economics semester 1

This regulates the sale of stock in a corporation.

Securities and Exchange Commission

In the short run, an increase in the money supply results in

lower interest rates.

The purpose of indexing Social Security payments to the CPI is to:

maintain the purchasing power of retirees.

The United States can best be described as having a

modified free enterprise system.

economic system

organized way in which a society provides for the wants and needs of its people

Economists use numbers such as those in the table to compare

output on a per person basis.

The concept of voluntary exchange means

people freely and willingly engage in market transactions.

This table shows the balance in an account if monthly deposits of $10 were compounded monthly. Suppose you deposited $10 into your savings account each month, as indicated in the table. Your account pays 4%, compounded monthly. How much will you have in your account at the end of 15 years?

$2,461

Study the illustration. At a price of $25, how much more of the product is demanded on curve D'D' than on curve DD?

2 units

A business doubled the price of a product in order to increase profits. Which of the following scenarios might have occurred?

A dramatic decline in revenues demonstrated the elasticity of the product.

With which country in the table does the U.S. have the largest trade deficit?

China

Which letter designations in the table mark Fed actions that will expand the money supply?

F, I, K

Which letter designations in the table mark Fed actions that will contract the money supply?

G, H, J

Gross domestic product after adjustments for inflation is known as

GDP per capita.

What should replace the question mark in the output-expenditure model?

Government - G

The dollar value of all final goods, services, and structures produced within a country's borders in a single year is

Gross Domestic Product (GDP)

Which of the following is a characteristic of a traditional economy?

It discourages new ideas and new ways of doing things.

Which letter represents the proper location on the diagram for "unlimited liability"?

W

Where would a mixed economy be located in the diagram?

Y

Which of the following will cause the market supply curve to shift?

a change in the numbers of sellers offering the product

What does the movement from b' to b on the graph represent?

a decrease in demand

North American Free Trade Agreement (NAFTA)

agreement among Canada, Mexico, and the United States to reduce tariffs

trade-offs

alternative choices made by consumers in the marketplace

Bonds

are contracts to repay borrowed money at regular intervals.

An economy at its production possibilities frontier is operating

at full potential

Manufactured goods needed to produce other goods and services are called

capital goods

mutual fund

company that sells stock in itself to individual investors and then invests the money in stocks and bonds of other corporations

An increase in the price of cameras results in a decrease in the demand for film. The two products are

complements.

scarcity

condition of not having enough resources to produce all the things people want

The largest sector of the macroeconomy is the

consumer sector.

Which group of people ultimately determines the products that a free enterprise economy produces?

consumers

What form of business organization does this organizational chart depict?

corporation

opportunity cost

cost of the next-best alternative use of money, time, or resources when one choice is made rather than another

Advertising, fashion trends, and new product introductions serve to

create consumer demand.

production possibilities frontier

diagram representing various combinations of goods and/or services that an economy can produce when all productive resources are fully employed

The numbers in this table were calculated by Selected:

dividing GDP by total population.

A market economy

does not provide for everyone's basic needs.

The minimum wage is an example of a federal law that supports

economic equity.

command economy

economic system in which a central authority makes most of the WHAT, HOW, and FOR WHOM decisions

capitalism

economic system in which private citizens own the factors of production

Social Security

ederal program of disability and retirement benefits that covers most working people

When a customer's need for a product is not urgent, demand tends to be Selected:

elastic.

profit

extent to which individuals or organizations are better off at the end of a specific period than they were at the beginning

In this production possibilities frontier, what could cause production to move from point a to point e?

factories that are available but idle

Total cost is the sum of the

fixed and variable costs.

Unemployment that is due to the time workers spend in job search is considered:

frictional unemployment.

Anna recently moved to Boston in order for her husband Joe to begin a new job as an economics professor at Harvard. Anna is an experienced surgeon who is currently interviewing with several different hospitals in Boston. Anna is currently:

frictionally unemployed.

Which products shown in the table are likely to have inelastic demand?

gasoline in general, services of medical doctors

exports

goods and services produced in one country and shipped to another

portfolio diversification

holding a large number of stocks so that increases in some will offset unexpected declines in others

profit motive

incentive that encourages people and organizations to improve their material well-being

In the production possibilities frontier shown in this graph, what could cause production to move from point b to point d

increased productivity

Which of the following results should be included where the question mark appears in the illustration?

inflation

This cartoonist would like government to

interfere with business less.

The Federal Reserve

is made up of 12 district banks and member banks.

The Fed's Federal Open Market Committee

is the Fed's primary monetary policy-making body.

Individual Retirement Account (IRA)

long-term, tax-sheltered time deposits people set up to help provide income during retirement

The purpose of government in a command economy is to

make major economic decisions.

capital good

manufactured good that is used to produce other goods and services

bear market

mean market in which prices of equities decline for several months or years

trade surplus

occurs when the value of exports exceeds the value of imports

When the economy is in full employment,

only cyclical unemployment is zero.

Investment spending represents spending on:

productive physical capital.

"[E]very individual, therefore, endeavours as much as he can [to direct his resources toward his own business] so that its produce may be of greatest value; every individual . . . neither intends to promote the public interest, nor knows how much he is promoting it. . . He intends only his own gain, and he is in this...led by an invisible hand to promote an end which was no part of his intention. . . By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it." Source: Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nation, 1776 According to Adam Smith, what directs the choices business people make about how to use their resources?

profit

Tariffs and quotas are designed to

protect domestic industry.

Based on the graph, how does the market demand for concert tickets change if the price increases from $30 to $40?

quantity demanded decreases by 4,000

An example of frictional unemployment is a(n):

real estate agent who leaves a job in Texas and searches for a similar, higher paying job in California.

The drawback of tariffs that this cartoon illustrates is that the target country might

retaliate.

The circular-flow diagram illustrates how firms ________ goods and services and ________ factors of production.

sell; buy

One of the first decisions that you will have to make as a business owner is how the company should be structured.... In making a choice, you will want to take into account the following: · Your vision regarding the size and nature of your business · The level of control you wish to have · The level of structure you are willing to deal with · The business' vulnerability to lawsuits · Tax implications... · Expected profit (or loss)... · Your need [to take] cash out of the business for yourself. Source: Small Business Administration, 2008 Which of the following is not an advantage that makes sole proprietorships popular among new business owners?

shared liability

economics

study of how people try to satisfy their needs through the careful use of scarce resources

tariff

tax on imports designed to increase their price in the domestic market

401(k) plan

tax-deferred investment and savings plan that acts as a personal pension fund for many employees

An example of a market economy is

the United States

Inflation is when there is:

the percentage change in the CPI.

A popular model used to illustrate the concept of opportunity cost is

the production possibilities frontier

Gross domestic product or GDP is:

the total dollar value of final goods and services produced in the economy in a given time period.

Study the graph. Suppose this nation starts with producing all military goods. It then decides to produce a mix of civilian and military goods represented by point B. What represents the cost in military goods given up?

the vertical distance from point A to point x

capital

tools, equipment, machinery, and factories used in the production of goods and services

Double counting would occur if:

used goods were included in the GDP calculation

What amount should replace the X in the table?

$10,000