Econ Final Exam
A mutual fund is a fund that
buys a portfolio of stocks and bonds on your behalf
The "market value" of a good or service refers to the
current dollar value of that good or service
Depreciation refers to the
decline in capital due to wear and tear, obsolescence, accidental damage, and aging
Frictional unemployment is unemployment
due to the time it takes for employers to search for workers and for worker to search for jobs
The concept of equity focuses on
fairness
You go to Starbucks and see that the price of your favorite tall vanilla latte has gone up by 25 cents. All sizes of the vanilla lattes are now more expensive. As a result of this price increase, you would expect to see a
fall in the quantity demanded of vanilla lattes
Intergenerational mobility is the extent to which
the economic status of children is independent of the economic status of their parents
Human capital refers to
worker skills and knowledge
An underemployed person is one who is
working but whose skills are not fully utilized
In your current job, you earn $55,000. You take the standard deduction of $12,200. You have an offer of a new job working for a different employer. Your salary would go up by $5,000. How much extra will you owe in federal income taxes if you take the new job?
$1,100
The standard deduction for a single person is $12,200. Based on this table, if your total income is $47,000, what is the amount of tax you will pay on your taxable income?
$3,982
Which of the following is a source of comparative advantage?
Abundant inputs
The loanable funds market is the market for
Funds used to buy, rent, or build capital
Which of the following items is an inferior good?
Inferior goods
What is social insurance?
It is government-provided financial funding to households to compensate for bad outcomes such as unemployment, illness, disability, or outliving their savings
What is quantity supplied?
It is the amount of an item that a seller is willing to sell at a particular price
What is a social safety net?
It is the cash-assistance, goods, and services provided by the government to better the lives of those at the bottom of the income distribution
When quantity demanded exceeds quantity supplied, _____ exists
a shortage
The table provides data on how long it takes Marla and Jason to cook lasagna or chicken curry
Marla because she has a lower opportunity cost than Jason
Due to a decline in demand and popularity, Ford Motor Company is planning to phase out traditional sedans such as 'Fusion' and 'Taurus' to focus on SUVs and trucks. Ford's sedans and trucks/SUVs are
Substitutes in production
The law of demand refers to
The inverse relationship between price and quantity demanded
Which principle tells you that the true cost of something is the next best alternative you have to give up to get it?
The opportunity cost principle
The aggregate production function is represented as
Y = f(L, H, K)
In the graph, the movement from point E to point F represents
a decrease in the quantity supplied
the liquidity of an asset is defined as the
ability to quickly and easily convert the asset to cash, with little or no loss in value
In the market graph, consumer surplus in the area
above the price and below the demand curve
On a market graph, producer surplus is the area that is
above the supply curve and below the price
The working age population includes people who are
age 16 or older who are not in the military or institutionalized
The U.S. Department of Education sponsors the i3 program (Investing in Innovation), which provides grants to educational institutions and schools that have a proven track record of high student achievement. This is an example of a government program designed to build
human capital
The principle that your best choice depends on your other choices, the choices others make, developments in other markets, and expectations about the future is known as the _____ principle.
interdependence
Enforceable property rights encourage economic growth by encouraging
investment
Discretionary spending is spending that
is appropriated by Congress annually
Diminishing marginal benefit
is when buying an additional item yields a smaller marginal benefit than the previous item
Shifts in demand
lead to price and quantity to move in the same direction
The concept of diminishing marginal utility means that an additional dollar of income will yield _____ marginal benefit compared to the previous dollar of extra income
less
Analysis based on value judgments is called _____ analysis
normative
A labor force participation rate is the
percentage of the working age population that is either employed or unemployed
The producer price index is an index that tracks the
price that businesses pay over time for the inputs used in production process
A market is
setting that brings together potential buyers and sellers
The law of supply refers to
the positive relationship between price and quantity supplied
What is the Federal Reserve's mandate?
to ensure maximum employment while maintaining stable prices
The cost-benefit principle states that a decision should be pursued only if the
Benefits are greater than the costs
What's the difference between microeconomics and macroeconomics
Microeconomics is the study of individual decisions in specific markets, whereas macroeconomics is the study of the economy as a whole
How is monetary policy different from fiscal policy?
Monetary policy adjusts interest rates, whereas fiscal policy adjusts government spending and taxes
In the field of economics, the observation that the living standard of a household is more stable than its income, because people think in terms of their long-term earnings as they spend, is known as
Permanent income vs current income
Suppose that a CPI basket includes avocados, pineapples and oranges. Avocados become very expensive, and consumers substitute away from avocados and buy hummus instead. If the CPI basket does not change to reflect the move away from avocados, the result is
Substitution bias
What happens to the equilibrium price and quantity when demand increases and simultaneously supply decreases, and the relative size of the shifts is not known?
The equilibrium price rises, and the change in the equilibrium quantity is ambiguous
A production function is
a method through which inputs can be turned into outputs, given the available resources
An excise tax is a tax on
a specific product
Credit constraints limit the
amount of money that people can borrow
future value is the
amount that your money will grow into by a future date as a result of earning interest
A trade cost is
an extra cost incurred as a result of buying or selling a good abroad rather than domestically
the movement from point M to point Q represents
an increase in demand
The movement from point M to point N represents
an increase in quantity demanded
Market failures occur when market forces lead to
an inefficient outcome
Sunk costs are costs that
are incurred in the past and cannot be reversed
The consumer price index is an index that tracks the
average price that consumers pay over time for a representative basket of goods and services
A "final" good or service is one that is
finished and ready for the final user
To maximize production, people should
focus on the task in which they have a comparative advantage
Hand to mouth consumers
live paycheck to paycheck
Menu costs are the
marginal costs of adjusting prices
The slope of the consumption function is the
marginal propensity to consume
GDP is defined as the
market value of all final goods and services produced within a country in a given year
Forward guidance occurs when the Federal Reserve
provides information about the future course of monetary policy in order to influence expectations about future interest rates
An equilibrium price is a price where the
quantity supplied equals the quantity demanded
Comparative advantage explains why people
specialize and trade
Investment refers to
spending on physical capital
The three major pillars of the financial sector are the
stock market, the bond market, and the banks
A government can promote the development of human capital by
subsidizing secondary school education
Mandatory spending is spending that
supports programs that do not get determined annually but instead are set in law
When a manager uses comparative advantage to assign tasks in a workplace, then each
task is assigned to the worker with the lowest opportunity cost for performing the task
Government social insurance programs are funded by
taxes and fees that are assessed on workers and employers specifically for each program
A market's deadweight loss is calculated at
the economic surplus at the efficient quantity minus the economic surplus at the actual quantity
the law of diminishing returns states that
when one input is held constant, while other inputs are increased, eventually output will increase by smaller and smaller amounts