economics semester 1
This regulates the sale of stock in a corporation.
Securities and Exchange Commission
In the short run, an increase in the money supply results in
lower interest rates.
The purpose of indexing Social Security payments to the CPI is to:
maintain the purchasing power of retirees.
The United States can best be described as having a
modified free enterprise system.
economic system
organized way in which a society provides for the wants and needs of its people
Economists use numbers such as those in the table to compare
output on a per person basis.
The concept of voluntary exchange means
people freely and willingly engage in market transactions.
This table shows the balance in an account if monthly deposits of $10 were compounded monthly. Suppose you deposited $10 into your savings account each month, as indicated in the table. Your account pays 4%, compounded monthly. How much will you have in your account at the end of 15 years?
$2,461
Study the illustration. At a price of $25, how much more of the product is demanded on curve D'D' than on curve DD?
2 units
A business doubled the price of a product in order to increase profits. Which of the following scenarios might have occurred?
A dramatic decline in revenues demonstrated the elasticity of the product.
With which country in the table does the U.S. have the largest trade deficit?
China
Which letter designations in the table mark Fed actions that will expand the money supply?
F, I, K
Which letter designations in the table mark Fed actions that will contract the money supply?
G, H, J
Gross domestic product after adjustments for inflation is known as
GDP per capita.
What should replace the question mark in the output-expenditure model?
Government - G
The dollar value of all final goods, services, and structures produced within a country's borders in a single year is
Gross Domestic Product (GDP)
Which of the following is a characteristic of a traditional economy?
It discourages new ideas and new ways of doing things.
Which letter represents the proper location on the diagram for "unlimited liability"?
W
Where would a mixed economy be located in the diagram?
Y
Which of the following will cause the market supply curve to shift?
a change in the numbers of sellers offering the product
What does the movement from b' to b on the graph represent?
a decrease in demand
North American Free Trade Agreement (NAFTA)
agreement among Canada, Mexico, and the United States to reduce tariffs
trade-offs
alternative choices made by consumers in the marketplace
Bonds
are contracts to repay borrowed money at regular intervals.
An economy at its production possibilities frontier is operating
at full potential
Manufactured goods needed to produce other goods and services are called
capital goods
mutual fund
company that sells stock in itself to individual investors and then invests the money in stocks and bonds of other corporations
An increase in the price of cameras results in a decrease in the demand for film. The two products are
complements.
scarcity
condition of not having enough resources to produce all the things people want
The largest sector of the macroeconomy is the
consumer sector.
Which group of people ultimately determines the products that a free enterprise economy produces?
consumers
What form of business organization does this organizational chart depict?
corporation
opportunity cost
cost of the next-best alternative use of money, time, or resources when one choice is made rather than another
Advertising, fashion trends, and new product introductions serve to
create consumer demand.
production possibilities frontier
diagram representing various combinations of goods and/or services that an economy can produce when all productive resources are fully employed
The numbers in this table were calculated by Selected:
dividing GDP by total population.
A market economy
does not provide for everyone's basic needs.
The minimum wage is an example of a federal law that supports
economic equity.
command economy
economic system in which a central authority makes most of the WHAT, HOW, and FOR WHOM decisions
capitalism
economic system in which private citizens own the factors of production
Social Security
ederal program of disability and retirement benefits that covers most working people
When a customer's need for a product is not urgent, demand tends to be Selected:
elastic.
profit
extent to which individuals or organizations are better off at the end of a specific period than they were at the beginning
In this production possibilities frontier, what could cause production to move from point a to point e?
factories that are available but idle
Total cost is the sum of the
fixed and variable costs.
Unemployment that is due to the time workers spend in job search is considered:
frictional unemployment.
Anna recently moved to Boston in order for her husband Joe to begin a new job as an economics professor at Harvard. Anna is an experienced surgeon who is currently interviewing with several different hospitals in Boston. Anna is currently:
frictionally unemployed.
Which products shown in the table are likely to have inelastic demand?
gasoline in general, services of medical doctors
exports
goods and services produced in one country and shipped to another
portfolio diversification
holding a large number of stocks so that increases in some will offset unexpected declines in others
profit motive
incentive that encourages people and organizations to improve their material well-being
In the production possibilities frontier shown in this graph, what could cause production to move from point b to point d
increased productivity
Which of the following results should be included where the question mark appears in the illustration?
inflation
This cartoonist would like government to
interfere with business less.
The Federal Reserve
is made up of 12 district banks and member banks.
The Fed's Federal Open Market Committee
is the Fed's primary monetary policy-making body.
Individual Retirement Account (IRA)
long-term, tax-sheltered time deposits people set up to help provide income during retirement
The purpose of government in a command economy is to
make major economic decisions.
capital good
manufactured good that is used to produce other goods and services
bear market
mean market in which prices of equities decline for several months or years
trade surplus
occurs when the value of exports exceeds the value of imports
When the economy is in full employment,
only cyclical unemployment is zero.
Investment spending represents spending on:
productive physical capital.
"[E]very individual, therefore, endeavours as much as he can [to direct his resources toward his own business] so that its produce may be of greatest value; every individual . . . neither intends to promote the public interest, nor knows how much he is promoting it. . . He intends only his own gain, and he is in this...led by an invisible hand to promote an end which was no part of his intention. . . By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it." Source: Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nation, 1776 According to Adam Smith, what directs the choices business people make about how to use their resources?
profit
Tariffs and quotas are designed to
protect domestic industry.
Based on the graph, how does the market demand for concert tickets change if the price increases from $30 to $40?
quantity demanded decreases by 4,000
An example of frictional unemployment is a(n):
real estate agent who leaves a job in Texas and searches for a similar, higher paying job in California.
The drawback of tariffs that this cartoon illustrates is that the target country might
retaliate.
The circular-flow diagram illustrates how firms ________ goods and services and ________ factors of production.
sell; buy
One of the first decisions that you will have to make as a business owner is how the company should be structured.... In making a choice, you will want to take into account the following: · Your vision regarding the size and nature of your business · The level of control you wish to have · The level of structure you are willing to deal with · The business' vulnerability to lawsuits · Tax implications... · Expected profit (or loss)... · Your need [to take] cash out of the business for yourself. Source: Small Business Administration, 2008 Which of the following is not an advantage that makes sole proprietorships popular among new business owners?
shared liability
economics
study of how people try to satisfy their needs through the careful use of scarce resources
tariff
tax on imports designed to increase their price in the domestic market
401(k) plan
tax-deferred investment and savings plan that acts as a personal pension fund for many employees
An example of a market economy is
the United States
Inflation is when there is:
the percentage change in the CPI.
A popular model used to illustrate the concept of opportunity cost is
the production possibilities frontier
Gross domestic product or GDP is:
the total dollar value of final goods and services produced in the economy in a given time period.
Study the graph. Suppose this nation starts with producing all military goods. It then decides to produce a mix of civilian and military goods represented by point B. What represents the cost in military goods given up?
the vertical distance from point A to point x
capital
tools, equipment, machinery, and factories used in the production of goods and services
Double counting would occur if:
used goods were included in the GDP calculation
What amount should replace the X in the table?
$10,000