ECON&202 Final

While Steve is cleaning out his garage, he finds an old surfboard that he no longer needs.

$10, the value of the beer he recieved

If an economy is growing at 10%, how long will it take for $1,000 to turn into $4,000?

14 years

which of the following acts...?

Federal Reserve act of 1913

The table shows that:

Person A has a higher willingness to pay for the fourth donut but not for the first donut

Which is not one of the three basic economic questions that each society must answer?

Who decides what goods and services are in demand?

which of these is a liability for a bank?

customer checking

What does the paradox of thrift say?

an economy that saves too much can end up with lower total savings

Which of the following would likely not cause inflation?

consumer confidence falls due to global economic concerns

Which of the following is true about hyperinflation?

financial assets in a hyperinflated currency quickly become worthless

Automatic stabilizers have ___ effects during times of economic prosperity and ___ effects during times of economic downturn.

contractionary and expansionary

reducing government spending, reducing transfer payments, or raising taxes describes which policy?

contractionary fiscal policy

if we want to raise the interest rate, which policy do we choose?

contractionary, take money out of the system, sell bonds

monetary policy deals with how we...

control money supply with setting a target interest rate

a country has an absolute advantage when...

producing more

the twin goals are

stable growth, stable prices

according to the trade off. which asset would have the highest risk in return?

stock and social media

what is the single most important factor influencing economic growth for an economy?

increased productivity

If real GDP at full employment is $5 billion...

inflationary gap; decrease

Which of the following is not true regarding the informal economy?

informal market activities do not contribute to the standard of living citizens

What occurs when spending what is above the full employment level?

innflationary gap

the wealth effect refers to the fact that when aggregate price levels rise:

the real value of savings accounts, bonds, and cash declines.

M1 is equal to:

traveler's check and debit

When the economy hits the bottom of the business cycle, this is called a:

trough

If an economy is operating at a point inside if its production possibilities frontier, then it can be assumed that its resources are:

underutilized

Uvaldo is deciding which brand of energy drink to buy. According to market economics, he would benefit most from basing his decision on which brand has the most:

value relative to its price

Which of the following statements about environmental quality and economic activity is true?

wealthier countries tend to value environmental quality more than developing countries

When economists warn about the crowding-out effect, they are referring to:

when government borrowing reduces private investment

Jackie finds a pair of jeans that she likes but the price tag is missing. She is willing to buy it ass long as its not more than $100. The cashier informs Jackie that the price is $72. Jackie buys the jeans, and therefore achieved a consumer surplus of:

$28, the difference between what she is willing to pay and the price

Which of the following price floors for milk would not cause a surplus in the market if the equilibrium price for milk is 3.60

$3.50

a guitar is produced in California using $100 in raw materials and sells for $300 in a guitar shop. Each guitar that is produced contributes ___ to U.S GDP

$300

if the marginal propensity to save is 0.2 and income rises by $5,000, how much of this will be consumed?

$4,000

In the graph, if a price floor on soybeans is set at $2 per bushel, the amount of surplus in this market would be ___.

0 bushels

Suppose that a store sells candy bars for 0.89 for one and 1.50 for two. The marginal cost of the second candy bar is:

0.61

if the price index is 200, how much did a $12 pizza (today) cost in the base year?

6.00

If the government raises taxes, what will this do to the AD curve?

AD shifts left

if a country increases the amount of goods it imports but its exports remain unchanged:

AD shifts left

if business expectations become less favorable, what will likely happen to the AD curve?

AD shifts left

Which policy is most likely to contribute to improved standards of living over time?

Adding after-school art and music programs to promote creativity.

In the following PPF, between which two points would short-run growth be represented

B to C

What are the components of aggregate expenditures?

C+I+G+(X-M)

which of the following persons is considered unemployed?

Emily has not worked for two months, but still applies for jobs every week

Which headline would be least likely to be studied in macroeconomics?

GM Expands Car Sales in China

At the end of the term, Vicky wants to sell her economics textbook for at least $25, otherwise she would keep it. George is looking to buy a textbook because he's taking the class next term, and he is willing to pay at most $60. If Vicky agrees to sell the textbook to George for $45:

George's consumer plus is $15 and Vicky's producer surplus is $20

Which of the following persons is considered part of the labor force?

Joe, a senior in high school who works part-time on weekends at the ice cream shop

cash is counted as a part of what?

M1

what are 2 common measure?

M1 and M2

If the economy is above long-run equilibrium output, what will happen in the long run if SRAS adjusts?

Prices rise and output decreases

Which statement is NOT true when a market is in equilibrium?

Sellers have enough inventory to satisfy all buyers and some left over for future demand

using the production rates for Spain and Portugal, which statement is TRUE?

Spain has a comparative advantage in olives

Because people make decisions at the margin, when deciding whether to purchase a second car, they would therefore compare:

The additional benefits expected from a second car with the additional costs of the second car

Tim woke up this morning with a stomachache and decided to skip class in order to get more rest. What is the opportunity cost of Tim's decision to sleep in?

The value of attending the class he decided to miss

The ceteris paribus assumption holds some variables constant in order to aid in model building.

True

In general terms, which item is an example of an inferior good?

a city bus

Trade is:

a driver of economic growth

Scarcity refers to the fact that:

a person must make choices given the resource limitation he or she faces

a tariff on an ... artwork...

adraloram

what happens when ___ federal reserve?

aggregate demand shift right

What does the 45 degree line represent?

all consumption and no saving

which example represents incentives for decisions?

all of these are incentives

Getting a flu shot reduces the chances of spreading the illness to one's classmates and friends. Why, then, is this considered a market failure due to external benefits?

because the number of people who obtain flu shots is less than the socially optimal quantity.

An effective price ceiling occurs at a price ____ the equilibrium price and causes a _____.

below; shortage

Which asset has the highest liquidity?

cash

Which of the following is not considered an example of one of the four main factors of production?

cash bonds

Which of the effect best explains why Ethiopia is able to achieve a high growth rate while Japan struggles with low growth?

catch-up effect

Advantages of coins over bills are everything except?

coins last longer, total cost is lower

What is one major category that separates national debt from public debt?

debt held by other government agencies

A temporary rise in the price of agricultural crops due to drought is likely to cause a(n):

decrease in the short-run aggregate supply

in order for the Fed. to raise interest rates it needs to do what?

decrease money by open market operations

higher interest rate ___ consumption ____ aggregate demand

decreased , exports, decreases

which of the following is specifically designed to increase the long-run aggregate supply curve?

developing new technologies

which of these is not part of the financial system?

digital market

When the increase in prices goes from 5% to 2%, this is referred to as:

disinflation

GDP measures the final value of goods and services produced to avoid the problem of:

double counting

If Chuck gets laid off from a high paying job and temporarily working as an Uber driver, he is considered

employed

the balanced budget multiplier is:

equal to 1

if the economy is in a recession...

expansionary policy, interest rates goes down

What does X represent in GDP?

exports

lower interest rate increases consumption investment and ____ which ____ aggregate demand

exports and improves aggregate demand

which of these would be the lowest interest rate?

federal funds rate

Which of the following combinations would result in the most economic freedom?

free trade, competitive markets, and limited regulations

an important reason why the federal reserve wouldn't keep interest rates at 0% is

give yourself room to get the most out of the expansionary policy. Fight inflation?

People's willingness to pay for umbrellas is most likely ____ on a ____ day.

higher; rainy

The provision of Pell Grants and the G.I Bill are examples of government investment in:

human capital

Which of the following are considered withdrawals from an economy?

imports, taxes and saving

If AD shifts right as the economy booms, and then SRAS shifts left, what happens to inflation?

it increases

Increased taxes will shift the aggregate demand curve to the ___ and ___ output demanded.

left; decrease

Resources are:

limited, but wants are unlimited

Which of the following curves is vertical?

long-run aggregate supply

If there is a lack of competition in a market, a market failure results because the quantity of goods sold is ___ than the optimal level while prices are ___ than the optimal level.

lover; higher

what was the primary reason to the 2008?

low interest rates, easy lending standards

a bonds price and yield

moves in opposite directions

all of the following programs are considered mandatory spending EXCEPT:

national defense

under which condition ... lender of last resort?

open market operations

what is the most important function of the Federal Reserve?

open market operations

Federal Reserve rate is the % rate banks charge other banks are what kind of loans?

overnight loan

Which of the following sequences is in the correct order according to the business cycle?

peak, recession, trough, recovery

A market exists when:

people exchange money for goods and services

Which point in the figure is obtainable but not efficient?

point f

For any given product, ______ is determined by what the market will bear.

price

On a demand curve:

price is on the vertical axis and the quantity demanded is on the horizontal axis

When a society produces a mix of goods and services that are most desired and produces them at the lowest cost possible:

production and allocative efficiency are achieved

if the economy is facing inflationary

raise interest rates

What is the best measure of economic growth and standards of living in a country?

real GDP per capita

FD uses its tools to counteract what?

recessions

Production efficiency:

reflects how well resources are allocated

Rational behavior:

requires thinking at the margin

the main features of fractional reserve banking are that banks do what?

reserve and loan money

if the government offers an incentive to individuals to save, the supply for loanable funds will shift to the ___ and ___

right; decrease

if the firms' product demand increases then the demand for loanable funds will shift to the __ and __

right; increase

the supply curve for loanable funds is shown as...?

savers and upward

which of the following is a form of U.S public debt?

savings bonds

U.S exports

services

in the market for LF what can cause a rise in the interest rate?

shift right in demand curve, shift in supply to the left

Frictional unemployment is:

short-term unemployment associated with people who are switching jobs

Zetaland produces widgets and gadgets. At current levels of output, it can produce more of both. We can conclude that:

some resources are not being used.

which of the following two things can people do wot money received as disposable personal income?

spend money or put it into savings

in the market for loanable funds, savers are shown as what?

supply curve, upward

Which factor of production enhances the productive capacity of all other resources in the production function?

technology

average price something...

terms of trade

A point on a nation's production possibilities frontier indicates:

that resources are fully utilized in producing the given combination of goods and sevices

Which of the following is a critical dilemma when implementing fiscal policy in reference to timing lags?

the economy may already be in a recovery before fiscal policy is enacted

demand refers to:

the goods and services buyers are willing and able to purchase at various prices in a given period of time

Planned economies rely heavily on ___ to make most economic decisions.

the government