new for final

does US import or export more

import

The labor force is the sum of

b. Employed workers and unemployed workers.

demand loanable funds

borrowers/ firms

Tax laws affect

both efficiency and equity.

supply labor of curve

bottom half is substitution, upper half is income

Hyperinflation is caused

by a rapid increase in a country's money supply,

A bank holds its reserves as _____ and _____.

c. Vault cash; deposits at the Federal Reserve

Which one of the following is not considered a financial intermediary?

d. A credit counselor

long run average cost curve for oligopolies

downward sloping because economies of scale

why do oligoplies exist?

economies of sclae

The Trans-Pacific Partnership (TPP) would ________ tariffs on most goods and services shipped between partnership countries and also ________ so-called non-tariff barriers to trade, such the licenses governments require to import some goods.

eliminate; reduce

labor force=

employed + unemployed who are looking

An increase in aggregate demand results in a(n) ________ in the _______

expansion, shortrun

104) Suppose Bob works for Mary as a proofreader. Mary and Bob fall deeply in love, marry, and have eight children. Bob stops working for Mary in order to care for the children. What will be the effect on GDP?

A) GDP will decrease.

Which of the following is a true statement about the multiplier?

A) The multiplier rises as the MPC rises.

114) When actual inflation is less than expected inflation

A) borrowers lose and lenders gain.

To examine how the total production of an economy has changed over time, it would be better to examine

A) real GDP.

Marginal productivity of labor goes up = increase in GDP

!

midpoint formula

(x₁+x₂)/2, (y₁+y₂)/2

3 microeconomic things to keep you out of poverty

- graduate from high school - don't have children until marriage and 21 - work continuously even if it is MW only 2% chance of being pour

weakness of GDP 4

- ignores value of leisure - included cost of reducing pollution not benefit -crime.. things are bought but not a good thing - dist if income... not good if only 1% grows

In the long run, _____ differences in economic growth rates result in _____ differences in GDP per capital.

. Small; large

The marginal propensity to consume is defined as

. The change in consumption divided by the change in disposable income.

monopoly... #of firms, type of product, enter/exit

1, unique, no enter/exit

real US GDP

1.5%

debt % to GDP

122%... ratio of debt to GDP

unemployment rate

3.7%

deficit % to GDP

3.7%.. spending more than receiving in taxes

rule of 70

70/growth rate = years to double for economy

inflation rate

8.2%

Security

A financial asset- such as a stock or bond- that can be bought and sold in a financial market

Commodity money

A good uses as money that has value independently of its use as money

AE formula

AE = C + I + G + NX

PPI (Producer Price Index)

An index that measures prices at the wholesale level... indication for CPI

Assets

Anything of value

money

Assets that people are generally willing to accept in exchange for goods and services

Assume that Bulgaria has a comparative advantage in producing sandals and Finland imports sandals from Bulgaria. We can conclude that

Bulgaria has a lower opportunity cost of producing sandals relative to Finland.

119) The demand for durable goods

C) declines by a smaller percentage than does GDP during a recession.

118) In comparison to a government that runs a balanced budget, when the government runs a budget deficit,

C) household savings will fall.

Federal reserve

Central bank of US

Some consumer electronics products such as plasma TVs, DVD players, and digital cameras, are introduced at very high prices but over time, their prices start falling (beyond what could be attributed to falling costs as companies take advantage of economies of scale and cheaper technologies). Which of the following is the best explanation for this observation?

D) After satisfying the demand for early adopters, firms lower price to attract the more price-sensitive

Following the passage of comparable worth legislation, Unity College responds by placing salaries for all assistant professors at $80,000. Which of the following is the result of the legislation?

D) There will be a surplus in the market for English professors and the market for business professors will not be affected.

if interest rate is below amount than amount demand > supply of loanable funds so

IR will rise

monetary policy

If the federal reserve buys treasury bonds, the price of bonds will increase the interest rate world wide will decline

Discount loans

Loans the federal reserve makes to banks

Discount policy

Lowering discount rate, fed can encourage banks to take additional loans and increase their reserves

oligopolies produce where

MC cuts MR

why is demand curve slope down for labor

MPL productivity decreases as you hire more, as you sell more Mrevenue declines

Which of the following could be evidence of a market failure?

Market prices do not reflect true production costs.

are pensions part of GDP

NO

According to Joseph Schumpeter, the theory of creative destruction describes a process by which

New products unleash a gale of destruction that drives old products out of the market.

The static aggregate demand and aggregate supply curve model helps explain

Short term fluctuations in real GDP and the price level.

rich pay majority of taxes

T

What is the area that represents producer surplus under a monopoly?

TRAPazoid

If Canada imports fishing poles from Mexico and Mexico imports bacon from Canada, which of the following would explain this pattern of trade?

The opportunity cost of producing fishing poles in Canada is higher than the opportunity cost of producing bacon in Mexico.

The labor force participation rate is defined as

The percentage of the working-age population in the labor force.

When aggregate expenditure is less than GDP, which of the following is true?

There was an unplanned increase in inventories.

for oligopoly, monopoly, and monocomp wage

W<_ Mpl * MR

Long run macroeconomic equilibrium

When AD, SRAS intersect on LRAS

GDP formula

Y=C+I+G+NX

"Free riding" is a characteristic of which type of good?

a public good

dominant strategy

a strategy that is best for a player in a game regardless of the strategies chosen by the other players

macroeconomic equilibrium

aggregate demand equals the quantity of aggregate supply/ savings=investment

aggregate demand curve

an aggregate demand curve shows the total spending on domestic goods and services at each price level.

closed economy

an economy that does not interact with other economies in the world y=c+i+g

15) If the Fed implements a expansionary monetary policy, this will lead to

an increase in the money supply, a decrease in interest rates, and an increase in GDP.

what causes the entire sras to shift

any variable other than price

The public choice model

applies economic analysis to government decision making.

state and local gov save which outweighs __ spending

federal gov

oligopoly firms... #of firms, type of product, enter/exit

few, doesn't matter, hard

CPI can be overstated

from biases.. must frequent

108) If an American firm opens a production facility in India, the total value of the production will be included in the

gdp of india

why can do mono comp demand change

go the left and become more elastic and in long run breaks even

sources of government failure 1) public choice theory

government officials work for their best interest

100) The political process is more likely to serve the interests of individuals whose preferences are in the middle, rather than individuals with preferences that are much to the left or right of the political center. This statement is best explained by which of the following?\\

he median voter theorem

saving loanable funds ...

household, governments

sources of government failure 3) log rolling

i do this, you do this for me

why does demand on Pi and real GDP slope down?

if price goes down, people spend more, if interest rate goes down, people invest more, if price of imports go down people export more

bulldog clause

if you break our agreement, I will ruin you

why does US growing

increase in capital, increase in technology

Demand curve for wage and labor can shift ...5 reasons

increase in human capital, increase technology, increase in price of product, increase of quantity of inputs, increase of number of firms

expansionary policy at full employment leads to

increase in prices

A policy that offers parents a tax reduction based on how much they are saving for their children's college education should ________ the equilibrium level of loanable funds and ________ the rate of long-term growth.

increase, increase

If the Fed buys U.S. Treasury securities, then this

increases reserves, encourages banks to make more loans, and increases the moneysupply.

id AD shifts faster than supply

inflation

what leads to redistribution of income

inflations

The demand for labor is described as a derived demand because

it is derived from the demand for products that use labor in the production process.

high income have___ flexibility and ___ financial system

labor , efficient

If demand is inelastic, the absolute value of the price elasticity of demand is

less than 1

105) If GDP calculations included measurements of pollution and environmental damage, GDP values would most likely be

less than their values without these measurements.

sources of government failure 4) regulatory choice

loyalty will shift from government to company if you are treated like royalt

fiscal policy

made by washington —> expansionary Increase gov spending, decrease taxes

monopolistic competitive firms... #of firms, type of product, enter/exit

many, different, easy

perfectly competitive firms... #of firms, type of product, enter/exit

many, identical, easy

monopolies produce at

mc=mr

CPI (Consumer Price Index)

measure of how much a family of four pays

103) Consumption expenditures do not include household purchases of

new houses

in short run mono comp can make profit, in long run

no

why do oligopolies exist?

occupational licenses, patents or tariffs/quptas

elasticiy price of demand

percent change in quanitty/ price

cyclical

person looking for job but no job to be found

structural

person looking for job, but qualification do not meet

frictional

person looking for job, job looking for person but they have not foudn eachother

2 shifts to Aggregate demand

policy - monetary and fiscal and, unexpected shcok

supply for labor can change if

pop increase, change in demographics, alternative for working

what causes shift on sras

price level

PC is__ while MC is not

productively efficient

Which of the following displays these two characteristics: nonrivalry and excludability?

quasi-public goods

how to people save / borrow

save liquid, borrow illequid

if household want to consume more what happens

savings down, so supply to left

sras curve

shows relationship between price level and quantity of real GDP

when ae>GDP

spending is more, inventories decline causing GDP and total employment to increase

increase in labor force of capital stock or productivity shifts ___ to the ___

sras to the right

Adam Smith's three requirements for economic growth and development are:

state should not impose any restriction on freedom of an individual. The theory of economic development rests on the pillars of saving, division of labour and wide extent of market.

increase in federal deficit leads to what happening in the graph

supply curve to left, IR rises.. firms borrow less

Marginal revenue product for a perfectly competitive seller is equal to

the change in total revenue that results from hiring another worker.

When there is a positive externality

the marginal social benefit received by consumers is greater than the marginal private benefit.

66) When a negative externality exists, the private market produces

the private market will over produce

Aggregate Expenditure

total spending on final goods and services in an economy during a given period, usually a year

GDP does not include what economy

underground

if aggregate supply moves faster than demand ...

unemployment

sources of government failure 12) rent seeking

use their power to better themselves

In PC wage is

wage=<_ MPL*Price

mono comp produce

where mc=mr

in the long run, the monopolistic competitor produces the minimum-cost output level, Qa, but in the short run its output of Qb is not cost minimizing.

yah

perfect comp and mono comp both earn...

zero economic profit in long run