Economics Final
a decrease in taxes will cause
AD to increase (move to the right)
an increase in confidence will cause
AD to increase (move to the right)
an increase in government spending will cause
AD to increase (move to the right)
Fiscal policy is controlled by
Congress and the President
federal tax dollars can be spent only if
Congress passes a law that the president signs and overrides a veto
doing something that is not necessarily discriminatory on its face, but impacts some groups more negatively than others is called
adverse impact discrimination
the aggregate supply-aggregate demand diagram relates various levels of
all prices as measured by the CPI and production as measured by real GDP
in a market for money
borrowers are the consumers and lenders are the suppliers
on the heritage foundation's scale of "economic freedom," the least "free" country would be that one whose economic system was purely
communist
economists measure the degree to which consumers win when Walmart comes to a city by looking at changes to
consumer surplus
the primary means by which a farmer can protect against weather related crop failure is with
crop insurance
economists consider deflation
dangerous, as it can lead to depression
the primary sources of price variability is
demand and supply variability
if the unemployment rate falls because the number of people not working but searching for work falls, economists would attribute this to the
discourages worker effect
which of the following reasons for making drugs sales illegal do economists generally see as potentially legitimate, but beyond their area of expertise?
drugs are immoral and allowing them to be sold is immoral
capital gains are those gains
earned from selling an asset for a price more than what was paid for it
if the price of a good increases by 5% and the quantity decreases by 10%, then at that price, the good is
elastic
The increase in output from point B to C is greater than the increases in output from point C to D because
eventually workers are up against the fact that there are fixed inputs and more workers do not add as much
a political problem with discretionary fiscal policy is the
expansionary bias
A mechanism by which buyers and sellers of goods and services negotiate an exchange is a
factor market
costs which do not increase with an increase in output are called
fixed costs
Fiscal policy is purposeful movements in ____ designed to direct an economy
government spending and taxes
crowding out is the idea that when
government spending increased private spending must decrease
economists timothy smelling reported that appropriately- adjusted poverty rates were
higher in the U.S. than in 8 of the 9 european countries studied
if demand is perfectly elastic, then the graph would be
horizontal
the supply and demand model examines the how prices and quantities are determined
in markets
the costs of income inequalities in an economy can be reduced to an extent if there is ____
income mobility
a higher interest rate
increases the motivation to delay consumption and, therefore, save
if the price of a good increases by 10% and the quantity decreases by 5%, then at that price, the good is
inelastic
one subject of study for macroeconomics is
inflation
the empirical finding that increased spending has no significant impact on educational outcomes
is consistent with the "flat part of the curve" on the educational production function
the percentage of government workers that ate unionized ____ the percentage of private workers that are unionized
is greater than
determining the comparative advantage of a country requires that you look at the economic notion of
opportunity cost
health care is not like other goods and services because
people go to the doctor to find out what is wrong whereas they get other services knowing more about what they need and if a newly discovered cure costs a lot we say, incorrectly, that its price has risen
without orphan drug laws
people with uncommon diseases would have little hope of companies seeking cure for their aliment
agricultural subsidies are generally
popular with politicians and unpopular with economics
the economic argument that is in a society's best economic interest to pay for the education of "someone else's child" is the
positive externalities argument
When analyzing a problem, if an economists is attempting to understand what caused something to happen without considering whether or not the action was fair or just, the economist is thinking
positively
the level of income sufficient to provide a family with a minimally adequate started of living is the
poverty line
because it costs more to live in cities than it does to live in rural areas the
poverty line is set too low in cities and too high in rural areas
because of an increase in the work-force participation rate for women, the availability of uncompensated child-care has become less available to poor women so as a consequence the fact that child-care must now be paid for suggests that the
poverty line should be revised upward to that it includes the price of child care
when the government wishes to help producers of goods by establishing the minimum price at which their good can be sold, economists call this a
price floor
publicly provided health insurance for the poor will
raise the price of health care to the non-poor and increase the totally amount of health care consumed
on a graph of real gross domestic product over time, recessions appear as
relatively short and shallow drops on an otherwise increasing path
the possibility that an investor will not receive full payment is called
risk
assuming perfect competition and at marginal revenue there will be
short and long run pressure on the price to fall
which of the following is a cost of high income inequality?
social disorder
the reasons why women are paid less than men are mainly
sociological... society imposes restrictions on some that limit their pay
externalities are effects of a transaction on
someone other than the buyer or seller
for a previously illegal good, decriminalization will cause
supply & demand to increase
limiting trade can be accomplished with
tariffs, quotas, non-tariff regulatory barriers
the EITC is a
tax credit to working poor families
though there is no tuition to public elementary and secondary schools, economists do not say that it is free because
taxpayers pick up the tab for considerable costs of education
the key difference between monopoly and oligopoly is
that there are two in oligopoly rather than one competitor in a monopoly
Economics is the study of
the allocation and use of scarce resources to satisfy the unlimited human wants
the federal reserve came into existence in response to
the boom and bust nature of the late 19th and early 20th century
when workers subdivide the tasks of a job in such a way so as to become more efficient economists refer to this as
the division of labor
the aggregate supply-aggregate demand diagram models
the economy as a whole
The statement that Congress passed a tax bill and two months later a recession began, so the bill must have been poor policy is an example of
the fallacy that correlation is the same as causation
in the market for money the price is
the interest rate
when evaluating a business decision, an economic will often resort to the use of present value because
the investment occurs in one time period and the profits in another
drug companies tend to attribute higher drug prices on
the low percentage of attempts that actually result in revenue producing drugs and high invention costs
a justification for government price supports on agriculture that economics generally accept as potentially legitimate is
the market punishes innovation
when tax filings increase faster than increases in population, and when nearly all the extra filings are from individuals in the lower 99 percent income group
the number of people in the top 1 percent group increases more than it would otherwise
an example of non discretionary fiscal policy would be
the operation of the welfare state
the inflation rate is
the percentage increase in the price index from one year to the next
the key difference between perfect competition and monopolistic competition is
the products sold are slightly different in monopolistic competition
one of the reasons economists approve of limiting trade would be
the protection of national security
the keynesian, classical and intermediate ranges apply to the
the shape of the aggregate supply curve
which of the following would be described as the recognition lag?
the time required to know that there is a recession
the poverty gap is
the total amount of money that would have to be transferred to households in poverty to lift them out of poverty
producer surplus is the area
under the price above supply curve
costs which increase with an increase in output are called
variable costs
if demand is perfectly inelastic, then the graph would be
vertical
the real balances effect suggests that
when prices are higher your buying power is less so you buy less
what output would a perfect competitor produce?
where average total cost crosses marginal revenue
assuming perfect competition which price is associated with profit being exactly normal?
where marginal cost and average total cost cross
using marginal analysis, an economist would judge the proper size of the government by comparing
whether the last dollar spent would have been better off left in private hands
if there are powerful unions in a labor market, the use of the supply and demand model to analyze labor markets
will cause you to believe that more people will be hired the there will be
if there are powerful buyers in a labor market, the use of the supply and demand model to analyze labor markets
will cause you to believe the wage will be higher than it is
which of the following reasons why women earn less than men is considered by some to be economic, and by others to be sociological?
women are more likely to choose flexible part-time employment to manage the needs of their family
those that lose from an increase in the minimum wage are
workers that are laid off
under the intermediate set assumptions of the medicare trustees report, payroll taxes ____ cover the likely increase in medicare expenses
would have to grow substantially to
over the last 31 years, costs of college tuition, room and board have increased by
629%
an increase in input prices will cause
AS to decrease (move up and to the left)
an increase in regulation will cause
AS to decrease (move up and to the left)
Production possibilities frontier models:
The choices we make in setting output alternatives
the mechanism by which buyers and sellers negotiate an exchange is called
a market
without a belief that the market has failed, which of the following will result in dead weight loss?
a price below or above equilibrium
the condition where firms want to sell more than consumers want to buy is called
a surplus
an example of discretionary fiscal policy would be
a tax cut adopted to stimulate consumption
for the minimum wage to be relevant it must be
above the equilibrium price
consumer surplus is the area
above the price under the demand curve
How does GDP deal with a Toyota produced in Kentucky?
it is fully counted
How does GDP deal with a Ford produced in Mexico?
it is not counted at all
when a firm has no competitors, in order to sell more go the good
it must reduce the price it charges
when a firm has many competitors selling the same good, in order to sell more of the good
it only needs to produce more of the good
projections of the trajectory of discretionary relative to mandatory spending made in 2014 had
mandatory spending's portion growing
medicare costs are high and rising at rapid rates because
medical technology is advancing and rising costs while the elderly pay only a quarter of the true costs and are therefore less cost conscious
the federal reserve governs U.S.
monetary policy
