (5.50)(10)+(2.00)(15)+(5.00)(20) = $185. Then, find the CPI by dividing the value of the market basket in Year 3 by the value of the market basket in Year 1 and multiplying by 100. (185)/(161.25) x 100 = 114.73
Imports constitute around Blank______ of nominal GDP in the United States.
15%
Because the only category of spending that depends on income is consumption,:
the slope of the aggregate expenditures line is the marginal propensity to consume.
Starting in the late 1600s, as economies started to grow,:
the standards of living of the people within them grew also.
When the number of sellers in a market changes,:
the supply curve shifts
When there is a change in a non-price determinant of supply:
the supply curve shifts and there is a movement along the demand curve.
Market Equilibrium When a nonprice determinant of supply changes:
the supply curve shifts to the left or right.
In a market, when the price or availability of resources used in the production of a certain good changes,:
the supply curve shifts.
If a nonprice determinant of supply causes an increase in supply,:
the supply curve will shift to the right.
In September, heating-oil producers anticipate a brutally cold winter and higher prices of heating oil by the end of November. We can expect that:
the supply of heating oil will fall now.
The revenue collected from a tax equals:
the tax times the quantity traded.
Whether a good or a service will be traded internationally depends largely on:
the terms associated with the trade.
Opportunity cost is:
the value of the opportunity that you give up when you choose one activity instead of another.
When the supply curve shifts to the right or left:
there has been a change in the non-price determinants of supply.
A decrease in the supply of cellphones implies:
there is a decrease in the quantity of cellphones supplied at each price.
Two goods are considered substitutes if:
there is a direct relationship between the price of one good and the demand for the substitute.
When the quantity supplied is equal to the quantity demanded of the good:
there is an equilibrium.
Transactions that happen either as a result of barter or illegally are not included in the calculation of GDP because:
they cannot be seen.
The marginal benefit of an activity can be found by calculating the change in:
total benefits as the level of the activity increases by one unit.
If the CPI was 240 in Year 1 and 245.1 in Year 2, what is the inflation rate between year 1 and year 2?
2.13% Reason: To find the inflation rate: ([CPI2−CPI1]/CPI1)×100=([245.1−240]/240)×100=2.12%
DOC 1.12 Use the table of information above to calculate the inflation rate between years 1 and 2.
3.09% Reason: To find the inflation rate: ([CPI2−CPI1]/CPI1)×100=([100−97]/97)×100=3.09%
Suppose that in the last year consumers spent $12 billion on durable goods, $34 billion on non-durable goods, and $44 billion on services. Consumption equals $_____ billion.
90
Which of the following is the equation for aggregate expenditures?
A + MPC (Y − T) + I + G + NX, where A = autonomous expenditure, MPC = the marginal propensity to consume, Y = income, T = taxes, I = investment, G = government purchases, and NX = net exports
The formula for consumption is:
A + MPC x (Y - T).
Which of the following would shift the supply curve for soft drinks to the left?
A 2 cent per ounce tax on all soft drinks
Use the graph above to answer the following question. The full-employment output level in Guilder is $10,000. Suppose now that Guilder's current real GDP is $8,000. This situation represents a(n) ____________ gap.
Blank 1: Recessionary
__________ is an act of households to keep the money they choose not to spend.
Blank 1: Saving or Savings
___________ occurs when households or firms take some of their income or profit and put it in a savings account in the stock market or in some other asset, hoping to make a return on their money and spend it in the future.
Blank 1: Saving or Savings
_____ are outputs of the direct activities of another person and are often intangible.
Blank 1: Services or service
A __________ is usually the product of price controls that do not allow markets to adjust to unforeseen events that disrupt supply. (Enter one word in the blank.)
Blank 1: Shortage, Surplus, shortage, surplus, shortages, or disequilibrium
___________ unemployment is usually the longest type of unemployment. (Enter one word in the blank.)
Blank 1: Structural
______________ unemployment occurs when the skills that some workers have to offer simply do not match the skills needed by the firms in an economy.
Blank 1: Structural
______ are similar goods, services, or resources that can take the place of another good. (Enter one word in the blank.)
Blank 1: Substitute or Substitutes
_____________ and subsidies alter the costs or benefits of producing goods and services.
Blank 1: Taxes, Tax, or Taxation
According to a(n) ______ , a piece of machinery that is still in use and highly productive could be fully depreciated. On the other hand, a(n) __________ would say that a machine should not be counted in depreciation because it is still in use and part of the productive process.
Blank 1: accountant, accounting, accounts, or accountants Blank 2: economist, economic, economics, or economists
AE = Y is the _________ ___________ ___________ identity.
Blank 1: aggregate Blank 2: expenditures Blank 3: equilibrium
Budget deficits are calculated and reported on a(n) _______ basis.
Blank 1: annual or yearly
The level of consumption that is associated with zero income is called ___________ consumption.
Blank 1: autonomous
A(n) _________ tax rate equals the amount of tax paid divided by income and multiplied by 100. (Enter one word in the blank.)
Blank 1: average
The Consumer Price Index measures the ________ price for a market basket of goods and services purchased by the typical consumer from one year to the next.
Blank 1: average
The Consumer Price Index measures the ____________ price for a market basket of goods and services purchased by the typical consumer from one year to the next.
Blank 1: average
The type of tax (progressive, regressive, or proportional) is determined by using the __________ tax rate.
Blank 1: average
The Consumer Price Index (CPI) is constructed using the goods and services purchased by the _________ household.
Blank 1: average or typical
In computing the Consumer Price Index, the reference year is also known as the ___________ year.
Blank 1: base
RGDP uses current-year quantities and _____ -year prices. (Enter one word in the blank.)
Blank 1: base
Real GDP uses prices from a _________ year, also referred to as constant prices.
Blank 1: base
When firms consider investment, they compare the marginal ___________ of the investment to the marginal ____________ .
Blank 1: benefit, cost, costs, or benefits Blank 2: cost, benefit, return, benefits, or costs
The federal government finances its deficits via _______
Blank 1: borrowings, loans, or borrowing
The taxes and subsidies that are under consideration in analyzing supply apply to ___________ (businesses/consumers). (Choose your answer from the options given in the brackets)
Blank 1: businesses, firms, companies, business, firm, or company
One assumption of the demand curve is that the number of ________ is constant.
Blank 1: buyers, consumers, or customers
real GDP per _________ is the same as real GDP per person
Blank 1: capita
Depreciation is the amount of ____________ that wears out or is used up during a year.
Blank 1: capital
The expected rate of return is the additional profit a firm expects to earn for each dollar of physical ____ purchased expressed as a percentage.
Blank 1: capital
During the Great Depression, chronic unemployment in the United States challenged the _________ theories of labor markets.
Blank 1: classical or traditional
A producer has a(n) ________ advantage in the production of a good or a service if his or her relative opportunity cost of production is lower than the opportunity cost of other producers. (Enter one word in the blank.)
Blank 1: comparative
When two countries specialize in producing the goods for which they have a(n) __________ advantage and then trade with each other, total production and consumption increase.
Blank 1: comparative
As long as there are differences in opportunity costs, there are _______________ advantages and there will be potential for trade to make both parties better off.
Blank 1: comparative or comparitive
An increase in the price of a good's ________ will shift the demand curve of the good to the left.
Blank 1: complement
The price of a __________ of a good is one of the nonprice determinants of its demand. (Enter one word in the blank)
Blank 1: complement or substitute
Goods, services, or resources that are consumed together are called _________ . (Enter one word in the blank).
Blank 1: complements, complementary, or complement
Assume you buy three goods: hamburgers, French fries, and pizza. Hamburgers and French fries are most likely ________ , whereas hamburgers and pizza are most likely ________ . (Enter one word in each blank.)
Blank 1: complements, complementary, or complement Blank 2: substitutes, substitution, or substitute
A decrease in the price of good A will cause an increase in the demand for good B when the two goods are ________ . (Enter one word in the blank.)
Blank 1: complements, complementary, or compliments
Real GDP uses prices from a base year also referred to as _________ prices.
Blank 1: constant or base
Non-price determinants are held _____________ for any given demand curve. (Use one word for the blank.)
Blank 1: constant, fixed, non-changing, static, stable, steady, unchanging, or same
Non-price determinants are held ______________ (one word) for any given supply curve.
Blank 1: constant, fixed, or unchanging
The sum of the marginal propensities to consume and save equals 1 because a fraction of each additional dollar is _______ and the remaining fraction is _________ .
Blank 1: consumed, spent, or consumption Blank 2: saved or savings
The Consumer Price Index measures the average price for a market basket of goods and services purchased by the typical ___________ (consumer/firm) from one year to the next.
Blank 1: consumer
The Consumer Price Index measures the average price for a market basket of goods and services purchased by the typical ________ from one year to the next.
Blank 1: consumer or household
The Consumer Price Index measures the average price for a market basket of goods and services purchased by the typical _________ from one year to the next.
Blank 1: consumer or household
Goods that have an average useful life of fewer than three years are known as _________ goods.
Blank 1: consumer, nondurable, non-durable, nondurables, or non durable
Assuming taxes are zero, the equilibrium is achieved at the point where the ________ schedule crosses the equilibrium line.
Blank 1: consumption
In an economy where all spending is done by households and individuals, __________ equals disposable income and savings equals zero at equilibrium.
Blank 1: consumption
Of the four categories of spending (consumption, gross investment, government purchases, and net exports) only _________ depends on income.
Blank 1: consumption
Of the four categories of spending (consumption, gross investment, government purchases, and net exports) only ___________ depends on income.
Blank 1: consumption
When the economy produces __________ goods such as entertainment, clothing, or food, there is enjoyment from their use, but no increase in productive capacity.
Blank 1: consumption or consumer
When _________ is greater than disposable income, savings is negative.
Blank 1: consumption or spending
A graphical representation of the relationship between the price of a good, service, or resource and the quantities producers are willing and able to supply is known as the supply __________
Blank 1: curve
The supply ______ displays in a graph the information found in the supply schedule.
Blank 1: curve
A graphical representation of the relationship between the price of a good, service, or resource and the quantity that individuals and firms are willing and able to buy, all else held constant, describes the demand ___________ (one word).
Blank 1: curve or schedule
all else held constant, generates a change in quantity demanded.
Blank 1: curve, line, or function
A sluggish economy will generate some _______ unemployment. (Enter one word in the blank.)
Blank 1: cyclical
If the government had no national _______ it would not have to make interest payments, and other things could be done with these funds.
Blank 1: debt
The national _______ is the accumulation of deficits and surpluses over time.
Blank 1: debt
If the MPC equals 0.75, an increase in taxes of $5 billion will result in an overall in real GDP of $ billion.
Blank 1: decrease, fall, reduction, decline, or loss Blank 2: 15 or fifteen
Inflation represents a(n) __________ in someone's ability to buy goods and services.
Blank 1: decrease, reduction, decreases, fall, or decline
A regressive tax is one in which the average tax rate ___________ (increases/decreases) as income increases.
Blank 1: decreases, falls, lowers, declines, or drops
A budget ________ occurs when a government receives less revenue than it spends in any given fiscal year.
Blank 1: deficit
A budget _________ occurs when the government expenditures exceed government revenues in any given fiscal year.
Blank 1: deficit
The national debt is the accumulation of _______ and _______ over time. (Enter one word per blank.)
Blank 1: deficits or deficit Blank 2: surpluses or surplus
A change in ______ (one word) occurs when a nonprice determinant of demand changes.
Blank 1: demand
Inflation is caused by increases in aggregate ____________ .
Blank 1: demand
Market _______ is based on the overall preferences of consumers in the market.
Blank 1: demand
Market demand is the horizontal summation of individual ________ curves. (Enter one word in the blank.)
Blank 1: demand
Suppose the price of burritos at Jack's Burrito Shack fell from $7.00 to $6.00 and the quantity of burritos purchased rose from 25 per hour to 30 per hour. This is consistent with the law of ___________ .
Blank 1: demand
The ________ for a product will change when the prices of the goods that are complements or substitutes for that product change.
Blank 1: demand
The law of _________ focuses entirely on the effect of a change in the good's price on the quantity of the good consumed and holds everything else constant.
Blank 1: demand
The size of the shift in the ________ (one word) curve depends on which nonprice determinant (tastes and preferences, income, etc.) changes and how much it changes.
Blank 1: demand
When income changes, ___________ (one word) can either increase or decrease.
Blank 1: demand
The _________ ________ represents the relationship between the price of a good, service, or resource and the quantity that individuals and firms are willing and able to buy, all else held constant, in a tabular form. (Enter one word in each blank.)
Blank 1: demand Blank 2: schedule
Consumer expectations influence the ______ curve, and producer expectations influence the ______ curve.
Blank 1: demand Blank 2: supply
Tastes and preferences, the number of buyers, and buyer expectations are all nonprice determinants of ________. (one word)
Blank 1: demand or market demand
Consumer expectations play a crucial role in determining the _______ for a good or service.
Blank 1: demand, current demand, or present demand
The market adjusts to a new equilibrium price and quantity when a non-price _______ of supply changes.
Blank 1: determinant, factor, determinants, or determinate
The demand for a good changes when the non-price _________ of demand changes. (Remember enter only one word in the blank.)
Blank 1: determinant, factor, determinants, or factors
The supply curve shifts in response to changes in non-price ___________ of supply. (Enter one word in the blank.)
Blank 1: determinants, factors, determinant, or factor
The notion that developing countries can catch up or converge with developed countries is one of the key insights of a branch of economics called ________ economics.
Blank 1: development
There is a(n) ________ relationship between disposable income and savings.
Blank 1: direct, positive, +, or linear
Because ___________ (discouraged/incumbent) workers are no longer looking for work, they are no longer included in the labor force.
Blank 1: discouraged
A(n) ___________ worker is someone who wants to work but is not actively looking for a job.
Blank 1: discouraged or discourage
An average tax rate equals the amount of tax paid ______ by income and multiplied by 100.
Blank 1: divided
If idle resources are put to use and more output is produced in an economy, there will be ________ _________
Blank 1: economic Blank 2: growth
The labor force consists of the _______ and the ________ . (Enter one word in each blank.)
Blank 1: employed Blank 2: unemployed
The unemployment rate provides information on the proportion of the labor force that is _______ and _______ .
Blank 1: employed Blank 2: unemployed
In the base year, nominal and real incomes are ______
Blank 1: equal, the same, identical, or equivalent
The value of leisure time spent with family, friends, or just relaxing on the couch does not have any physical presence and is thus considered intangible. Thus it is __________ (excluded/included) while calculating GDP. (Remember enter only one word in the blank.) (Choose your answer from the options given in the brackets)
Blank 1: excluded or discounted
Assuming that the inflation rate is zero, a firm will buy capital if and only if the __________ rate of return on the __________ is greater than or equal to the prevailing ___________ rate.
Blank 1: expected Blank 2: capital Blank 3: interest
A change in real GDP equals the ________ multiplier times the initial change in expenditures.
Blank 1: expenditures or expenditure
The ____________ multiplier is used to calculate a change in real GDP whenever expenditures such as consumption gross investment government purchases or net exports change.
Blank 1: expenditures or expenditure
The aggregate ___________ model states that in equilibrium, output or real GDP (Y) will be equal to expenditures (C plus I plus G plus NX).
Blank 1: expenditures or expenditure
The aggregate ____________ model states that in equilibrium output, or real GDP, Y, will be equal to expenditures, C plus I plus G plus NX.
Blank 1: expenditures or expenditure
When consumption, investment, government spending, and net exports are summed up, the result is called aggregate __________ .
Blank 1: expenditures or expenditure
The _______ approach to calculating GDP tells us who bought what; the ______ approach to calculating GDP tells us who earned what.
Blank 1: expenditures or expenditure Blank 2: income
If output is lower than the full-employment level, _____________ are too low.
Blank 1: expenditures, expenditure, or spending
Because _____ are produced domestically, they must be included in gross domestic product. (Enter one word in the blank.)
Blank 1: exports or export
For the economy as a whole, we keep track of the output flowing between countries using the concept of net ___________
Blank 1: exports or export
Goods and services that are manufactured domestically but sold abroad are called
Blank 1: exports or export
When calculating net exports, ______ are added to GDP but ________ are subtracted from GDP.
Blank 1: exports or export Blank 2: imports or import
Suppose there is an increase in taxes of $20. If the MPC equals 0.75, consumption will ___________ by $_________________ .
Blank 1: fall, drop, decrease, or decline Blank 2: 15
Suppose there is an increase in taxes of $5. If the MPC equals 0.8 consumption will ___________ by $_____________ .
Blank 1: fall, drop, or decrease Blank 2: 4
Knowing how ______ an economy is growing can give us an idea of how big it will be in the future.
Blank 1: fast, much, quickly, or rapidly
When we measure economic growth, we are interested in how _______ the economy is growing.
Blank 1: fast, much, quickly, or rapidly
A(n) ___________ good or service is the one that is sold to the end user and is not used to produce another product for subsequent sale. (Enter one word in the blank.)
Blank 1: final or finished
Only ___________ goods and services are included in GDP so that expenditures are not counted twice.
Blank 1: final or finished
Gross investment includes purchases of capital goods made by ________
Blank 1: firms, businesses, or suppliers
A price fixed above equilibrium that changes the incentives that both buyers and sellers face is called price _________
Blank 1: floor
Incentives faced by both buyers and sellers change in the face of a price _______
Blank 1: floor, ceiling, control, controls, or floors
The surplus and/or deficit is a(n) __________ because we measure the surplus or deficit at each fiscal year. National debt is a(n) _________ showing how much the government owes at a particular point in time.
Blank 1: flow Blank 2: stock
Invisible transactions that happen in a(n) _________ market will be included in GDP.
Blank 1: formal or legal
The natural rate of unemployment is equal to the sum of _________ and ____________ unemployment rates.
Blank 1: frictional Blank 2: structural
There are three types of unemployment: ___________ , __________ , and _________ .
Blank 1: frictional Blank 2: structural Blank 3: cyclical
Monetary payments in the form of net taxes flow to the ________ _ from households and businesses.
Blank 1: government
To provide national defense, the ______ needs resources such as labor and final goods such as military products.
Blank 1: government
Transfer payments and subsidies are payments the _________ makes to households and businesses that do not require an exchange of productive activity. (Enter one word in the blank.)
Blank 1: government
Countries with relatively high real GDP per capita tend to have relatively ______ life expectancy and _______ literacy rates.
Blank 1: high, long, or extended Blank 2: higher, longer, increased, high, or long
In the 10 years after NAFTA's enactment, from 1994 to 2004, growth in the United States was ________ than in the decade preceding it.
Blank 1: higher, larger, bigger, greater, more, faster, or high
Higher the amount of capital available to workers, higher the productivity of the nation. The more productive the nation, the _________ the wages and standards of living.
Blank 1: higher, more, better, or greater
Higher the amount of capital available to workers, higher the productivity of the nation. The more productive the nation, the ___________ the wages and standards of living.
Blank 1: higher, more, better, or greater
If actual output is less than the full-employment level, the current unemployment rate is ________ than the natural rate of unemployment.
Blank 1: higher, more, or greater
Goods and services that are produced by a household and are not exchanged in a market are known as ________ production.
Blank 1: home or household
Market supply is the __________ summation of the quantities supplied by individuals, firms, states, or even nations at each price over a fixed time period. (Enter one word in the blank.)
Blank 1: horizontal, quantity, total, or overall
When graphing a demand curve, we always place quantity demanded on the ____________ (horizontal/vertical) axis.
Blank 1: horizontal, x, or X
Consumption includes purchases made by ___________
Blank 1: households or consumers
Consumption includes purchases made by _____________
Blank 1: households, consumers, household, consumer, buyers, or buyer
The CPI will always be __________ for the base year because we are comparing the value of the basket to itself. (Answer in number.)
Blank 1: hundred, 100, or one hundred
The goods and services made in other countries that we purchase are called______ . (Answer in one word)
Blank 1: imports
Because ______ are not produced domestically, they need to be subtracted from gross domestic product.
Blank 1: imports or import
_______ are not counted in nominal GDP because they are produced somewhere else.
Blank 1: imports or import
Although we commonly use the expenditures approach to measure gross domestic product, we can also measure GDP by using the _______ approach.
Blank 1: income
Although we commonly use the expenditures approach to measure gross domestic product, we can also measure GDP by using the ________ approach.
Blank 1: income
Autonomous consumption is independent of your current ________ .
Blank 1: income
Consumers' willingness and ability to buy a good, service, or resource will change if ___________ (income/the price of a factor) changes, resulting in a new relationship between price and quantity demanded. (Choose an option from the ones given within parenthesis.)
Blank 1: income
National __________ is the sum of wages (and other labor compensation), rent, interest, and profits.
Blank 1: income
Suppose you have $30 to spend on tacos each week. When the price of tacos increases from $2.00 to $3.00, the purchasing power falls from 15 tacos per week to 10 tacos per week. This decrease in the quantity of tacos demanded illustrates the __________ effect.
Blank 1: income
The ________ approach to measuring GDP measures the value of all final goods and services in an economy using the income they generate.
Blank 1: income
Whether you use the _______ approach or the ______ approach to calculating nominal GDP, you should arrive at the same number.
Blank 1: income or incomes Blank 2: expenditure or expenditures
Real GDP is an imperfect measure of standard of living because it does not report the distribution of _______ .
Blank 1: income or wealth
Real GDP is an imperfect measure of standard of living because it does not report the distribution of ___________ .
Blank 1: income or wealth
If the MPC equals 0.8, a decrease in taxes of $2 billion will result in an overall ________ in real GDP of $ ______ billion.
Blank 1: increase or rise Blank 2: 8 or eight
A tax on producers ________ the cost of producing. (Choose between increases/decreases).
Blank 1: increases, raises, increase, or increasing
When the government needs to borrow money, it ________ the demand for loanable funds in the economy.
Blank 1: increases, raises, increase, or raise
A progressive tax is one in which the average tax rate ________ as income increases. (Enter one word in the blank.)
Blank 1: increases, rises, increase, or rise
In the real world, the opportunity cost of production _____________ as production increases. (Enter only one word in the blank.)
Blank 1: increases, rises, increase, or rise
Increasing the quantity of wheat supplied requires that farmers incur increasing costs for water, fertilizer, and other resources, thus _________ (increasing/decreasing) the opportunity cost of growing wheat.
Blank 1: increasing or raising
The law of __________ opportunity cost says that because some resources are better suited to producing one good or service than another, as the production of a good or a service increases, the ________ cost of each additional unit rises.
Blank 1: increasing, increased, or increase Blank 2: opportunity
A good for which there is an inverse relationship between the demand for the good and income is a(n) ________ (one word) good.
Blank 1: inferior
for ________ (one word) goods, an increase in income decreases demand, and a decrease in income increases demand.
Blank 1: inferior
Economists define _________ as a general increase in the prices of goods and services.
Blank 1: inflation
When calculating the ________ rate in an economy, the most straightforward approach is to compare the price level in one year with the price level in the next year.
Blank 1: inflation
When calculating the _________ rate in an economy, the most straightforward approach is to compare the price level in one year with the price level in the next year.
Blank 1: inflation
When a minimum wage results in unemployment, people may turn to ___________ markets to provide their labor.
Blank 1: informal or unorganized
When a minimum wage results in unemployment, people may turn to ____________ markets to provide their labor.
Blank 1: informal or unorganized
Invisible transactions that happen in a(n) _______ market will not be included in GDP.
Blank 1: informal, black, underground, or illegal
An opportunity cost is associated with the ________ payments made on the national debt.
Blank 1: interest
If the government had no national debt, it would not have to make ___________ payments, and other things could be done with these funds.
Blank 1: interest
a(n)__________ good or service is used to build or make another product that will be subsequently sold.
Blank 1: intermediate
Although consumption is the largest component of GDP, ____________ (one word) is the most volatile component of GDP which can make planning difficult.
Blank 1: investment
The level of gross ________ does not tell how fast the stock of capital in the economy is increasing.
Blank 1: investment
The level of gross _______________________ does not tell how fast the stock of capital in the economy is increasing.
Blank 1: investment
A new house falls under residential ________
Blank 1: investment or investments
In economics, ________ does not solely refer to saving money or buying stocks or bonds.
Blank 1: investment, investing, or investments
In economics, the term ________ refers to the formation of productive capital within an economy.
Blank 1: investment, investments, or investing
Transactions that happen either as a result of barter or illegally are not included in GDP because they are _______ .
Blank 1: invisible, immeasurable, hidden, intangible, unseen, underground, or unreported
The services of workers referred to as ___________ are counted as intermediate inputs because they are used up in making goods and providing services. (Remember enter only one word in the blank.)
Blank 1: labor
With a __________ expenditures multiplier, the swings in output will tend to be greater.
Blank 1: large, high, big, greater, larger, bigger, or higher
State and local government purchases combined are now ________ than federal government purchases which is a change from decades ago.
Blank 1: larger, greater, more, higher, or bigger
The larger the expenditures multiplier, the _________ the swings in output will tend to be.
Blank 1: larger, higher, bigger, greater, or more
When producers expect higher future prices, current supply shifts to the _____
Blank 1: left
The difference between expenditures at the full-employment level of output and expenditures when output is __________ than the full-employment level is called a recessionary gap.
Blank 1: less, below, or lower
The fraction of each additional dollar of income spent on consumption is called the __________ propensity to consume.
Blank 1: marginal
A(n) ____________ (one word) refers to a group of buyers and sellers who exchange one specific good, service, or resource, not necessarily at a specific place.
Blank 1: market
The overall or total demand for a good, service, or resource is called ________ (one word) demand.
Blank 1: market
The ________ (one word) demand represents the horizontal summation of individual demand curves.
Blank 1: market or aggregate
Any place where, or any mechanism by which, buyers and sellers interact to trade goods, services, or resources is a(n) ________ . (Enter one word in the blank)
Blank 1: market or marketplace
Prices and quantities traded are determined by the interaction of buyers and sellers in a(n) ____________ (one word).
Blank 1: market or marketplace
The _______________ (one word) wage is the most common form of price floor.
Blank 1: minimum
The percentage change in real income is approximately the percentage change in nominal income __________ (plus/minus) the percentage change in prices.
Blank 1: minus
The Consumer Price Index (CPI) is calculated ____________ . (Give the frequency of CPI calculation. Enter one word in the blank.)
Blank 1: monthly
A budget surplus occurs when a government receives _______ than it spends in any given fiscal year.
Blank 1: more
Households now spend _________ on services than they do on durable and nondurable goods which is a change from decades ago.
Blank 1: more
More often than not, the federal government spends ________ than it receives in revenue forcing it to borrow to finance its deficits.
Blank 1: more
The more capital that is available to its workers, the _______ productive a nation will be.
Blank 1: more
A budget surplus occurs when a government receives __________ revenue than it spends in any given fiscal year.
Blank 1: more or greater
The difference between expenditures at the full-employment level of output and expenditures when output is _______ than the full-employment level is called an inflationary gap.
Blank 1: more, above, higher, or greater
The difference between expenditures at the full-employment level of output and expenditures when output is _________ than the full-employment level is called an inflationary gap.
Blank 1: more, above, higher, or greater
The _____ can tell us how much changes in consumption, gross investment, government purchases, or net exports can affect real GDP. (Enter one word in the blank.)
Blank 1: multiplier
A fully employed economy is one that is operating at what economists call the ___________ rate of unemployment.
Blank 1: natural
Comparing the actual unemployment rate with the _________ rate of unemployment can help us gauge the current state of the economy relative to normal times.
Blank 1: natural
The _________ rate of unemployment in an economy equals the sum of frictional and structural unemployment rates.
Blank 1: natural
Technology may also contribute to changes in the frictional and ________ rate of unemployment.
Blank 1: natural or structural
If net investment is _______ , then the total capital stock of a country is shrinking.
Blank 1: negative
Net exports are _______ when imports exceed exports.
Blank 1: negative
If inventories are shrinking, inventory investment is _________
Blank 1: negative, decreasing, or falling
Monetary payments in the form of _________ taxes flow to the government from households and businesses.
Blank 1: net
The capital stock increases only if _________ investment is positive.
Blank 1: net
The circular flow model with the government uses ______ taxes because households and firms receive transfer payments and subsidies from the government.
Blank 1: net
The government uses the revenue from _______ taxes to make monetary payments or expenditures in the resource and product markets.
Blank 1: net
An increase in _______ GDP can be caused by increases in quantities or increases in prices.
Blank 1: nominal
In the base year, _______ income and _______ income are the same.
Blank 1: nominal Blank 2: real
We distinguish between _________ income and _______ income because receiving a salary increase is better than not getting one, but the additional dollars may not allow you to buy as many goods and services as last year due to inflation.
Blank 1: nominal Blank 2: real
A minimum legal price that is not set above the equilibrium price is a _________ - __________ price floor. (Enter one word in each blank.)
Blank 1: non Blank 2: binding
A good for which there is a direct relationship between the demand for the good and income is a(n) _______ good. (Enter one word in the blank.)
Blank 1: normal
for ______ goods, an increase in income increases demand and a decrease in income decreases demand. (Enter one word in the blank.)
Blank 1: normal
A(n) ________ cost is associated with the interest payments made on the national debt.
Blank 1: opportunity
As long as there are differences in _____________ costs, there are comparative advantages and there will be potential for trade to make both parties better off.
Blank 1: opportunity
Firms will be willing and able to produce more output only when prices rise, because the _________ cost of production is rising. (Enter one word in the blank.)
Blank 1: opportunity
If the terms of trade are the same as your __________ cost, you will receive no gains from the trade.
Blank 1: opportunity
The _________ cost of an investment equals the return that a firm forgoes if it uses its own funds.
Blank 1: opportunity
The ___________ cost of producing a good or a service can be found by solving for the cost of one good in terms of another.
Blank 1: opportunity
If we relied on nominal GDP to tell us how the economy was doing, it would almost always ________ -state the truth. (Choose from under or over.)
Blank 1: over
If inventories are growing, inventory investment is _________ . (Enter one word in the blank.)
Blank 1: positive
If the slope of a line is ________ , there is a positive relationship between the two variables.
Blank 1: positive, +, or upward
All else equal, a change in the _______ of a good, service, or resource changes the quantity supplied of the good, service, or resource.
Blank 1: price
The supply curve focuses entirely on ________ the changes in the of the product and holds everything else constant.
Blank 1: price
When a non ________ (one word) determinant of demand changes, the demand curve shifts.
Blank 1: price
When drawing a supply curve, we always place ___________ on the vertical axis and _______ supplied on the horizontal axis. (Use one word for each blank.)
Blank 1: price or P Blank 2: quantity or Q
When the __________ of a good changes, the quantity demanded changes.
Blank 1: price or cost
A change in _________ (one word), all else held constant, generates a change in quantity demanded.
Blank 1: price or prices
Along a demand curve, all else is held constant except the good's own ___________ (one word).
Blank 1: price or prices
Inflation is defined as the general increase in the __________ of goods and services produced in an economy.
Blank 1: price or prices
The income effect refers to the change in purchasing power when the ______ (one word) changes.
Blank 1: price or prices
The percentage change in real income is approximately equal to the percentage change in nominal income minus the percentage change in the ________ level.
Blank 1: price or prices
When graphing a demand curve, we always place __________ on the vertical axis.
Blank 1: price, prices, or P
Inventory investment is included in gross investment because output is counted in the year it is _________ , not the year it is ___________ .
Blank 1: produced, made, or produce Blank 2: manufactured or sold
In the circular flow model including the government the government obtains goods and services from the ________ market.
Blank 1: product
The points on the _________ possibilities frontier show how we are allocating our resources to the production of two different goods or services.
Blank 1: production
At a firm's level, higher expected prices can increase the current _______ while decreasing the current ________ to the market.
Blank 1: production or output Blank 2: supply
A(n) ________ tax is one in which the average tax rate increases as income increases.
Blank 1: progressive
The fraction of each additional dollar of income spent on consumption is called the marginal ____ to consume.
Blank 1: propensity or propensities
A(n) ________ tax is one in which the average tax rate stays the same as income increases.
Blank 1: proportional or Flat
In the circular flow model including the government, the government combines resources and goods and services and it supplies households and firms with _________ goods and services.
Blank 1: public
To calculate real GDP, multiply the _________ of each good produced in each year by base-year _______ .
Blank 1: quantities or quantity Blank 2: amount, prices, price, or amounts
There is an inverse relationship between price and __________ demanded. (Enter one word in the blank.)
Blank 1: quantity, amount, or product
Any change in technology and the availability and the quality of resources are likely to affect the __________ that producers are willing and able to supply to the market at every price.
Blank 1: quantity, amount, or quantities
The opportunity cost of investment is the ________ interest rate.
Blank 1: real
Using _____ (one word) GDP provides us with a better picture of the economy because it allows us to see what is happening to the amount of production over time without price changes skewing our calculation.
Blank 1: real
The percentage change in __________ income is approximately equal to the percentage change in ________ income minus the percentage change in prices.
Blank 1: real Blank 2: nominal
Sales taxes are ________ in that the tax rate falls as the amount taxed rises.
Blank 1: regressive
When firms build houses and sell them to consumers, they contribute to _______ investment.
Blank 1: residential or housing
In the circular flow model including the government, the government obtains resources from the _______ market.
Blank 1: resource
A(n) _________ is any item, whether a gift of nature, the result of production, or the result of human effort, that is used to produce goods and services. (Enter one word in the blank.)
Blank 1: resource, input, resources, or inputs
The circular flow model shows how households and firms interact in two key markets: the __________ market and the _________ market. (Enter one word per blank.)
Blank 1: resource, resources, factor, or factors Blank 2: product or products
The points on the production possibilities frontier show how we are allocating our _______ to the production of two different goods or services.
Blank 1: resources or resource
The opportunity cost of producing a good for one producer may be different from that of another because of differences in available ________ and ___________.
Blank 1: resources, resource, or inputs Blank 2: technology or tech
The quantity traded times the tax equals the tax _________
Blank 1: revenue
If the demand for loanable funds increases, interest rates ________ , which can have big effects on consumers.
Blank 1: rise, increase, increases, or rises
When consumption is greater than disposable income, _________ is negative.
Blank 1: saving or savings
The supply ______ displays the supply in a table showing the different prices and their corresponding quantities supplied.
Blank 1: schedule
Market participants who are willing and able to sell goods, services, or resources are ________
Blank 1: sellers, producers, suppliers, businesses, or firms
A(n) ________ is an intangible product or action that consumers, firms, or governments wish to purchase.
Blank 1: service
A(n) _________ is an intangible product or action that consumers, firms, or governments wish to purchase.
Blank 1: service
Until recently, as the composition of consumption has shifted toward ___________ , many states have seen their tax revenues from this source _________ .
Blank 1: services Blank 2: fall, decrease, drop, or decline
When a ____________ (one word) exists in a competitive market, buyers want to purchase more of a good or service than is supplied
Blank 1: shortage
When the government sets the price below market equilibrium, there will be a(n) _____________ in the market.
Blank 1: shortage
GDP ______________ the actual amount of output produced in an economy because informal market transactions result in increases in output produced.
Blank 1: underestimates, underestimate, under estimates, or under estimate
Markets that are part of the _________ economy exchanging illegal goods and services or engaging in illegal transactions are called black markets.
Blank 1: underground or informal
Economic activity in which goods and services are exchanged for payment but are not counted as part of GDP are exchanged in the _______ economy.
Blank 1: underground, informal, or barter
If discouraged workers see an improvement in economic conditions, they could decide to reenter the labor market start looking for work and be counted as ________ . (Use one word for the blank.)
Blank 1: unemployed
The labor force is important because it is the basis for calculating the __________ rate.
Blank 1: unemployment
The size of the ________ rate in an economy is an indicator of how hard it may be for a person to find another job.
Blank 1: unemployment
When more unemployed individuals find jobs, the ___________ rate decreases and the labor market improves.
Blank 1: unemployment
When the size of the labor force stays constant, a decrease in the ___________ rate is a good indicator for assessing the overall health of an economy.
Blank 1: unemployment
When drawing a supply curve, we always place price on the _______ axis and quantity on the ______ axis. (Enter one word in each blank.)
Blank 1: vertical or Y Blank 2: horizontal or X
The slope of a line is the amount of change in the variable on the _________ axis that occurs for a one-unit increase in the variable on the _________ axis.
Blank 1: vertical or y Blank 2: horizontal or x
To find the slope of a line connecting two points, take the difference in their _________ height and divide by the difference in their _________ distance.
Blank 1: vertical or y Blank 2: horizontal or x
When graphing the savings schedule, place savings on the _________ axis and disposable income on the _________ axis.
Blank 1: vertical or y Blank 2: horizontal or x
To be included in the labor force of an economy, someone needs to be _________ or actively searching for a(n) _________ .
Blank 1: working or employed Blank 2: job, position, employment, or opportunity
If the terms of trade are the same as your opportunity cost, you will receive _________ gains from the trade.
Blank 1: zero or no
With an MPC of 0.8, the tax multiplier will be equal to ___________ .
Blank1: -4
Which of the following pairs of goods most likely represents substitutes?
Butter and margarine
Gross domestic product equals:
C + I + G + NX.
The aggregate expenditures model states that in equilibrium output or real GDP (Y) will be equal to:
C plus I plus G plus NX.
The aggregate expenditures model states that in equilibrium output, or real GDP, Y, will be equal to:
C plus I plus G plus NX.
The aggregate expenditures model states that in equilibrium, output or real GDP (Y), will be equal to:
C plus I plus G plus NX.
Which of the following does the Bureau of Labor Statistics compute?
CPI
[(Value of a market basket in Year T / Value of a market basket in base year) X 100] = __________
CPI
Which of the following can be used to compare today's income levels to those of earlier years?
Consumer Price Index
An economic indicator used to measure the average price of a market basket of goods and services over time is the:
Consumer Price Index.
To determine your real wage, you should divide your nominal wage by the:
Consumer Price Index.
Which of the following plays a crucial role in determining the demand for a good or service?
Consumer expectation
Suppose Country A has a real GDP per capita of $18,000 and Country B has a real GDP per capita of $24,000. We can conclude that:
Country B is more likely to have a higher standard of living than Country A.
The Bureau of Labor Statistics (BLS) collects information on employment as part of the monthly:
Current Population Survey.
A new health study was released promoting the benefits of broccoli. As a result, consumer perception of broccoli improves. How will this event change the market for broccoli?
Demand for broccoli will increase at each price.
Increasing wages has caused incomes in the United States to increase. How will this impact the market for furniture, a normal good?
Demand for furniture will increase.
Suppose goods A and B are complements. If the price of good A increases, what happens to the demand for good B?
Demand shifts to the left.
An increase in the number of retired individuals will have what effect on the market for houses in retirement communities?
Demand will increase at each price.
One problem with developing countries is that measures of GDP often underestimate the amount of production that actually occurs. Why is this true?
Developing countries often have relatively large informal markets.
Why is the supply curve upward-sloping?
Producing significantly more of a product involves increased costs so the price of the good must rise for sellers to be willing and able to increase the quantity of the good they supply to the market.
Payments to entrepreneurial ability are split into two subcategories:
Proprietor's income and corporate profits
In the presence of inflation, why do we use real GDP instead of nominal GDP?
Real GDP adjusts for inflation.
_________ is/are also called factors of production since they are transformed into output during the production process.
Resources
Diminishing marginal utility describes the:
negative relationship between the quantity of a good, service, or resource and the marginal utility obtained from each additional unit consumed in a given period of time.
The dollar value of all the final goods and services that are produced during a fixed period of time is:
nominal gross domestic product.
The expenditures or the dollar value of all the final goods and services that are produced during a fixed period of time are:
nominal gross domestic product.
The actual number of dollars received in exchange for the different resources available in the economy is:
nominal income.
The number of dollars you receive for your labor is:
nominal income.
A minimum legal price that is set below the market price is called a
non-binding price floor.
The law of increasing opportunity costs exists because
not all resources are well-suited for all production.
Medicare taxes are an example of a:
proportional tax.
Consider the following statement: "A system where everyone pays the same percentage in taxes is fair." This person supports:
proportional taxes.
When the price of a good or service decreases:
quantity demanded increases.
When there is a movement along a demand curve, we say that there has been a change in:
quantity demanded.
Investment demand slopes downward because the:
quantity of investment demanded increases as interest rates fall
Any change in the availability and quality of resources and technology will likely affect the:
quantity producers are willing and able to supply to the market at every price.
Self-interest, marginal decision making, and optimization form the basis for:
rational decision making.
Real GDP per capita is the same as:
real GDP per person
The dollar value adjusted for inflation of all final goods and services produced in a country during a fixed period of time is called:
real GDP.
The measure of the purchasing power of what you earn every month is:
real income.
The measure of the purchasing power of what you earn every month:
real income.
doc 1.8 The graph best represents a(n):
recessionary gap.
Other things remaining constant - an increase or decrease in the quantity supplied of a good at every price is:
reflected by a shift of the supply curve.
The term "poor" is a(n) _____ term; we must define it in comparison with some benchmark.
relative
In the circular flow model, households can obtain the income they need to buy the products they want to consume only by selling their ______________ - also known as factors of production. (Enter one word in the blank.)
resource
Any item, whether a gift of nature, the result of production, or the result of human effort, that is used to produce goods and services is a:
resource.
Because the world is characterized by scarcity, people must allocate the limited __________ at their disposal among many competing uses.
resources
Inputs used to produce goods and services are:
resources
An increase in supply is shown as a:
rightward shift of the supply curve.
You can do two things with disposable income:
save it or spend it on consumption
Sales of ___________ do not represent new production, just the reallocation of past production that was already counted as part of GDP in another year.
secondhand goods
The idea that people choose to do the things that interest them is:
self-interest.
The anticipated future outcomes, including prices, that sellers associate with the production of a good, service, or resource are expectations of the:
seller.
Market participants who are willing and able to sell goods, services, or resources are known as:
sellers
An intangible product that consumers wish to purchase is a:
service
Taxes and subsidies that are placed on businesses are likely to:
shift the supply curve.
An increase in supply is a:
shift to the right.
A strong economic model allows us to analyze the economic events of the world by:
simplifying a very complex economic world.
The size of the producer subsidy will influence the:
size of the shift in supply.
As winter approaches, we would expect that the demand for:
skis increases.
In 2018, the poverty line for an individual in the United States was:
slightly less than the world average income.
Because the only category of spending that depends on income is consumption, the:
slope of the aggregate expenditures line is the same as the slope of the consumption schedule.
To simplify analysis in economics, supply curves are often drawn as:
sloping lines.
In the real world, the opportunity cost increases as production increases, because:
some resources are better suited for producing some goods or services than others.
The demand curve shifts when:
something other than the price of a good changes
Because of differences in opportunity costs, individuals and businesses
specialize in the production of the good for which they wield a comparative advantage.
The size of the producer tax determines the:
-size of the supply shift.
Which of the following occurs when the price of a good increases?
There is an increase in the quantity supplied.
If incomes increase during a period of expansion, goods considered to be inferior will experience:
a decrease in demand at each price.
When demand shifts to the left, it is called:
a decrease in demand.
An increase in the price of a good's complement will cause:
a decrease in the demand for the good.
A decrease in demand means:
a decrease in the quantity demanded at every price, so the curve shifts to the left.
Jamie has been out of work for a full year. She has given up searching for work. She is:
a discouraged worker.
All of the following are counted as part of GDP except:
a farmer growing their own food.
Suppose a manufacturer produces soccer balls and footballs. If the cost of producing a soccer ball decreases, the opportunity cost of producing:
a football will increase.
The sum of the marginal propensities to consume and save equals 1 because:
a fraction of each additional dollar is consumed and the remaining fraction is saved.
An excise tax is a tax on:
a good or service that depends on the units sold
if a country produces a lot of capital, it will experience:
a lot of economic growth shifting the production possibilities curve outward.
A binding price ceiling is:
a maximum legal price set below the equilibrium price
A binding price floor is:
a minimum legal price set above the equilibrium price
A nonbinding price floor is:
a minimum legal price that is not set above the equilibrium price.
A change in quantity demanded can be described as:
a movement along the demand curve that results from a change in the good's own price.
Using a production possibilities curve, economic growth resulting from the use of previously idle resources is shown as:
a movement toward the curve.
An example of a new technology that can increase productivity is:
a new and improved machine to pick coffee beans.
A characteristic of demand for a good, service, or resource other than its own market price is:
a nonprice determinant of demand.
The market adjusts to a new equilibrium price and quantity when:
a nonprice determinant of supply changes.
If demand shifts to the right when income increases, we can conclude that the good is:
a normal good.
A change in income is illustrated by:
a shift in the demand curve.
When more or less of a good, service, or resource is supplied at every price, there is:
a shift of the supply curve to the right or left.
If _____ were not allowed to adjust, a shortage would persist, and the market would not return to equilibrium. (Use one word for the blank.)
prices
Suppose you get $100 for your birthday and you spend $75 on a new smartphone and save the remaining $25. The marginal propensity to consume or MPC is equal to ________ .
Blank 1: 0.75 or .75
Suppose you get $500 for your birthday and you spend $400 and save the remaining $100. The marginal propensity to consume or MPC is equal to _________ . (Enter a number in the blank.)
Blank 1: 0.8 or .8
A market is:
a system where buyers and sellers interact to trade goods, services, or resources.
When economists refer to a "good," they are referring to:
a tangible product that consumers, firms, or governments wish to purchase.
The demand schedule displays the demand for a product:
in a table, showing the different prices and the corresponding quantities demanded.
Due to the multiplier effect,:
an initial change in aggregate expenditure leads to a larger final change in real GDP
An inferior good has:
an inverse relationship between demand for the good and income.
Using a production possibilities curve, economic growth resulting from additional resources is shown as:
an outward shift of the curve.
At equilibrium:
anyone who wants to buy or sell a unit of the good can do so at the market price.
If the price of tortilla chips decreases, and as a result, you buy more salsa, then tortilla chips and salsa:
are complements.
Surpluses and shortages:
are denoted in units of the product itself.
Substitute goods:
are viewed as replacements for other goods.
The law of demand states that:
as the price of a good, service, or resource rises, the quantity demanded will fall, all else held constant.
Consumption equals:
autonomous expenditure plus the marginal propensity to consume times income minus taxes.
Suppose that tax revenue is $300 billion and that government spending is $300 billion. The budget is:
balanced
When the market is in equilibrium, the price that consumers pay and that producers receive:
balances the marginal benefit and marginal cost of consuming and producing a good or service.
The income approach to measuring GDP measures the total value of all final goods and services in an economy:
based on the income they generate.
Someone needs to be working or actively searching for a job to:
be included in the labor force.
Increased imports means greater competition from abroad which:
benefits consumers in the form of lower prices
In order for a price floor to be:
binding, the price floor must be set above the equilibrium price.
The change in price or quantity will be indeterminate when:
both demand and supply change.
The direction of change in price or quantity will depend on the magnitude of the shifts in demand and supply when:
both demand and supply change.
When a tax is imposed on a market:
both producers and consumers are affected, no matter who pays the tax
The taxes and subsidies that are under consideration in analyzing supply are applied to:
businesses.
When a shortage exists in a competitive market, the price provides incentives for:
buyers to decrease the quantity of a good or service purchased in the market.
The type of tax that is assessed is determined:
by using the average tax rate.
The demand curve:
can be a straight line or a nonlinear curve.
A change in income:
can increase or decrease demand.
In economics, depreciation refers to:
capital that is worn out or obsolete
A change in consumer expectations on the price of a good will:
change demand for the good at each price.
A movement along a demand curve is called a(n) __________ , and a shift in a demand curve is called a(n) __________.
change in quantity demanded; change in demand
Assuming taxes are zero, changing disposable income in the aggregate expenditure model:
changes the intercept of the consumption schedule.
A model that concisely describes how goods, services, resources, and money flow back and forth in an economy is the:
circular flow model.
doc 1.1 Using these production graphs, in which product should Julia specialize?
coffee
If you are relatively better at something, then you are said to have a(n) _____ advantage in that activity.
comparative
The producer with the lowest relative opportunity cost has a(n) _____ advantage and should specialize in the production of that good.
comparative
When two countries specialize in producing the goods for which they have a(n) _____ advantage and then trade with each other, total production and consumption increase.
comparative
Gains from trade can be measured by:
comparing the levels of consumption available before and after the trade.
When the price of spaghetti sauce increased, the demand for spaghetti noodles shifted to the left. By this description, these two must be:
complements.
The simple model of production assumes that the opportunity cost of production is:
constant
When you see a production possibilities frontier (PPF) drawn as a straight line, the opportunity cost of one good or service (in terms of units of the other good or service that must be given up) is assumed to be:
constant
An economic indicator known as the CPI is the:
consumer price index
Gross domestic product is equal to the total sum of four categories:
consumption (C), gross investment (I), government purchases (G), and net exports (NX).
Assuming taxes are zero, the equilibrium consumption and disposable income occur where the:
consumption schedule crosses the equilibrium line.
Gross domestic product equals the total sum of four categories:
consumption, gross investment, government purchases, and net exports.
Gross domestic product is equal to the total sum of:
consumption, gross investment, government purchases, and net exports.
Aggregate expenditures comprise:
consumption, investment, government spending, net exports
Resources (such as land) and technology (such as the ability to draw water from a well):
contribute to how a good or service is produced for the market.
When the marginal benefit of an activity equals the marginal _________, there is no incentive to either increase or decrease the level of the activity performed._
cost
If consumers expect prices to fall,:
current demand will fall
In calculating real GDP, we use:
current year quantities and base year prices
There is a technological improvement in the process for harvesting oranges. As a result, the cost of producing oranges will:
decrease and supply will increase.
As the amount of an activity increases, its marginal benefit:
decreases.
The equilibrium quantity increases and the equilibrium price is indeterminate when:
demand and supply both increase.
The equilibrium price is indeterminate when:
demand and supply change in the same direction
If both consumers and producers have a change in expectations about future prices,:
demand and supply will shift.
When the price of a related good, such as a substitute or a complement, changes:
demand can increase or decrease.
An increase in the price of a good's complement will shift the:
demand curve of the good to the left.
A tax on demanders shifts the:
demand curve to the left
The nonprice determinants or other factors that affect demand are held constant for any given:
demand curve.
The ________ and the ________ are two ways to show the overall relationship between the price of a good and the quantity demanded for the good.
demand curve; demand schedule
The equilibrium price decreases and the equilibrium quantity is indeterminate when:
demand decreases and supply increases.
If consumers believe that prices will decrease in the future,:
demand decreases today.
When income decreases,:
demand for an inferior good increases
Suppose there is a reputable, scientific study that finds substantial health benefits associated with the consumption of pizza. In this case, we expect:
demand for pizza to increase.
An increase in the price of a good's substitute will shift the:
demand for the good to the right.
If an event affects demand such that less of a good, service, or resource is demanded at all prices, we say that:
demand has decreased.
When more of a good, service, or resource is consumed at all prices, we say that:
demand increased.
A normal good, as opposed to an inferior good, is a good for which:
demand increases as income increases.
When a nonprice determinant of demand changes, a change in:
demand occurs, which has the effect of shifting the entire demand curve to the right or left.
A tabular representation of the relationship between the price of a good, service, or resource and the quantity that individuals and firms are willing and able to buy, all else held constant, describes the:
demand schedule.
The terms "normal" and "inferior" refer to what happens to:
demand when income changes.
When income changes,:
demand will shift right or left.
Prices of related goods, complements and substitutes, are:
determinants of demand.
The average tax rate:
determines whether the tax imposed is regressive, progressive, or proportional.
According to a popular statement in economics, "if not for _______________, we should be able to grow the world's food supply in a flower pot".
diminishing marginal productivity
If a fitness center owner decides to hire additional employees but does not change the size of the fitness center or the amount of capital available to its employees to perform their tasks, the fitness center will likely experience:
diminishing marginal productivity.
The principle that if at least one input of production is fixed, the marginal productivity of additional variable resources will eventually fall, all else held constant, is known as:
diminishing marginal productivity.
As the benefit of consuming more of a good falls with each additional unit, the price consumers are willing and able to pay also falls with increased consumption. This scenario describes:
diminishing marginal utility.
The price of a good and the quantity supplied are:
directly related
When savings is negative, it is called:
dis-saving.
In choosing which type of tax to use, a government takes into consideration many factors including:
discouraging or encouraging certain behavior.
Assuming taxes are zero, a change in disposable income in the aggregate expenditure model:
does not change the shape of the consumption schedule.
Investment demand is:
downsloping.
Due to the inverse relationship between the price of a good and the quantity demanded for the good, we expect that the demand curve is:
downward-sloping.
A shift of the demand curve is:
due to a change in demand.
The quality of a(n) ________ model can be measured by how well it reflects reality and whether it gives us insights that can be used in the real world.
economic
An increase in real GDP or real GDP per capita is called:
economic growth.
If the labor force in an economy is 160 million and the number of employed is 125 million, the number of unemployed equals _____________ million workers.
Blank 1: 35, thirty-five, or 35 million
Stefan works as a cook for McDonald's. He is 23 years old. Stefan is:
employed
The tax on a good or service that depends on the units sold, not the price of the good or service is called _____ tax.
excise
Because of diminishing marginal returns, the:
expected rate of return decreases as more investment occurs.
If output is higher than the full-employment level then:
expenditures are too high.
Because of diminishing marginal utility, the benefit of consuming more of a good:
falls with each additional unit, so the price consumers are willing and able to pay falls with increased consumption.
Sources of revenue are the same for federal, state, and local governments.
false
In the circular flow model, the market economy creates:
flows of goods and services resources and money.
Markets, such as the New York Stock Exchange and your local retail store, are ______ markets.
formal
If a transaction happens in a(n) _____ market — that is sold by a licensed seller — it will be included in GDP; if the transaction happens instead in a(n) _____ market — one that is either illegal or otherwise untraceable — it will not be included in GDP.
formal; informal
The natural rate of unemployment changes over time because:
frictional unemployment structural unemployment and the labor force change on a continuous basis.
A tangible product that consumers, firms, or governments wish to purchase is a:
good
Complements are:
goods, services, or resources that are consumed together.
When aggregate expenditures increase, the change in equilibrium real GDP is:
greater than the change in aggregate expenditures.
When someone has stopped actively searching for a position,:
he or she is not considered a part of the labor force.
The nonprice determinants or other factors that affect demand are:
held constant for any given demand curve.
The non-price determinants or other factors that affect supply are:
held constant for any given supply curve.
Real GDP growing at 4 percent is considered to be a(n):
high growth rate for an industrialized country and suggests robust economic growth.
The supply curve will shift to the left in the current period when producers expect:
higher prices in the future and there are fewer sellers.
The law of supply tells us that:
higher prices of goods result in higher quantities of goods being supplied.
When we draw a demand curve for a good or service, we focus only on the price of the good and the quantity demanded at each price. In this way, we are:
holding all else constant.
Market supply is the _____ summation of the quantities supplied by individuals - firms - states - or even nations at each price over a fixed time period.
horizontal
Shortages and surpluses are represented by the:
horizontal distance between the quantity demanded and the quantity supplied.
If an economy exports $12 billion worth of goods and services and imports $8 billion worth the amount of its net exports is $ ______ billion. (Only use number; $ has been provided for you.)
Blank 1: 4 or four
Suppose that tax revenue is $300 billion and that government spending is $250 billion. The budget is:
in surplus.
If a good is normal, then:
income and demand for the good are positively related.
Consumers' willingness and ability to buy a good, service, or resource will change if:
income changes, which will result in a new demand relationship.
Normally when you buy a sandwich, you also buy a cookie for $2. Today when you buy your sandwich, the cookies are $1, and you buy two. This scenario illustrates the:
income effect.
You are out on a Friday evening and decide to stop for an ice-cream cone. Usually you buy a single-scoop cone for $2. Tonight the shop is offering two single-scoop cones for $3, so you buy one for you and one for your friend. This scenario illustrates the:
income effect.
Disposable income is:
income minus taxes.
If the number of buyers increases, the demand will:
increase and the curve will shift to the right.
Suppose there is a decrease in taxes of $15. If the MPC equals 0.8, consumption will ______ by $______.
increase; 12
On the supply side of the market, when the price of a good increases, the quantity supplied of the good:
increases
A tax on producers:
increases the cost of producing.
According to the law of _____ , producing significantly more of a product than current levels will come at a higher cost, so the price of the good must rise for sellers to be willing and able to increase the quantity of the good they supply to the market.
increasing opportunity costs
Taxes are generally collected from:
individuals and firms
In general, an increase in the money supply causes:
inflation.
Expected rate of return and interest rate are two factors that:
influence the investment decisions of firms.
Markets such as swap meets or garage sales are called _____ markets.
informal
Resources are also called
inputs because they are transformed into output in the production process.
GDP cannot account for:
intangibles such as happiness.
If investment spending increases by $4 billion and real GDP increases by $16 billion, the expenditures multiplier is
Blank 1: 4 or four
Suppose at the beginning of the year there are ten cranes in the economy. During the course of the year, two cranes wear out and are replaced. At the same time, net investment is equal to two cranes. Gross investment is equal to ______ cranes.
Blank 1: 4 or four
Suppose there are 150 million workers in the labor force of an economy. Out of those workers, 2.5 million are frictionally unemployed and 3.5 million are structurally unemployed. The natural rate of unemployment in the economy is _______ percent.
Blank 1: 4, 4.00, 4.00%, or 4%
Suppose there are 150 million workers in the labor force of an economy. Out of those workers, 2.5 million are frictionally unemployed and 3.5 million are structurally unemployed. The natural rate of unemployment in the economy is _________ percent.
Blank 1: 4, 4.00, 4.00%, or 4%
Suppose 155.2 million workers are employed and 6.8 million are unemployed in an economy. The unemployment rate equals __________ percent. (Round off your answer to one decimal place.)
Blank 1: 4.2, 4.2%, 4.1, 4.1%, 4.19, or 4.19%
If 164.6 million workers are employed and 7.4 million are unemployed, the unemployment rate equals __________ percent. (Round off your answer to one decimal place.)
Blank 1: 4.3, 4.3%, 4.30%, or 4.30
If the multiplier equals 4, an increase in investment spending of $10 billion will result in an overall increase in real GDP of $ ________ billion.
Blank 1: 40, forty, or $40
Suppose that nominal income is $5,000 and the CPI is 115. Real income is equal to $ __________. (Round off your answer to the nearest whole number.)
Blank 1: 4348 or $4348
If investment spending increases by $15 billion and real GDP increases by $75 billion, the expenditures multiplier is ________.
Blank 1: 5 or five
With an MPC of 0.8, the expenditures multiplier will equal ___________ .
Blank 1: 5 or five
Suppose an economy is in equilibrium with real GDP equal to $600 billion, gross investment equal to $12 billion, a marginal propensity to consume of 0.8, and an expenditures multiplier of 5. If gross investment decreases by $5 billion, the aggregate expenditures schedule shifts down by $ ________ billion. The new equilibrium GDP will be $.___________ billion.
Blank 1: 5 or five Blank 2: 575 or five hundred seventy five
If the labor force equals 143 million workers and of those 135.5 million workers are employed and 7.5 million are unemployed, the unemployment rate equals _____________ percent. (Round off your answer to one decimal place.)
Blank 1: 5.2, 5.2%, 5.20%, 5.24, or 5.24%
If business fixed investment is equal to $35 billion, residential investment is equal to $15 billion, and inventories have increased by $5 billion, then gross investment is $ _______ billion. (Only use number; $ has been provided for you.)
Blank 1: 55
Suppose that at the beginning of the year, there are ten cranes in the economy. During the course of the year, three cranes wear out and are replaced. At the same time, net investment is equal to three cranes. Gross investment is equal to ________ cranes.
Blank 1: 6 or six
The natural rate of unemployment for an economy experiencing frictional unemployment of 3 percent and structural unemployment of 4 percent is _________ percent.
Blank 1: 7 or 7%
If an economy exports $15 billion worth of goods and services and imports $8 billion worth, the amount of its net exports is $ _____ billion. (Only use number; $ has been provided for you.)
Blank 1: 7 or seven
Suppose the real GDP of a country was $50 billion in Year 1. In year 2, the real GDP rose to $54 billion. The growth rate of real GDP was _________ %. (Enter a number in the blank.)
Blank 1: 8 or eight
Suppose that in the last year consumers spent $10 billion on durable goods, $40 billion on nondurable goods, and $35 billion on services. Consumption equals $ _______ billion. (Only use number; $ has been provided for you.)
Blank 1: 85 or eighty-five
Suppose that last year a total of $15 billion in goods and services was exported to other countries while $6 billion was imported. Net exports equals $ _____ billions.
Blank 1: 9 or nine
The ________ Price Index allows us to calculate the best inflation measure for the typical consumer in the economy.
Blank 1: Consumer
Purchases of capital equipment by firms or military equipment by the government are not included in the ___________ Price Index, but are included in the _______ Price Index.
Blank 1: Consumer Blank 2: GDP
__________ includes all expenditures made by households on goods and services such as clothing, food, electronics, and recreation.
Blank 1: Consumption or Consumer spending
___________ is the largest component of GDP in the United States.
Blank 1: Consumption or Consumer spending
__________ unemployment, which results from fluctuations in the business cycle, generally lasts longer than ________ unemployment.
Blank 1: Cyclical Blank 2: frictional
______ is the amount of capital that wears out or is used up during a year.
Blank 1: Depreciation
________ (Discouraged/Incumbent) workers are people who lost jobs, looked for a while with no success, and then gave up looking for work.
Blank 1: Discouraged
______ growth is calculated using real GDP or real GDP per capita.
Blank 1: Economic
________ _________ is an increase in real gross domestic product or real gross domestic product per capita. (Enter one word in each blank.)
Blank 1: Economic Blank 2: growth
The ________ Price Index does not include purchases of imported or used products, but the _________ Price Index does account for them.
Blank 1: GDP Blank 2: Consumer
In the circular flow model, _____ can obtain the income they need to buy the products they want to consume only by selling their resources.
households
In the simple circular flow model, firms will buy resources from and sell products to:
households
The two parties involved in the simple circular flow model are:
households and businesses.
In the market for labor:
households are on the supply side, and firms are on the demand side.
If there is only consumption spending, the equilibrium level of real GDP is found at the:
intersection of the consumption schedule and the equilibrium line.
Technology refers to:
knowledge, inventions, and innovations that can potentially increase resource productivity.
The largest two categories of national income are:
labor and profits.
The multiplier effect causes the:
larger change in real GDP resulting from an increase in expenditures.
Some economies started to grow faster than ever before starting in the:
late 1600s.
You go to a baseball game on "dollar dog" night. In the first inning, you gobble up three hot dogs loaded with toppings. In the fourth inning, you have one more hot dog, but it takes a bit longer to finish. In the eighth inning, you buy one more hot dog but eat only half. This scenario is an illustration of the:
law of diminishing marginal utility.
You have just returned from seeing a movie with a friend and are relaxing at home. Another friend calls and asks whether you will watch the same movie with her. Though you enjoyed the movie, you are not interested in watching it again. This scenario is an example of the:
law of diminishing marginal utility.
Suppose a farmer has three kinds of land for growing peaches; good - better - and best. As the farmer increases production - she will use the best land first - and costs will be low. At some point - she will run out of the best land and will have to start using the better land - and costs will be a little higher. This describes the:
law of increasing opportunity cost.
A change in demand:
leads to a shift of the demand curve.
When unemployed workers become discouraged, they:
leave the labor force and the unemployment rate goes down, even though the labor market is worsening.
When the price of a good rises, we can expect that:
less of the good will be purchased.
As disposable income rises so does consumption, but not by the full amount because the marginal propensity to consume is:
less than 1.
Taxes charged on and subsidies provided to consumers are:
likely to shift the demand curve.
Real GDP per capita in China is:
lower than in the United States, but China's growth rate is making it possible for the Chinese to catch up to the United States.
A subsidy to producers:
lowers the cost of producing.
The "all else held constant" assumption:
makes it possible to study how a change in only the price affects the quantity demanded.
The additional benefit associated with one more unit of an activity is the _____ benefit.
marginal
When you decide to turn off the bedroom light on your way to the kitchen so that you can save a little money on your electric bill, you are engaging in:
marginal decision making.
When price ceilings are in effect:
market participants have a strong incentive to work around the laws
Sellers are:
market participants who are willing and able to sell goods, services, or resources.
Mathematically, the tax multiplier equals:
-MPC/(1-MPC)
If adhesive technology improves, the:
-Supply of wooden toys will increase.
If wood prices fall, the:
-Supply of wooden toys will increase.
The horizontal summation of the quantities supplied by individuals - firms - states - or even nations at each price over a fixed time period represents the:
market supply.
The overall - or total - supply of a good - service - or resource is the:
market supply.
___________ investment occurs when firms invest in new buildings or replace machines, adding to the capital stock that will allow the economy to produce more in the future. (Enter one word in the blank.)
Blank 1: Gross or Fixed
____________ (Exports/Imports) are not counted in nominal GDP because they were produced somewhere else. (Select answer from one of the options given.)
Blank 1: Imports
The sum of individual supply curves added together reflect the:
market supply.
The total quantity all producers are willing and able to produce at every price is known as:
market supply.
_________reduces the purchasing power of those receiving an annuity or any other fixed payment over time such as a pension.
Blank 1: Inflation
_____________ goods are not part of GDP because their prices are included in the final price of the products.
Blank 1: Intermediate
The reason why __________ goods and services are not included in the calculation of GDP is that they would be counted twice.
Blank 1: Intermediate, Second-hand, Used, or Secondhand
In economics, ________ refers only to the purchases of new physical capital by firms and households.
Blank 1: Investment
__________ is the most volatile component of GDP.
Blank 1: Investment
________ is much more volatile than real GDP as a whole.
Blank 1: Investment or Investments
_________ refers to spending by firms on capital goods designed to improve the future productivity of the firms.
Blank 1: Investment, Investments, business investment, or business investments
Labor force statistics are collected by the U.S. Bureau of __________ Statistics.
Blank 1: Labor
The CPI is computed by the U.S. Bureau of _________ Statistics.
Blank 1: Labor
More imports mean:
more competition from foreign firms.
When there is an increase in demand,:
more is demanded at every price.
If manufacturing technology improves,:
more manufactured products will be supplied.
If consumers' perceptions of a good improve,:
more of the good will be demanded at each price
If actual output is greater than the full-employment level, the current unemployment rate is ________ than the natural rate of unemployment.
Blank 1: Lower
________ investment is a good predictor of future GDP.
Blank 1: Net
________ income is the actual number of dollars received in exchange for the different resources available in the economy.
Blank 1: Nominal
_________ income is the number of dollars you receive for your labor.
Blank 1: Nominal
____________ goods include goods such as food and clothing.
Blank 1: Nondurable, nondurable consumer, nondurables, Non-durable, or Non-durables
___________ is always equal to ___________ , so we use the same abbreviation for both (Y). (Enter one word in each blank.)
Blank 1: Output Blank 2: income
__________ refers to the quantity of output firms produce.
Blank 1: Production
_GDP measures the constant dollar value of all final goods and services produced in a country during a fixed period of time.
Blank 1: Real
________ income equals nominal income divided by the Consumer Price Index times 100.
Blank 1: Real
___________ income measures the purchasing power of what you earn every month.
Blank 1: Real
When we say in economics that there is an increase in supply, we mean that:
more output is being supplied at every price, all else held constant.
Because informal-market transactions result in increased output produced, GDP ___________ -estimates the actual amount of output produced in an economy. (Add one word as your answer for the blank)
Blank 1: under
More often than not, the federal government spends __________ it receives, forcing it to borrow to finance its deficits.
more than
In the United States, the GDP Price Index and the CPI tend to:
move together and in the same direction.
A change in the quantity demanded refers to a:
movement along the demand curve as the price changes.
When aggregate expenditures increase, the change in equilibrium real GDP is greater than the change in aggregate expenditures because of the:
multiplier effect.
A fully employed economy is one that is operating at what economists call the:
natural rate of unemployment.
Nominal GDP is a good snapshot of the current value of production in an economy but it cannot be used to make comparisons over time because:
prices change.
When we consider the effects of taxes and subsidies on the market for goods, services, and resources, we evaluate how taxes and subsidies affect:
producers
In the circular flow model, the two markets are the factor market and the:
product market.
Daniel has an annual taxable income of $25,000 and pays $2,500 in income taxes. Julia has a taxable income of $45,000 and pays $4,500 in income taxes. This tax is ___.
proportional
A change in quantity demanded is:
...the change in the quantity of a good, service, or resource that consumers, firms, and governments are willing and able to buy due to a change in its price. A change in quantity demanded is due to a change in the good's own price.
Which of the following would shift the supply curve for guitars?
A tax is implemented on guitars
Which of the following events would increase the cost of production?
A tax is placed on the market.
Which of the following events will increase supply?
A technological improvement that reduces the cost of production
Suppose you get $500 for your birthday and you spend $400 and save the remaining $100. The marginal propensity to save or MPS is equal to ________ .
Blank 1: 0.2 or .2
Suppose you get $100 for your birthday and you spend $75 on a new smartphone and save the remaining $25. The marginal propensity to save or MPS is equal to _______ .
Blank 1: 0.25 or .25
Calculate the equilibrium Y for Country A using the following information: A= $100, G = $80, I = $150, NX = −$50, T = $125, and MPC = 0.75.
$745 Reason: To find Ye, you need two equations Y=AE and AE = A + mpc(Y−T) + I + G + NX. Substitute the numbers from the question to get AE = 100 + 0.75(Y - 125) + 150 + 80 + −50. Simplify this expression to get AE = 0.75Y + 186.25. Now, set AE = Y to get Y = 0.75Y + 186.25. Solving for Y, you get $745.
Given the equilibrium equation: 'Y_e=(1/(1-MPC))(A+I+G+NX)+((-MPC)/(1-MPC))T' which term represents the tax multiplier?
'(-MPC)/(1-MPC)'
Given the equilibrium equation: 'Y_e=(1/(1-MPC))(A+I+G+NX)+((-MPC)/(1-MPC))T' which term represents the GDP or expenditures multiplier?
'1/(1-MPC)'
Which of the following would be considered nonprice determinants of the demand for flour?
- A change in buyers' expectation of the price of flour next week - A change in the number of buyers of flour - A change in consumer preferences to bake
Which of the following is a possible outcome if a nonprice determinant of supply changes?
- An increase in supply at all possible prices - A decrease in supply at all possible prices
Which of the following are reasons the demand curve is downward sloping? (Select all that apply)
- Income effect - Diminishing marginal utility - Substitution effect
At the federal government level, which of the following are the main sources of income? - Individual and corporate income taxes - Excise taxes - Tariffs - Payroll taxes
- Individual and corporate income taxes - Excise taxes - Payroll taxes
Which of the following variables influence investment decisions? - Interest rate - Expected rate of return - Marginal propensity to consume - Number of other firms - Marginal propensity to save
- Interest rate - Expected rate of return
Indicate which of the following are not included directly in the calculation of GDP. - Final goods - Final services - Intermediate goods - Government spending on goods - Used goods
- Intermediate goods - Used goods
Which of the following is true of real GDP? - It tells us whether prices rose in a country. - It tells us how much output was produced in a country. - It tells us whether wages rose higher than prices. - It tells us whether more output was produced in one year relative to another.
- It tells us how much output was produced in a country. - It tells us whether more output was produced in one year relative to another.
Which of the following statements is true? Multiple choice question. - The income effect causes changes in tastes and preferences, while a change in income leaves the taste and preferences unchanged. - The income effect causes the demand curve to shift, while a change in income causes a movement along the demand curve. - The income effect causes a movement along the demand curve, while a change in income shifts the demand curve. - The income effect causes changes in the price, while a change in income changes the supply.
- The income effect causes a movement along the demand curve, while a change in income shifts the demand curve.
Which of the following are reasons for the demand curve sloping downward?
- The substitution effect - Diminishing marginal utility - The income effect
Which of the following are examples of resources? - Workers hired to pick grapes at a vineyard. - An oven used to bake bread at a bakery. - Social Security payments made to retired workers. - A new technology improving the production process for tractors.
- Workers hired to pick grapes at a vineyard. - An oven used to bake bread at a bakery.
The equilibrium condition of the aggregate expenditures model is: - (-MPC/1-MPC) = AE - (Change in RGDP/Change in taxes) = AE - Y = C + I + G + NX - AE = Y
- Y = C + I + G + NX - AE = Y
The demand curve for a normal good is downward sloping because
- as prices rise, the purchasing power of each dollar earned falls, and consumers are willing and able to buy less of a good. - when consumers purchase substitutes, the quantity demanded of the good falls. - the benefit of consuming more of a good falls with each additional unit, so the price consumers are willing and able to pay also falls with increased consumption.
Since 2000, the labor force participation rate has decreased because: - baby boomers are retiring and leaving the labor force. - there are more discouraged workers. - more and more people have shifted to the informal economy. - the overall population has decreased. - the definition of the labor force has changed. - family sizes have shrank.
- baby boomers are retiring and leaving the labor force. - there are more discouraged workers. - more and more people have shifted to the informal economy.
Shifts in supply: - can be parallel. - affect demand. - occur when there is a change in the nonprice determinants of supply. - are due to changes in price.
- can be parallel. - occur when there is a change in the nonprice determinants of supply.
In an economy where all spending is done by households and individuals in equilibrium,: - consumption equals disposable income. - consumption equals zero. - savings equals zero. - savings equals consumption. - disposable income equals zero.
- consumption equals disposable income. - savings equals zero.
A tax:
- increases the price of goods sold. - increases the cost of goods sold and shifts the supply curve to the left. - does not change the benefit of a good.
Most economists prefer measuring the deficit relative to GDP because: - it allows a comparison between unemployment and inflation. - it allows a comparison across time. - it allows a comparison between nominal GDP and inflation. - it allows a comparison across countries.
- it allows a comparison across time. - it allows a comparison across countries.
GDP is not a perfect way to measure economic activity because: - it does not account for productivity changes. - it does not provide a gauge of unemployment. - it does not measure wage changes. - it does not account for the depletion of natural resources. - it ignores activities that occur outside formal markets. - it does not account for changes in product quality. - goods and services that are not bought and sold in a market are not included in GDP. - it cannot measure the value of leisure time.
- it does not account for the depletion of natural resources. - it ignores activities that occur outside formal markets. - it does not account for changes in product quality. - goods and services that are not bought and sold in a market are not included in GDP. - it cannot measure the value of leisure time.
When the supply curve shifts to the right,:
- it is called an increase in supply. - more of a good, service, or resource is produced at all prices.
When the supply curve shifts to the left,:
- lower quantities of a good, service, or resource are produced at all prices. - it is called a decrease in supply.
A change in supply: - occurs when a nonprice determinant of supply changes. - has the effect of shifting the entire supply curve to the right or left. - results in movement along the supply curve. - is a result of a change in price.
- occurs when a nonprice determinant of supply changes. - has the effect of shifting the entire supply curve to the right or left.
If the production of a good incurs at a lower cost,: - the opportunity cost (in terms of other goods that could have been produced) has increased. - the opportunity cost of producing other goods (in terms of the amount of this good that could have been produced) has increased. - the opportunity cost (in terms of other goods that could have been produced) has decreased. - the opportunity cost of producing other goods (in terms of the amount of this good that could have been produced) has decreased.
- the opportunity cost of producing other goods (in terms of the amount of this good that could have been produced) has increased. - the opportunity cost (in terms of other goods that could have been produced) has decreased.
The income effect:
- works in the same direction as the substitution effect for normal goods. - refers to the change in the demand for a good caused by a change in a consumer's purchasing power.
With an MPC of 0.5, the tax multiplier will equal ____
-1
Which of the following statements are true? - A nonbinding price ceiling is set below the equilibrium price, and a binding price ceiling is equal to the equilibrium price. - A nonbinding price ceiling is set equal to the equilibrium price, and a binding price ceiling is below the equilibrium price. - A binding price ceiling is set below the equilibrium price, and a nonbinding price ceiling is above the equilibrium price. - A nonbinding price ceiling is set equal to the equilibrium price, and a binding price ceiling is above the equilibrium price.
A binding price ceiling is set below the equilibrium price, and a nonbinding price ceiling is above the equilibrium price.
Which of the following statements are true? - A nonbinding price floor will encourage sellers to sell more. - A binding price floor will encourage buyers to purchase more. - A binding price floor will be lower than a nonbinding price floor. - A binding price floor will be higher than a nonbinding price floor.
A binding price floor will be higher than a nonbinding price floor.
The government decides to implement a tax on turnips. What will be the effect on the turnip market?
A change in supply
Suppose scientists in Spain found that moderate consumption of dark chocolate reduces the risk of heart disease by 75%. As a result, people now consume more dark chocolate at all prices. Why did this happen?
A change in tastes and preferences increased demand.
Which of the following persons would not be considered unemployed?
A construction worker who has given up looking for work after 18 months without a job
An increase in the cost of a resource will have what effect on the market?
A decrease in supply
What is the effect of a subsidy being placed on the market?
A decrease in the cost of production
Which of the following would be included as a member of the labor force?
A recent high school graduate looking for a first job
When a nonprice determinant of supply changes what will be the effect on the market?
A shift in the supply curve at all possible prices
A new technology increases the production of widgets by 25% at all possible prices. Which of the following statements offers the best description of the location of the new supply curve, relative to the original curve?
A shift to the right with a greater increase occurring at higher price levels.
doc 1.4 Refer to the graph. Suppose the market price is $1.50. What is the size of the shortage or surplus in this market at $1.50?
A shortage of 400
Which of the following individuals is unemployed?
Angela who lost her job and is now looking for work
Consider a consumer who buys cookies and ice cream for snacks. Assume that the price of ice cream increases. Which of the following is an example of the substitution effect?
As the price of ice cream increases, ice cream becomes relatively more expensive than cookies, so the consumer will buy more cookies and less ice cream.
You are an economist in the country of Econlandia trying to estimate the equilibrium level of output. You have the following information: C = A + 0.4(Y−T) A = $75 I = $200 G = $150 NX = −$75 T = $200 The equilibrium level of output in Econlandia is _________ .
Blank 1: $450 or 450
If nominal income increases by 5 percent and prices by 7 percent, the percentage change in real income will be _________ percent.
Blank 1: -2 or negative two
Starting in equilibrium, real GDP is equal to $1,000 billion, gross investment is equal to $50 billion, marginal propensity to consume is 0.75, and expenditures multiplier is 4. If gross investment decreases by $25 billion the aggregate expenditures schedule shifts vertically by $ _________ billion. The new equilibrium GDP will be $._______ billion.
Blank 1: -25, -twenty five, negative twenty-five, or negative twenty five Blank 2: 900 or nine hundred
With an MPC of 0.75, the tax multiplier will be equal to _______ .
Blank 1: -3
Suppose an economy is in equilibrium with real GDP equal to $800 billion, gross investment equal to $20 billion, a marginal propensity to consume of 0.75, and an expenditures multiplier of 4. If gross investment increases by $10 billion, the aggregate expenditures schedule shifts vertically by $ __________ billion. The new equilibrium GDP will be $ _________ billion.
Blank 1: 10 or ten Blank 2: 840 or eight hundred forty
An economy operating at full employment does not imply that ________ percent of the workers in the labor force are employed.
Blank 1: 100%, one hundred, or 100
DOC 1.11 Use the information in the table above to calculate the CPI in Year 2, using Year 1 as the base year. Round to the nearest whole number. The Consumer Price Index is
Blank 1: 107, 106.976, or 106.9
Suppose that expenditures by the federal government are $35 billion, expenditures by the state governments are $50 billion, and expenditures by the local governments are $25 billion. Government purchases of goods and services equal $ ________ billion. (Enter a number in the blank.)
Blank 1: 110, 110 billion, or $110 billion
If the labor force is 150 million and the number of employed is 20 million, the number of unemployed equals ___________ million workers.
Blank 1: 130 or one hundred thirty
Suppose that in year 1, real GDP per capita was $28,000 billion and in year 2, real GDP per capita rose to $32,200 billion. The growth rate of real GDP per capita was ______ %. (Enter just the number; % sign has been provided for you.)
Blank 1: 15 or fifteen
Suppose that in year 1, real GDP was $60 billion and in year 2, real GDP rose to $69 billion. The growth rate of real GDP was _____ %. (Enter just the number; % sign has been provided for you.)
Blank 1: 15 or fifteen
Suppose the real GDP per capita was $30,000 billion in Year 1. In Year 2, the real GDP per capita rose to $34,500 billion. The growth rate of real GDP per capita was _______ %. (Enter a number in the blank.)
Blank 1: 15 or fifteen
Suppose that the government runs a budget deficit of $75 billion in year 1. Assume that the year began with a national debt of $25 billion. In year 2 the government ran a budget surplus of $50 billion. In year 3, the government spent $100 billion more than it collected in taxes. The debt is $ ________ billion. (Enter a number in the blank. Do not add any units to your answer.)
Blank 1: 150 or -150
Suppose real GDP is roughly $750 billion and the population is approximately 50 million people. Real GDP per capita is $ _______ . (Enter a number in the blank.)
Blank 1: 15000 or 15,000
Suppose that $15 billion in goods and services was exported to other countries; $8 billion in goods and services was imported; expenditures by federal state and local governments on goods and services totaled $30 billion; over the course of the year firms purchased $25 billion worth of new capital; and consumers spent $15 billion on durable goods, $35 billion on nondurable goods, and $40 billion on services. GDP was $ ________ billion. (Enter a number in the blank; $ has been provided for you.)
Blank 1: 152
If the MPC equals 0.8, a decrease in taxes of $4 billion will result in an overall increase in real GDP of $ _________ billion.
Blank 1: 16 or sixteen
Suppose real GDP is roughly $900 billion and the population is approximately 50 million people. Real GDP per capita is $________. (Only use number; $ has been provided for you.)
Blank 1: 18000 or 18,000
If nominal income increases by 3 percent and prices by 1 percent, the percentage change in real income will be __________ percent.
Blank 1: 2 or two
If nominal income increases by 5 percent and prices by 3 percent, the percentage change in real income will be _________ percent.
Blank 1: 2 or two
With an MPC of 0.6, the expenditures multiplier will equal _________ .
Blank 1: 2.5
Starting in equilibrium real GDP is equal to $500 billion, gross investment is equal to $10 billion, marginal propensity to consume is 0.8, and expenditures multiplier is 5. If gross investment increases by $20 billion, the aggregate expenditures schedule shifts vertically by $ ________ billion. The new equilibrium GDP will be $ _________ billion.
Blank 1: 20 or twenty Blank 2: 600 or six hundred
Suppose the real GDP of a country is $75 billion in Year 1. If the real GDP rises to $90 billion in Year 2, the growth rate of real GDP is _______ %.
Blank 1: 20, twenty, or 20%
Cindy runs Cindy's Cupcake Shop. She has decided to charge $3 for a gourmet cupcake. She knows the individual demand schedules (shown below) for five of her customers. What is the market demand that Cindy will face for her five customers, if she charges $3 a cupcake?
Blank 1: 21 or twenty one cupcakes
Suppose that the government runs a budget deficit of $75 billion in year 1. Assume that the year began with a national debt of $0. In year 2 the government ran a budget surplus of $50 billion. In year 3, the government spent $200 billion more than it collected in taxes. The debt is $ _______ billion. (Only enter a number; the dollar sign has been provided for you.)
Blank 1: 225 or -225
If the multiplier equals 5, an increase in investment spending of $5 billion will result in an overall increase in real GDP of $ _________ billion.
Blank 1: 25 or twenty five
Suppose at the beginning of Year 1, there are ten cranes in an economy. During the course of Year 2, two cranes wear out. At the same time, the government invests in capital and purchases three new cranes. Gross investment is equal to _______ cranes, and depreciation is equal to ______ cranes. Therefore, net investment is equal to ________ crane(s).
Blank 1: 3 or three Blank 2: two or 2 Blank 3: 1 or one
If 160 million workers are in the labor force and of those workers 2.5 million are frictionally unemployed and 3.5 million are structurally unemployed, the natural rate of unemployment is ________ percent. (Round off your answer to two decimal places.)
Blank 1: 3.75, 3.75%, 3.7, or 3.7%
In 2000, the CPI of a country was 172. In 2014, the CPI was 238. An income of $25,000 in 2000 was worth __________ in 2014 dollars. (Enter your answer as a whole number.)
Blank 1: 34,593 or 34593
Suppose that at the beginning of the year, there are ten cranes in the economy. During the course of the year, four cranes wear out. At the same time, we invest in capital and purchase six new cranes. Gross investment is equal to ________ cranes and depreciation is equal to ________ cranes, so net investment is equal to _______ cranes. (Use one word for each blank.)
Blank 1: six or 6 Blank 2: four or 4 Blank 3: 2 or two
___________ is the result of low-cost producers focusing all their efforts on producing a single good or service. (Use one word for the blank.)
Blank 1: specialisation, Specialisation, Specialization, or specialization
Starting in the late 1600s, certain economies started to grow faster than ever before and as they grew the of living of _________ the people within them grew too. (Enter one word in the blank.)
Blank 1: standard, standards, or quality
A(n) _______ denotes the total level or amount of something at a particular point in time. On the other hand, a(n) _____ is the change to the stock of that something over a period of time.
Blank 1: stock or stocks Blank 2: flow or flows
If the unemployment rate were zero, there would be neither ________ unemployment nor __________ unemployment. (Enter one word per blank.)
Blank 1: structural Blank 2: frictional
Taxes and _______ alter the costs or benefits of producing goods and services.
Blank 1: subsidies or subsidy
A(n) __________ to producers lowers the cost of producing. (Enter one word in the blank.)
Blank 1: subsidy or subsidies
A decrease in the price of a good's ________ will cause a decrease in the demand for the good.
Blank 1: substitute or substitutes
Two goods are _________ , if an increase in the price of one good increases the demand for the other. (Enter one word in the blank.)
Blank 1: substitutes
The ________ effect is the effect that a change in the price of one good, service, or resource has on the demand for another. (Enter one word in the blank.)
Blank 1: substitution
When the price of lemonade increases, Jack buys more iced tea and less lemonade. The decrease in the quantity demanded for lemonade and the increase in the quantity demanded for iced tea is an example of the _________ effect.
Blank 1: substitution
When the price of oranges increases, Jack buys more apples and fewer oranges. The decrease in the quantity demanded for oranges and the increase in the quantity demanded for apples is an example of the _________ effect. (Enter one word in the blank.)
Blank 1: substitution
Because imports are not produced domestically, they need to be ________ from gross domestic product.
Blank 1: subtracted, removed, excluded, deducted, or omitted
Taxes and subsidies that are placed on businesses are likely to shift the _______ curve.
Blank 1: supply
The law of _______ tells us that higher prices result in higher quantities being supplied.
Blank 1: supply
The size of the producer subsidy will influence the size of the shift in __________
Blank 1: supply
The size of the producer tax will influence the size of the shift in _________
Blank 1: supply
A change in taxes and subsidies on producers alters market ________
Blank 1: supply, efficiency, price, or prices
Traditional models of labor markets implied that if unemployment was very high, there was a(n) _________ of labor and over time, wages would _________ making firms _________ willing to hire the unemployed.
Blank 1: surplus or excess Blank 2: drop, decrease, fall, or reduce Blank 3: more
The supply schedule displays the supply in a(n) ________ form, showing the different prices and their corresponding quantities supplied.
Blank 1: table, chart, tabular, or grid
The perceived desirability of consuming a good, service, or resource refers to the _________ (one word) and preferences of buyers.
Blank 1: tastes or taste
A change in real GDP equals the ____________ multiplier times the initial change in taxes.
Blank 1: tax
One way to reduce the quantity demanded for cigars would be to impose a ______________ (one word) on cigars.
Blank 1: tax
The size of the multiplier effect caused by a change in taxes is determined by the __________ multiplier.
Blank 1: tax
A payment made to the government that is the result of economic activity is called a ____________ . (Use one word for the blank.)
Blank 1: tax, taxation, or taxes
The government uses the revenue from net _______ make monetary payments or expenditures in the resource and product markets.
Blank 1: taxes or tax
The knowledge, inventions, and innovations that can potentially increase resource productivity are known as _____________
Blank 1: technology
If the government is giving money to someone so she can buy a good or service, it is a(n) ______ payment and is not included in GDP. (Remember enter only one word in the blank.)
Blank 1: transfer
If the government is giving money to someone so she can buy a good or service, it is a(n) _________________ payment and is not included in GDP. (Remember enter only one word in the blank.)
Blank 1: transfer
Social Security payments are considered ________ payments and are not included in GDP.
Blank 1: transfer, transfer payment, transfer payments, or transfers
Jack likes burritos. He values the first burrito at $10.00, the second burrito at $8.00, and the third burrito at $6.00. If the price of burritos is $6.50, Jack will buy _______ burritos.
Blank 1: two or 2
Which of the following is not an area of most federal spending?
Education
All adults over 16 years of age are included in the labor force. (True or False)
False
When there is no income, there can be no consumption.
False
Consider the market for labor. _____ are the demanders of labor, and _____ are the suppliers of labor.
Firms; workers
Most economists prefer measuring the deficit relative to _______ because it places the deficit in better context and allows a comparison across time or across governments from different countries.
GDP
Which of the following occurs when two trading countries each focus on producing what they are relatively good at?
Global production and consumption increase.
Suppose that expenditures by the federal government are $30 billion, expenditures by the state governments are $55 billion, and expenditures by the local governments are $20 billion. What is the total of government purchases of goods and services?
Government purchases of goods and services equal $105 billion.
Suppose that expenditures by the federal government are $40 billion, expenditures by the state governments are $55 billion, and expenditures by the local governments are $20 billion. What is the total of government purchases of goods and services?
Government purchases of goods and services equal $115 billion.
A new restaurant building is constructed in the United States. Which of GDP expenditure categories does this belong to?
Gross Investment
Suppose at the beginning of the year, there are ten cranes in the economy. During the course of the year, two cranes wear out and are replaced. At the same time, net investment is equal to two cranes. Calculate gross investment from the given information.
Gross investment is equal to four cranes.
According to the circular flow diagram, which two groups interact in the resources market?
Households and firms
According to the circular flow, which two groups interact with each other in the product market?
Households and firms
What makes one good a substitute for another?
How people respond to a change in price
According to the principle of diminishing marginal productivity:
If at least one input of production is fixed, the marginal productivity of additional variable resources will eventually fall, all else held constant.
While in college, Jane purchases a significant amount of generic coffee, but after she receives her first paycheck, she no longer purchases the generic brand and instead buys a grocery store name brand. Once Jane has been working for 5 years and has earned several raises, she now purchases luxury coffee from a small, local roaster. What is true about the grocery store name brand coffee based on Jane's behavior?
It starts as a normal good, then becomes an inferior good.
Which of the following people illustrates a case of cyclical unemployment?
Joe who has recently been laid off due to a fall in demand
Which of the following people illustrates a case of structural unemployment?
John who has lost his job because his skills have become obsolete
If output is lower than the full-employment level, expenditures are too:
Low
When there are taxes, the initial change in consumption will equal the:
MPC times the change in disposable income due to taxes.
Which of the following correctly states the three main reasons the demand curve is downward sloping?
Marginal benefit, purchasing power, and substitutes
Which of the following statements is true? - NX = C + I. - NX = X + M. - NX = X - M. - NX = M - X.
NX = X - M.
Use the table of prices above for the following question. Was there inflation between year 2 and year 3?
No Reason: While some of the prices of the items increase, the cost of all the items was $230 during Year 2 and Year 3, meaning that there was no inflation from year 2 to year 3.
Suppose the price of jelly increases. As a result, the demand curve for peanut butter shifts to the left. What can we infer from this?
Peanut butter and jelly are complements.
doc 1.2 Based on the production possibilities schedules, who should specialize in the production of avocados?
Person A
doc 1.5 Referring to the graph, suppose the demand for bottled water decreases by 400 bottles at each price. What are the new equilibrium price and quantity in this market?
Price = $1.50; Quantity = 300
Producers expect the price of lumber to increase next month. How will producers respond today?
The supply of lumber will decrease at every price.
How is the market supply of a good or service calculated?
Summing the quantity produced by all sellers at every price within the market.
A tabular representation of the relationship between the price of a good, service, or resource and the quantities producers are willing and able to supply is the _________ schedule.
Supply
Consider the market for oranges in the United States. What is the size and type of the disequilibrium found at $4.00?
Surplus of 300 million tons of oranges
Which of the following likely affects the demand curve?
Taxes and subsides placed on consumers.
Which of the following likely affects the supply curve?
Taxes and subsidies placed on producers.
Supply - supply curve - and supply schedule are:
The three different ways of expressing information about the supply of a good, service, or resource.
A small nation produces coffee and chickens. What is one possible reason the opportunity cost of producing chickens will increase relative to coffee?
The cost of producing coffee has decreased.
Which statement best describes the demand curve for most goods and services?
The demand curve is downward sloping.
How is a decrease in demand depicted graphically?
The demand curve shifts to the left.
When a tax is imposed on buyers, what happens in the market?
The demand curve shifts to the left.
For normal goods, an increase in income will have what effect on demand?
The demand curve will shift to the right.
The price of hotdogs, a complement to hotdog buns, decreases. How will this affect the market for hotdog buns?
The demand for hotdog buns will increase at every price.
The price of paint, a complement to paint brushes, decreases. Which of the following statements about demand is true?
The demand for paint brushes will increase.
The price of pencils, a substitute to pens, decreases. Which of the following statements about demand is true?
The demand for pens will decrease.
What happens when the prices of complements or substitutes for a product change?
The demand for that product will change.
Which of the following is a benefit from imposing a tax on a good or service?
The government raises revenue to fund government activities
________ focuses entirely on the effect of a change in the good's price on the quantity of the product consumed and holds everything else constant.
The law of demand
Which principle states that as the price of a good increases the quantity supplied will increase?
The law of supply
Evaluate the following statement: "I love ice cream. But I've eaten so much ice cream today, I can't possible eat another cup."
The marginal benefit of eating ice cream is falling.
doc 1.6 Referring to the graph, if a $6 excise tax is imposed on the market for wine, what happens to the price buyers pay and the price sellers receive?
The price for buyers increases and the price for sellers decreases.
Which of the following is a determinant of demand in the market for laptop computers?
The price of desktop computers, a substitute in consumption for laptops.
Which of the following is true of a normal good?
The quantity demanded falls as the price rises.
Which of the following offers an example of structural unemployment?
The rise in unemployment for stable workers after the development of gasoline-powered automobiles and the resulting long-term decline in horse-and-buggy transportation
At an aggregate level, more disposable income leads to more consumption. (True or False)
True
Beneficial terms of trade are the terms—or prices—that are between the two parties' opportunity costs.
True
Even when there is no income, there is consumption.
True
Not everyone is counted in the labor force. (True or False)
True
Revenue sources are different for federal, state, and local governments. (True or False)
True
Subsidies most often take the form of payments to businesses by governments. (True or False)
True
The demand for a product will change when the prices of the goods that are complements or substitutes for that product change.
True
The price of a good is a measure of how much money it takes to buy that good.
True
Unemployment benefits have nothing to do with the unemployment calculations conducted by the Bureau of Labor Statistics. (True or False)
True
While some countries have experienced improvements in standards of living, there are a few countries that are subject to absolute poverty. (True or False)
True
The CPI is computed by the:
U.S. Bureau of Labor Statistics
The letter used to represent both real GDP and income is:
Y
The growth rate of real GDP is calculated as:
[(New GDP - Old GDP)/Old GDP] * 100.
A change in quantity demanded is caused by:
a change in a good's own price.
All the following can shift the supply curve except: - a change in income. - resource costs and availability. - the number of sellers. - expectations about market conditions.
a change in income.
A change in price, all else held constant, generates:
a change in quantity demanded, but not a change in demand.
The expenditures multiplier is used to calculate:
a change in real GDP whenever expenditures such as consumption gross investment government purchases or net exports change.
The tax multiplier times the initial change in taxes equals:
a change in real GDP.
In economics, a downward-sloping or upward-straight line is often called:
a curve.
Historically, the average income in the United States is:
about 4 times greater than the world average.
The demand curve should slope downward because:
according to the law of demand, a lower price will lead to a higher quantity demanded.
The expected rate of return is the:
additional profit the firm expects to earn for each dollar of physical capital purchased, expressed as a percentage
The statement "certain expenditures are independent of real GDP" is an assumption of the:
aggregate expenditures model.
Nominal gross domestic product measures the dollar value of:
all final goods and services that are produced during a fixed period of time.
The demand curve for a good displays:
all of the information found in the demand schedule for the good.
Individuals and businesses must choose between the different uses for their available resources. This is called ______ resources and is due to the concept of ______.
allocatingscarcity
Using real GDP provides us with a better picture of the economy because it:
allows us to see what is happening to the amount of production over time without price changes skewing our calculation.
In economics, the word "curve" is typically used to refer to:
almost any graphical representation of the relationship between two variables.
When the demand curve shifts to the right, it shows:
an increase in demand.
Economic growth is defined as:
an increase in real GDP or real GDP per capita.
An increase in the quantity of a good - service - or resource supplied at every price is:
an increase in supply.
If butter and margarine are considered substitutes, then an increase in the price of butter will cause:
an increase in the demand for margarine.
If goods A and B are substitutes, then:
an increase in the price of good A will cause the demand for good B to shift to the right.
An increase in demand signals:
an increase in the quantity demanded at every price, so the curve shifts to the right.
The prices of skis are expected to decline in the future. There is likely to be:
an increase in the supply of skis now.
A change in demand is:
an increase or decrease in the quantity demanded at every price.
The value of the next-best forgone alternative is the __________ cost. (Enter one word in the blank.)
opportunity
When the marginal benefit equals the marginal cost, we reach a(n):
optimal level of output.
When developing the aggregate expenditures model,:
other categories of expenditure in the model are independent of income, and are added to consumption, which depends on income
When a minimum wage results in unemployment:
people may turn to informal markets to provide their labor.
Shortages cannot push the market to an equilibrium in the presence of:
price controls.
The federal minimum wage is an example of a
price floor
A shortage persists when:
price is not allowed to adjust upward
The income effect is the effect that a change in the:
price of a good, service, or resource has on the purchasing power of income.
When analyzing demand and supply curves for an individual good, the vertical axis measures the:
price of the good and the horizontal measures quantity.
Companies will be willing and able to produce additional units of a good only if the:
price of the good increases enough to cover the increasing costs.
A movement along the supply curve is the result of a change in _______ , while a shift in the supply curve is the result of a change in ________.
price; non-price determinants
When graphing a demand curve, we place _______ on the y-axis and _________ on the x-axis.
price; quantity demanded
Generally, the budget deficit is calculated and reported _____ and the national _____ is the accumulation of previous budget deficits and surpluses.
yearly; debt
The slope of the consumption schedule equals:
ΔConsumption/ΔDisposable Income
In Great Britain by 1750, whole sections of the English peasantry were enjoying levels of prosperity and wealth that had previously been reserved for elites such as kings and clergy. (True or False)
true
Real GDP does not tell you everything you need to know to determine standards of living in a given country. (True or False)
true
The labor force is important because it is the basis for calculating the:
unemployment rate.
A percentage change in a value equals the:
value in the later year minus the value in the earlier year divided by the value in the earlier year and multiplied by 100.
When we graph the relationship between price and quantity demanded:
we call the result a demand curve, but demand curves are often drawn as straight lines.
When both demand and supply change simultaneously
we can determine the effect on either price or quantity, but not both
Equilibrium means that:
we should expect to see the price and the quantity converge at specific levels.
Suppose demand and supply both shift simultaneously. If we know the direction of the shifts, but not the relative magnitude of the shifts, then
we will know the effect on either the price or the quantity but not both.
The opportunity cost of the investment occurs:
when a firm makes a purchase using its own funds or borrowed funds
The entire demand curve shifts to the right or left:
when there is a change in demand.
The income effect, the substitution effect, and diminishing marginal utility explain:
why the quantity demanded will fall when prices rise.
A demand curve and demand schedule express information about the:
willingness and ability to purchase a good.
A market cannot exist:
without individuals and firms that are willing and able to buy a good.