UNIT 3 PREP EXAM MICRO ECON

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Depressant discounted value of future payment can be calculated using which of the following formulas

(future payment)/(1+ interest rate)N power)

A bond is

A certificate acknowledging a day and amount of interest to be paid each year until payment; and I owe you

depreciation of the dollar refers to

An increase in the dollar price of foreign currency

Capitol gains are

An increase in the market value of an asset

The demand for labor and other factors of production typically decline in a recession because those factors

Are derived from the demand for final output, which also declines in a recession.

Exceptions and deductions included in the tax laws

Are designed to encourage specific economic activities

If the marginal tax rate is too high, it can cause all of the following, except

Businesses to produce more.

Specialization in production, and then trading with other countries

Change the mix of output for each country and increase total world output.

the net balance of payments is

Current-account balance plus Capital-account balance

If the government imposed a green tax on gasoline, the amount of air pollution should

Decrease as people switch to more fuel-efficient cars.

The demand for dollars in the foreign exchange market

Depends in part on the foreign demand for U.S. goods

There risk premium is the

Difference and rates of return on safe and risk investments

an increase in the price of the us dollar in terms of euros will cause ceteris paribus,

European goods to be cheaper to residents of the United States.

By altering market incentives, the government tries to shift

External costs to the producer

Comparative advantage in production is achieved by

Having a lower opportunity cost of producing a good relative to that of other countries.

which of the following generates demand for foreign currencies

Imports of foreign goods by firms located in the United States.

The labor supply curve starts to burn backward once the

Income affect exceeds the substitution effect

an emission charge

Increases private marginal cost and reduces output

Affirm should hire an additional work as long as the wage rate is

Less than or equal to the MRP

Without trade, the countries consumption possibilities are

Limited to its domestic production possibilities

And economy with nominal tax rates, significantly higher than effective tax rates has

Loopholes in the tax code

If a greater portion of income is distributed to those in the highest income quintile, the

Lorenz curve sags below the diagonal line of absolute equality.

If a firm that pollutes wants to maximize profits, it will produce where

Marginal revenue and private marginal cost are equal.

As long as interest-earning opportunities exist, present dollars are worth

More than future dollars.

If the wage rate increases, there will be a

Movement up the labor supply curve to the right

The effective tax rate is

Never higher than normal tax rate

The intersection of demand for loanable funds and the supply of loanable funds determines the

Prevailing interest rate.

external costs occur because

Private costs do not reflect the full costs to society.

The US federal income tax is classified as a

Progressive tax only.

Tradable, pollution, permits, when compared to command and control options, tend to

Provide the same amount of pollution abatement at a lower cost.

A primary purpose of tradable pollution permits is to

Reduce the cost of pollution control.

Financial intermediaries make the allocation of resources, more efficient by

Reducing search and information costs in the financial markets

A tax is progressive if it takes a

Smaller fraction of income as income falls.

Dividends are

The amount of corporate profit paid out for each share of stock

A beggar thy neighbor policy is

The imposition of trade barriers to increase domestic employment.

Market failure exist whenever

The market generates a sub optimal outcome of income distribution

The advantage to a corporation of issuing bonds instead of stock is that

The owners keep control of the company.

social costs are

The total resource costs of an economic activity.

Opportunity cost of working is the

Value of leisure time that must be given up.

The number of hours that workers willing to work, is determined by the trade off between the increasing

Value of leisure time, and then decreasing marginal utility of income

appreciation of the us dollar can be caused by

an increase in the demand for dollars

The supply of loanable funds is determined by all the following except

demand for loanable funds

Taxes paid divided by total income is the

effective tax rate

the exchange rate is the price of

one currency in terms of another

The US tax system, as a whole is basically

proportional

In general, state and local taxes are

regressive

A tax imposed on imported goods is

tariff

exports minus imports define a countrys

trade balance

For an upward-sloping labor supply curve, the quantity of labor supplied varies directly, ceteris paribus, with

wage rate


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