DAe4final

The unemployment rate is calculated as

(the number of unemployed / the number of people in the labor force) *100%

An example of a fiduciary monetary system is

American​ one-dollar bills.

The minimum wage is an example of a price ceiling. A. False B. True Part 2 An​ above-equilibrium minimum wage will result in​ ________ in the quantity of labor demanded and​ ________ in the quantity of labor supplied. A. a​ decrease; a decrease B. an​ increase; a decrease C. an​ increase; an increase D. a​ decrease; an increase

False a​ decrease; an increase

Which of the following describe the​ "invention" of​ banking?

Goldsmiths in the sixteenth century issued gold receipts which entitled its owners to reclaim their gold on demand.

Which of the following statements is​ true? A. Most individuals earn more when they are older than when they are younger or​ middle-aged. B. Most individuals earn more when they are younger than when they are​ middle-aged or older. C. Most individuals earn the same amount whether they are​ younger, middle-aged, or older. D. Most individuals earn more when they are​ middle-aged than when they are younger or older.

Most individuals earn more when they are​ middle-aged than when they are younger or older.

If the federal government has a budget deficit it can finance its spending by Part 2 A. selling municipal bonds. B. selling Treasury bonds. C. selling corporate bonds. D. All the above. Part 3 Which of the following statements is true regarding the national debt and federal government​ deficits? Part 4 A. There is a positive relationship between the national debt and a federal government budget surplus. B. There is a positive relationship between the federal government budget surplus and a federal government budget deficit. C. There is a positive relationship between the amount of borrowing and a federal government surplus. D. There is a positive relationship between the national debt and a federal government budget deficit.

Part 1 Selling treasury bonds Part 2 There is a positive relationship between the national debt and a federal government budget deficit.

Which of the following actions would cause an increase in the level of reserves in the banking​ system?

The FOMC instructs the NY trading desk to purchase government bonds on the open market.

In a market​ system, how are the terms of exchange​ established? Part 2 A. Consumer advocacy groups establish fair prices for​ items, and most firms comply because they​ don't want to anger their customers. B. The forces underlying supply and demand interact to set a price. C. Federal and state legislation establish minimum and maximum prices. D. Industry associations set up acceptable price ranges for their​ goods, and firms within each industry are required to set price within its relevant range.

The forces underlying supply and demand interact to set a price.

A model is considered​ "good" if it yields usable predictions that are supported by​ real-world observations. A. False B. True

True

All of the countries that grant considerable economic freedom have experienced positive rates of economic growth.

True

Cyclical unemployment results from business recessions.

True

The difference between real GDP and nominal GDP for the same year reflects the amount of inflation that occurred during that year

True

The labor force is equal to the number of employed plus the number of unemployed.

True

Unemployment due to the fact that workers must search for appropriate job offers is called frictional unemployment.

True

A black market is a market in which a​ price-controlled good is sold at an illegally high price. A. True B. False Part 2 As long as a price ceiling is​ ________ the market clearing​ price, imposing a price ceiling creates a​ ________. A. ​below; surplus B. ​above; surplus C. ​below; shortage D. ​above; shortage

True ​below; shortage

When the Fed engages in open market​ operations, it is buying or selling A. U.S. government securities newly issued by the U.S. Treasury. B. capital equipment. C. U.S. government securities. D. loans made to banks to meet the legal reserve requirement ratio. E. gold.

U.S. government securities.

Which of the following describes an inferior​ good? A. When consumer income​ decreases, the demand for public transit decreases. B. When consumer income​ increases, the demand for eggs decreases. C. When consumer income​ decreases, the demand for aspirin is unchanged. D. When consumer income​ increases, the demand for tea increases.

When consumer income​ increases, the demand for eggs decreases.

The accompanying graph depicts the market for unskilled labor. With the market initially in​ equilibrium, let a minimum wage be set at​ $8 per hour. The amount of unemployment is now Part 2 A. ​40,000 hours of labor. B. ​20,000 hours of labor. C. zero. D. ​50,000 hours of labor.

Wrong ans: ​20,000 hours of labor.

Which of the following will cause the demand curve to​ shift? A. a change in consumer income B. more firms in the market C. newer technology and improved productivity D. a change in the cost of raw materials

a change in consumer income

The effect of a quantity restriction is

a higher price

The effect of a quantity restriction is A. higher taxes to pay for the quantities of the good that the government must buy and store. B. an increase in quantity supplied. C. a reduction in demand. D. a higher price.

a higher price.

A cost that arises from the production or consumption that falls on someone other than the producer or consumer is called A. a positive externality. B. a public choice impact. C. a negative externality. D. a negative benefit. E. a private good.

a negative externality.

An increase in the price of cigarettes will reduce the amount of cigarettes purchased. This is Part 2 A. a positive economic statement. B. a negative economic statement. C. a normative economic statement. D. an economic assumption.

a positive economic statement.

A monopolist is defined as A. a single supplier of a good or service for which there is no close substitute. B. a large​ firm, making substantial​ profits, that is able to make other firms do what it wants. C. a producer of a good or service that is expensive to​ produce, requiring large amounts of capital equipment. D. a firm with annual sales over​ $10 million.

a single supplier of a good or service for which there is no close substitute.

If the current price of a good is greater than the equilibrium​ price, there will be

a surplus of the good and its price will decrease.

Given the existence of relative​ scarcity, resources can be rationed by Part 2 A. a system of prices. B. ​queuing, or standing in line. C. political mandate. D. All of the above.

a system of prices. B. ​queuing, or standing in line. C. political mandate.

In order to be​ successful, money in a fiduciary monetary system must have

acceptability and predictability of value.

The expenditure approach to tabulating GDP A. adds up the total value of all income earnings during the year. B. adds up the total amount spent on newly produced domestic goods and services during the year. C. excludes investment expenditures because they yield consumption in the future. D. adds consumption​ expenditures, investment​ expenditures, government​ expenditures, interest payment and wages.

adds up the total amount spent on newly produced domestic goods and services during the year.

Prices perform a rationing function by

allocating goods to the buyers who are willing and able to pay the highest price.

The economic way of thinking will

allow you to make better decisions.

The economic way of thinking is best described as A. the collected writings of the economics Nobel Prize winners. B. the glossary of terms at the back of your textbook. C. a set of economic rules handed down from one generation to the next. D. an analytical framework enabling one to reach informed conclusions.

an analytical framework enabling one to reach informed conclusions.

The federal budget is defined as Question content area bottom Part 1 A. an annual statement of U.S. government violations of international laws. B. an annual statement of expenditures and tax revenues of the U.S. government. C. a monthly statement of expenditure laws passed by the U.S. government. D. a monthly statement of whether the U.S. government is in deficit or surplus. E. an annual statement of what policy actions the U.S. government has pursued.

an annual statement of expenditures and tax revenues of the U.S. government.

Tim goes to a design academy to become a toy designer. This is an example of

an investment in human capital.

Positive economic statements​ ________, and normative economic statements​ ________. A. relate to whether outcomes are good or​ bad; are​ value-free statements B. are value​ judgements; are factual statements C. are concerned with​ "what is"; are concerned with​ "what ought to​ be" D. are scientific​ predictions; are purely descriptive

are concerned with​ "what is"; are concerned with​ "what ought to​ be"

If the Fed increases the discount​ rate, A. ​banks' assets increase. B. banks find it more profitable to increase their loans to businesses. C. banks pay a lower interest rate if they borrow from the Fed. D. banks pay a higher interest rate if they borrow from the Fed. E. banks increase their lending to the Fed.

banks pay a higher interest rate if they borrow from the Fed

A private cost is a cost of production that is A. always the same as the social cost of production. B. borne by the producer of a good. C. equal to zero if there is an external cost. D. the same as an external cost. E. borne by someone other than the producer of a good.

borne by the producer of a good.

The use of the federal budget to achieve macroeconomic objectives of full employment and sustainable economic growth is

called fiscal policy

Economic models A. include every detail found in the real world. B. can be used to explain or predict economic phenomena. C. are not tested using​ real-world data. D. assume that all factors in the model change at the same time.

can be used to explain or predict economic phenomena.

A public authority that provides banking services to commercial banks and regulates financial institutions and markets is called a Question content area bottom Part 1 A. mint. B. commercial bank. C. central bank. D. money market fund. E. thrift institution.

central bank

Consider the coffee market shown in the graph at right. A decrease in the demand for coffee will​ ________ the equilibrium price and​ _________ the equilibrium quantity. A.increase comma decrease increase, decrease B.increase comma increase increase, increase C.decrease comma maintain decrease, maintain D.decrease comma decrease

decrease, decrease

Real GDP is computed by adjusting nominal GDP for

depreciation.

According to the law of​ supply, the quantity supplied of any commodity is​ ________ related to its​ price, other things being equal.

directly

Government-enforced prices such as price ceilings A. are only imposed on goods where market price has no useful function. B. ration economic resources more efficiently than prices in a market system. C. aid in the rationing function performed by prices in a market system. D. disrupt the rationing function performed by prices in a market system.

disrupt the rationing function performed by prices in a market system.

Of all the characteristics that lead to income​ inequality, the factor with the largest impact is

education

Goods and services that the United States sells to other nations are called

exports.

The cost of producing an additional unit of a good or service that falls on people other than the producer is the marginal

external cost.

Which type of unemployment is​ this? A.cyclical unemployment cyclical unemployment B.frictional unemployment frictional unemployment C.structural unemployment structural unemployment

frictional unemployment

Buyers and sellers receive information about what should be bought and what should be produced A. from prices in a market system. B. by listening to TV news programs. C. from newspaper gossip columns. D. from friends and family.

from prices in a market system.

The existence of scarcity requires

hat people must make choices and face​ trade-offs in using their resources.

Car insurance and cars are complements. If the price of car insurance​ increases, the

i answered(wrong ans): quantity of cars demanded decreases. Correct answer: demand for cars decreases

Opponents of minimum wage legislation argue that higher minimum wages serve to

increase​ unemployment, particularly among unskilled minority teenagers.

In order to raise wages above the market level for its​ workers, a union must

limit the supply of labor in an industry.

Voluntary exchange

makes both parties to a trade better off.

Which of the following is the best example of a public​ good?

national defense

"We ought to do more for the education of our​ children." Statements using words like ought or should are A. normative statements. B. irrational statements. C. positive statements. D. empirical statements.

normative statements.

In a​ zero-sum game

one​ player's losses are offset by another​ player's gains.

The inequality of annual income

overstates the amount of lifetime inequality.

All of the following transactions are excluded from the measure of GDP except A. paying your dentist to have your teeth cleaned. B. the purchase of existing shares of Microsoft stock. C. Social Security payments. D. the sale of a used car.

paying your dentist to have your teeth cleaned.

Public goods create a free−rider problem because

people can enjoy the good or service no matter whether or not they pay for it.

A currency will cease to function as money if

people think that they will not be able to use it to exchange for goods and services later.

The tragedy of the commons is the absence of incentives to

prevent overuse and depletion of the common resource.

When demand decreases and the​ (upward sloping) supply curve remains in the same​ position, Part 2 A. price rises and equilibrium quantity rises. B. price rises and equilibrium quantity falls. C. price falls and equilibrium quantity falls. D. price falls and equilibrium quantity rises.

price falls and equilibrium quantity falls.

Import quotas are an example of​ government-imposed A. quantity restrictions. B. price ceilings. C. price floors. D. price lotteries.

quantity restrictions.

All of the following are government imposed quantity restrictions except A. rent controls. B. a ban on a good making it illegal to own the good. C. import quotas. D. licensing certain activities.

rent controls

In a rent controlled​ market, we would expect to observe

renters moving into the market to take advantage of the lower rents.

Each individual must make choices because A. resources are limited and therefore cannot satisfy​ one's many competing wants. B. even if​ one's wants are completely​ satisfied, insufficient time exists to fully enjoy all of them. C. wants are sometimes mixed up with needs. D. needs are more important than wants.

resources are limited and therefore cannot satisfy​ one's many competing wants.

Scarcity

results from unlimited wants coupled with limited resources.

The Board of Governors of the Federal Reserve System has

seven members serving for 14−year terms.

In a price​ system, changes in prices

signal to consumers that some goods are relatively more or less scarce.

The government has a budget surplus if

tax revenue is greater than outlays.

The primary losers from minimum wages are A. teenage and unskilled workers. B. ​ low-wage workers who remain employed. C. ​ high-wage workers. D. the government.

teenage and unskilled workers.

Of the​ following, who gains from a​ tariff?

the government of the importing country

Market failure occurs because

the market system does not make individuals responsible for the social​ costs/benefits of their actions.

The theory of public choice is the study of

the process through which​ voters, politicians, and other interested parties interact to influence nonmarket choices.

According to the accompanying​ graph, when the government imposes a price ceiling of​ $25 A. the quantity of goods that will be traded is 150. B. the quantity of goods that will be traded is 200. C. the quantity of goods that will be traded is 0. D. the quantity of goods that will be traded is 100.

the quantity of goods that will be traded is 100.

Gross domestic product is defined as

the total market value of all final goods and services produced in an economy during a year.

Which of the following is a dissimilarity between the market sector and the public sector decision​ making?

the type of voting system

Market failure occurs when A. the market system fails to allocate resources to each individual according to their abilities. B. the unrestrained market economy leads to too few or too many resources going to a specific economic activity. C. the market system fails to allocate an equal share of resources to all individuals. D. the market system fails to allocate resources to each individual according to their needs.

the unrestrained market economy leads to too few or too many resources going to a specific economic activity.

Opportunity cost refers to

the value of the​ next-best alternative.

Which of the following is a similarity between the market sector and the public sector decision​ making? A. there is an opportunity cost associated with every action B. a dollar voting system is in effect C. governments can resort to using force in their regulation of economic affairs D. goods are furnished to the ultimate consumers without payment required

there is an opportunity cost associated with every action

When an individual proclaims the need for a new​ car, the person typically means

they want something they currently do not have.

The primary purpose of economic regulation is

to control the price that regulated enterprises are allowed to charge.

The ultimate purpose of economics is

to study how individuals make choices.

A good or resource is excludable if

when you pay for the good or​ resource, you are guaranteed to be the sole consumer.

Ceteris Paribus means

​"other things​ constant."

Does the richest person in the world face the problem of​ scarcity?

​Yes, because even if you have money you will never be able to satisfy all of your wants and must therefore make choices.

If the Fed engages in an open market sale with a bond​ dealer, the bond​ dealer's bank's transactions deposits liabilities will​ ________ and the money supply will​ ________.

​decrease; decrease

In which of the following cases does the tragedy of the commons​ occur? ​i) cattle grazing on private ranches ​ii) catching lobsters off the coast of Florida ​iii) raising salmon on salmon farms ​iv) using legal services provided by the courts

​ii) catching lobsters off the coast of Florida

Factors of production include

​land, labor, physical​ capital, human capital and entrepreneurship.