Econ Final Exam Prep

A contractionary fiscal policy either _____ government spending or _____ taxes.

Decreases; Increases

True or False: To decrease interest rates, the Fed should increase the money supply.

True

What does a perfectly inelastic demand curve look like?

A vertical / straight up and down line.

Producer surplus is represented by the area _____ the supply curve and _____ the price.

Above; Below

_____ occurs when the only two firms in an industry agree to fix the price at a given level.

Collusion

Markets that are characterized by many buyers and sellers are:

Competetive

Suppose Oklahoma decides to produce only two goods, oil and football helmets. If Oklahoma is producing on its production possibility frontier, as oil production increases, the production of football helmets will:

Decrease

The automatic stabilizer in government tax revenue that occurs when GDP rises _____ the multiplier.

Decreases

True or False? Exports increase producer surplus but decrease consumer surplus and total surplus.

FALSE

True or False: The purchasing power of money increased during the oil crisis of 1979 because the aggregate price level increased but the growth rate of the money supply was faster than the increase in the price level.

False

Why would one firm's Dominant strategy be to cooperate with the other?

If firm A does not have an advantage in making any of the products, it would be best to cooperate with firm B.

If an increase in income leads to a decrease in the demand for a good, then the good is said to be:

Inferior

In general, for the U.S. economy, the relation between unemployment and economic growth is:

Negative

Spending on inputs is _____ of GDP, and investment spending is _____ of GDP.

not a part; part

The Rule of 70 States that:

The number of years for a variable to double equals 70 divided by its annual growth rate.

True or False: According to the Coase theorem, the inefficiencies caused by externalities can be removed by the private sector if individuals enter into appropriately structured deals, provided that the transaction costs of such deals are sufficiently low.

True

True or False: Airplane seats are rival in consumption.

True

True or False: The short-run aggregate supply curve has a positive slope, showing that increases in the price level will increase the quantity of aggregate output supplied by firms.

True

The 2009 American Recovery and Reinvestment Act was an example of:

an expansionary fiscal policy.

In the past 30 years, both China and India have had substantial economic growth:

but India is still poorer than the United States was in 1900, and China only now matches the level of income in the U.S. in 1900.

When a market is in equilibrium, the quantity:

demanded is equal to quantity supplied.

Entry barriers:

exist in monopoly and oligopoly markets.

If a country removes a tariff on imported shoes, we expect the domestic price of shoes to _____ and the quantity of shoes consumed in the domestic market to _____ .

fall; rise

The Federal Open Market Committee does NOT directly control the _____ with monetary policy.

federal funds rate

Frictional unemployment exists because of all of the following reasons EXCEPT:

for the minimum wage.

An assumption of the model of perfect competition is:

identical goods.

Excise taxes that raise the most revenue and cause the least deadweight loss are likely to be levied on goods for which demand is _____ and supply is _____.

inelastic; inelastic

When a nation's economy grows:

its production possibility frontier shifts outward

OPEC is a(n) _____ cartel that includes _____ national governments.

legal; 13

An example of an import quota is a:

limit on the total number of Honda automobiles imported from Japan.

The slope of a typical production possibility frontier is:

negative.

With tradable emissions permits, the main problem is to determine the _____, while with emissions taxes the main problem is to determine the _____.

optimal quantity of pollution; optimal tax rate

A country's living standard is best measured by:

per capita real GDP.

The key measure used to track economic growth is:

real GDP per capita.

The inflation-adjusted measure of aggregate output typically used by economists is called:

real gross domestic product.

Which one of the following is NOT included in M1

savings deposits

The supply curve found by taking the horizontal summation of the short-run supply curves of all of the firms in a perfectly competitive industry is called the _____ curve.

short-run market supply

In the long run:

the firm has time to change the level of all inputs.

The idea that the interest rate is determined by the supply and demand for money is known as:

the liquidity preference model.

Market structures are categorized by:

the number of firms and whether products are differentiated.

We can measure total consumer surplus for good X as:

the sum of the individual consumer surpluses for all buyers of X

The production function provides information about:

the transformation of inputs into output.

Because the aggregate price level has no effect on aggregate output in the long run, the long-run aggregate supply curve is:

vertical.

Holding all other things constant, if ramen noodles are an inferior good to Vanessa, then as her income increases, her demand curve for ramen noodles:

will shift left.