econ midrerm

when buyers in an economy increase total spending, what happens to the aggregate demand curve, real GDP, and PL?

AD shifts right, real GDP decreases, PL increases

when aggregate supply decreases, what happens to price levels (PL) and output?

PL increases, output increases

when the total spending in an economy increases and aggregate demand increases, what happens to the price level (PL) and real GDP?

PL increases; real GDP increases

choose an example of a public good from the following list: a lighthouse, tap water, a toll road, a pair of jeans

a lighthouse

what is mercantilism? accumulating gold and silver through limiting imports, relying on the supply by producers, encouraging imports so that consumers can get what they need, relying on the forces of supply and demand

accumulating gold and silver through limiting imports

who is the "father of capitalism"?

adam smith

the EPA was established in 1970 to

address environmental concerns

the total value of all production by all producers in a nation is called the: aggregate demand, aggregate supply, inflation, price level

aggregate supply

the loss of productivity due to death and illness from a factory's air pollution is an example of: a cost to production which is part of the price of the good produced, an external cost to society from production of a good, a cost of consumption which is part of the price of the good produced, an external cost to society from consumption of a good

an external cost to society from production of a good

when the government provides flu shot vaccinations, this is an example of

an over provision of a good with a positive external benefit

country A can produce two goods: bottled water and diamonds. where would a point lie in the production possibilities curve model showing efficient use of all of country A's resources? any point on the PPC, a point outside the PPC, no points on this model illustrate this concept, a point inside the PPC

any point on the PPC

which of the following systems allows money from savers to be reallocated to borrowers?

banks

when marginal cost and marginal benefit ar equal, the price of this good is

best for consumers and producers

the us government funds its debt by issuing ___. most of the us national debt is owed to ___ bonds; chinese stocks; americans stocks; chinese bonds; americans

bonds; americans

throughout the history of the united states, these three groups of people have played important roles in the economy: business, soldiers, government labor, government, factories government, technology, taxes business, labor, government

business, labor, government

according to adam smith, how how should the wealth of a nation be measured? by the value of the richest person's wealth in a country, by the value of gold and silver in a country's vaults by how many hours workers work in a nation, by the value of goods and services sold in a nation

by the value of goods and services sold in a nation

machinery and equipment used by firms to produce goods and services are called

capital

the goal of fiscal policy is to: change aggregate demand through spending and taxation, change aggregate demand by changing interest rates, change aggregate supply through spending and taxation, change aggregate supply by changing interest rates

change aggregate demand through spending and taxation

monetary policy is: using gold to back money, changing taxes and spending, printing more money, changing the money supply, which changes the interest rate

changing the money supply, which changes the interest rate

the law which established national auto emission limits is the

clean ai act

one of the roles of the fed is to

clear checks

a fishing pond that is free to the public and that is overfished by nearby residents who deplete the fish population is considered to be a: public good, social good, common good, private good

common good

this characteristic of a market economy involves firms trying to succeed against each other to produce better goods that consumers most want. this is called: freedom of choice, importance of consumers and producers, competition, private property

competition

when the united states is overheating and there is inflation, congress might use: expansionary fiscal policy contractionary monetary policy expansionary monetary policy contractionary fiscal policy

contractionary fiscal policy

what is the business type where the owners have no liability, but share in the profits?

corporation

country A can produce two goods: bottled water and diamonds. country A wants to produce at a point outside of its production possibilities curve. what must occur in order for this to happen? country A must obtain more resources or its resources must become better quality so that it can produce more of both goods, country A must lay off some workers, country A must give up producing diamonds, country A must give up producing water

country A must obtain more resources or its resources must become better quality so that it can produce more of both goods

which of the following monetary policy tools should the fed use when the united states experiences a recession? increase the reserve requirement ratio, decrease the reserve requirement ratio sell bonds, increase the discount rate

decrease the reserve requirement ratio

___ is when the government spends more than it collects in tax revenue is one year. the ___ is when this overspending per year is totalled altogether

deficit spending; national debt

in country A, when it becomes very hot outside, people run through sprinklers in their yard. country A experiences extremely hot weather. what happens to the market for sprinklers?

demand increases; price increases

a ___ is how a country decides to allocate its scarce resources and answer the three basic economic systems: economic system, production possibilities curve, capital good, factor of production

economic system

TINSTAAFL refers to the idea that: my wants and needs are greater than my available resources, diamonds sparkle so they are expensive compared to water, economics is a social science, everything has a cost since resources can be allocated to many uses

everything has a cost since resources can be allocated to many uses

the government increases spending and decreases taxes. this is called: expansionary fiscal policy, monetary policy, increasing financial policy, contractionary fiscal policy

expansionary fiscal policy

the president of the united states submits the proposed budget each year in

february

when the us is experiencing a recession, the ___ will ___: congress; buy bonds congress; sell bonds fed; sell bonds fed; buy bonds

fed; buy bonds

the central bank of the united states is called the

federal reserve bank

when the price of shoes increases, how does this act as a rationing device for consumers? fewer shoes will be made, so fewer consumers will get the good, more consumers will be able to buy the good, more shoes will be made, so more consumers will get the good, fewer consumers will be able to buy the good

fewer consumers will be able to buy the good

most of the government regulations in the united states address

health and the environment

economics is the study of: how to get a good job, how resources are allocated, how to become wealthy, career choices

how resources are allocated

the law of supply states that as the price of a good increases, the quantity supplied will

increase

the profit motive provides an incentive for firms to ___ at higher prices decrease prices decrease output increase prices increase output

increase output

if the united states was experiencing a recession, congress might: increase spending and increase the interest rate, decrease spending and cut taxes, increase spending and cut taxes, decrease spending and increase taxes

increase spending and cut taxes

when a country is experiencing inflation, what fiscal policy pools might it use: decrease taxes and/or increase spending, increase the reserve requirement ratio, sell bonds, increase taxes and/or decrease spending

increase taxes and/or decrease spending

when the fed decreases the reserve requirement ratio, the effect is to: increase the money supply, cause a bank panic, decrease the money supply, increase the interest rate

increase the money supply

over the course of american history, the role of government in the economy has: decreased, increased greatly, stayed the same, has always been minimal

increased greatly

since the 1960s, the US government has

increased its involvement in the economy through spending and regulations

government spending and the number of government regulations has: increased but then significantly decreased since the 1960s, decreased since the 1960s, increased since the 1960s, remained about the same since the 1960s

increased since the 1960s

a contractionary monetary policy tool includes which of the following? increasing taxes, increasing the reserve requirement ratio, decreasing taxes, buying binds

increasing the reserve requirement ratio

the federal government collects most of its revenue from

individual income tax

adam smith wrote that the free market through supply and demand, competition, and self-interest will lead to the most benefit for society. his concept was illustrated through the term

invisible hand

producers will make the handbags most wanted by consumers. if they make bad handbags, producers will not make a profit and will go out of business. resources to make handbags will go to where they will be best used. consumers who want to buy a handbag will earn income to do so. this best describes which of the following convepts written about by adam smith?

invisible hand

sunlight is a resource used to power my outdoor solar-powered deck lights. sunlight is a factor of production called: capital, labor, land, entreperneurship

land

the factor of production described as natural resources such as oil, land, or water

land

country A can produce two goods: bottled water and diamonds. as country A reallocates its resources to produce more bottled water, it is giving up more and more diamonds. this concept is illustrated by the production possibilities curve. what is this concept? law of increasing opportunity costs, economic systems, diamond water paradox, scarcity

law of increasing opportunity costs

when consumers save money in banks and dont spend it on goods and services, this is a

leakage

the portion of the budget which is required by law and includes social security, medicare, and medicaid is: mandatory spending, interest spending, external spending, discretionary spending

mandatory spending

in the market for cupcakes sold at $1 each, after consuming 15 cupcakes, i am no longer willing to pay $1 for the 16th cupcake, as the benefit of consuming another cupcake has been reduced. this is an example of the concept of: supply, marginal cost, optimal price, marginal benefit

marginal benefit

i am studying for my economics course. my first hour of studying is very productive and it was worth giving up time with my friends. by the third hour of studying, the ____ of studying one more hour was greater that the benefit i was receiving so i stopped studying and went out with my friends. choice, tradeoff, marginal benefit, marginal cost

marginal cost

the optimal price of a good is where

marginal cost is equal to marginal benefit

a system which reallocates resources to the goods and services most demanded by society, through supply and demand is: command economy, mixed economy, traditional economy, market economy

market economy

in the early history of the united states, after independence from the british, americans highly valued personal freedom. what type of economic system, primarily, was the united states at this time? mixed economy, centrally planned economy, market economy, traditional economy

market economy

quantity supplied is equal to quantity demanded. this is called

market equllibrium

government spending increased starting in the 1960s. one of the programs to be established during that time is

medicare

federal government programs that provide health care for people, leading to a healthy economy are

medicare and medicaid

anything used to exchange goods and services is

money

i am studying for my economics course. if i wasnt studying, I would be socializing with friends. socializing with friends is the ___ of studying. opportunity cost, tradeoffs, non-monetary incentive, marginal benefit

opportunity cost

i decided to quit my teaching job and open a donut shop. my costs include rent on the building, wages for workers, payments for machines and ingredients, and the salary i earned as a teacher. the salary i earned as a teacher is considered a cost because it is my

opportunity cost

market failure is when

positive or negative effects of production or consumption of a good or service are not worked into the price of this good or service and too many or too few resources are allocated to that good

when the price of bread is set at $2 and this is below the market equilibrium, this is a: price floor, price ceiling, equilibrium, incentive

price floor

in the market for strawberries, doctors announce that eating more strawberries makes you healthier. what happens to the price and quantity of strawberries?

price increases; quantity increases

in the market for roller skates, the price of roller skates increases. this change in price provides information to producers. due to the profit motive, they will increase the quantity supplied of roller skates to the market. what is the role of price in this scenario? price is acting as a rationing device, price is acting as a teaching tool, price is acting as a barrier to entry, price is acting as a signal and incentive

price is acting as a signal and incentive

in the market for milkshakes, if the price of milk (a resource for milkshakes decreases, what will happen to the price and quantity in the milkshake market?

price will decrease; quantity will increase

the market economy characteristic in which the factors of production are owned by individuals and individual businesses who allocate them according to what society most wants is called: private property, freedom of choice, competition, limited government

private property

when the price of a good increases, which of the following describes how price acts as a rationing device of resources? producers will produce less of the good, so fewer resources will be allocated to this market consumers will demand more of the good, so fewer resources will be allocated to this market producers will produce more of the good, so more resources will be allocated to this market consumers will demand more of the good, so more resources will be allocated to this market

producers will produce less of the good, so fewer resources will be allocated to this market

environmental protections in the united states took a big jump after: a ton of fish ended up on an alaskan beach, rachel carson wrote 'silent spring' about the detrimental use of pesticides, a nuclear power plant meltdown, an increase in the amount of global environmental laws

rachel carson wrote 'silent spring' about the detrimental use of pesticides

the horizontal axis of an aggregate supply-aggregate demand (AS-AS) diagram is labeled

real GDP

aggregate demand is defined as: the total supply from all firms in an economy, spending by firms on goods used to produce other goods and services, the spending by consumers for a specific good or service, the total spending in an economy by consumers, firms, the government, and from international markets

spending by firms on goods used to produce other goods and services

financial markets facilitate the purchase of: interest rates, goods and services, government spending, stocks, bonds, and other investments

stocks, bonds, and other investments

in the market for pencils, the price of wood increases. wood is a resource for pencils. what happens to the supply of pencils and which way does the supply curve shift?

supply decreases; supply curve shifts left

when a price floor is set, the outcome is which of the following? equillibrium, ceiling, shortage, surplus

surplus

how are public goods funded? donations are collected, they are not funded, tax collected by the government, private citizens pay for use

tax collected by the governmnet

marginal cost is: the total cost of producing one unit of a good, the benefit of consuming one more good of a unit, the cost of producing all units of a good in a market, the cost of producing one more unit of a good

the cost of producing one more unit of a good

an example of a negative effect of consumption is

the effects of secondhand smoke

what does the circular flow model illustrate? the flow in income in an economy between households and firms, the opportunity cost of producing one good over another, the idea that if price is increases, the quantity supplied by producers increases, the relationship between buyers and price of a good or service

the flow in income in an economy between households and firms

federal government deficit spending is when

the government spends more on programs than it collects in taxes

the circular flow model illustrates which of the following?

the interaction of a buyer and a seller in a specific market

how does increasing the money supply help to solve unemployment? the interest rate decreases, which leads to less spending and output, the interest rate increases, which leads to less spending and output, the interest rate increases, which leads to more spending and output, the interest rate decreases, which leads to more spending and output

the interest rate decreases, which leads to more spending and output

when an environmental law is passed, such as for water pollution from a textile factory, what is the effect of the law on the market for textiles?

the law increases the costs of production, so the price of clothing will increase

which of the following is an example of the law of demand? the price of snow cones increased, so the quantity demanded of snow cones increased, the price of snow cones increased, so the quantity demanded of snow cones decreased, the price of snow cones increased, so the quantity demanded of snow cones increased, the price of snow cones decreased, so the quantity demanded of snow cones decreased

the price of snow cones increased, so the quantity demanded of snow cones decreased

when households put some of their income into a savings account in a bank, how does this affect the circular flow model?

this is a leakage and the model shrinks

what is the incentive for consumers?

to buy the best good at the lowest price

what is the incentive for producers?

to make a profit

i am studying for my economics course. i could be watching TV, sleeping, eating, or socializing with friends. These are my: marginal costs, common goods, opportunity costs, tradeoffs

tradeoffs

scarcity is: monetary rewards, unlimited wants and needs of people met by limited resources, free market economics, something needed for survival

unlimited wants and needs of people met by limited resources

one of the roles of price is to acts as a rationing device. which of the following is an example of this? fewer resources will be allocated to the video game market, the government will decide who gets the video games, motivated by the profit motive, more producers will enter the market, when the price of a video game increases, the buyers who want to buy video games and have the money to pay the price get the video games

when the price of a video game increases, the buyers who want to buy video games and have the money to pay the price get the video games

which of the following workers should receive higher wages, according to adam smith?

workers with higher skills needed for their job