Econ final study guide

In October 2010, the amount of money held by individuals and companies was $756.7 billion; checkable deposits owed by individuals and companies were $502.2 billion; money market funds were $1.895 trillion; savings deposits were $277.7 billion; time deposits were $329.1 billion. What was the M2 amount in October 2010?

$3.76 trillion

___ is an example of money.

A jar of coins

Which scenario best explains scarcity?

A man has $20 but wants to take his girlfriend to a fancy steak restaurant, where he needs $70.

measures the amount of a good that consumers are willing and able to purchase at a specific time

demand

The loss of capital to normal wear and tear is the _____.

depreciation

Smart investors use _____ to spread their money among multiple investments.

diversification

Safe stock companies often make these regular payments to shareholders.

dividends

A relatively new form of money that is growing in popularity is _____.

e-cash

A(n) ______ might be used to prevent unhealthy products from entering a country.

embargo

Which answer is NOT characteristic of a command economic system?

encouragement of the pursuit of wealth

The _____ price is the point where quantity demanded and quantity supplied are equal.

equilibrium

This is a measure of the value of a house to a homeowner after subtracting any loan balance.

equity

An economy going from the trough to the peak is said to be in a state of _______.

expansion

An example of ___ is increasing government spending.

expansionary fiscal policy

The wages paid to employees are an example of a(n) _____ cost.

explicit

The trend of marginal utility is to increase as consumption increases.

false

The Free Application for Federal Student Aid is the best way to pursue _______ aid for college expenses.

federal

This goes into effect every October 1st.

federal budget

A rental car company buys 30 new automobiles. The automobiles are examples of ___ goods.

final

You buy a brand-new television. The television is an example of a(n) ___ good.

final

What is the purpose of interest?

for the lender to make money in exchange for giving money to those who need it

If a homeowner can no longer pay the home loan, the lender will likely _____ on the property.

foreclose

Which is NOT a component of the free enterprise system?

freedom from all government involvement

An employee who leaves a job to be closer to home experiences ______ unemployment.

frictional

A deli buys 40 pounds of salami for its famous grinder sandwiches. The salami is an example of ___ goods.

intermediate

a condition that exists whenever demand exceeds supply

shortage

One ideal of the American Dream is to own a(n) _____ home not connected to any other building.

single-family

A ship-building company buys 50 tons of lumber to build classic-style ships. The lumber is an example of ___ goods.

intermediate

This affects one's future earning potential more than anything else.

level of education

Every state requires drivers to have this insurance.

liability insurance

Developing a new and improved aircraft is an example of a(n) _____ business decision.

long-term

The importance of the Constitutional right to private property lies mainly in the ability to ___.

make profit in the sale or operation of private property

The additional cost required to produce one more product is ___.

marginal cost

A(n) ____ of payment is a way in which to settle a debt.

means

A(n) ______ loan is one in which the property purchased secures the loan.

mortgage

This type of investment was created to help investors pool money and benefit from professional money managers.

mutual funds

This type of loan charges the same rate and payments for the life of the loan.

standard fixed-rate

This represents investors' expectations concerning the future profits and growth prospects of a publicly traded business.

stock price

Government mismanagement of the economy is the cause of _____ inflation.

structural

the amount of a service to consumers that producers are willing and able to provide

supply

the condition present when supply exceeds demand in a market

surplus

A protective ______ is used in an attempt to protect a country's businesses.

tariff

This organization provided an obstacle to banking during the Middle Ages.

the Roman Catholic Church

The creators of the mixed economic system were from ______.

the United Kingdom

The concept of a "double coincidence of wants" is the instrumental part of ___.

the barter system

Fluctuations of expansion and recession are part of ___.

the business cycle

Who makes the fundamental economic decisions that drive a market (capitalist) economy?

the consumers

President Richard Nixon severed all connections between the dollar and ___.

the gold standard

These include credit unions and savings and loans associations.

thrift institutions

replacing a DVD player with a device that can stream videos

new goods effect

These short-term loans charge very high fees and interest rates.

paycheck loans

When a shopper makes a rational choice, he or she may ___.

pick the item that represents the greatest value

government intervention that typically results in a shortage in the market

price ceiling

government intervention that typically results in a surplus of services and goods

price floor

In a(n) __________ economy, transactions are typically done through barter rather than currency.

traditional

The extent to which consumers receive happiness or benefit from a purchase is called ___.

utility

A function of money is to serve as a store of ______.

value

Which philosopher is most associated with the market economy?

Adam Smith

President Andrew Jackson destroyed the ______ of the United States.

Bank

Which answer was NOT a weakness of the Articles of Confederation

Congress could not negotiate treaties with foreign countries.

The _______ War and the subsequent agricultural surplus contributed to the recession of 1857.

Crimean

The ____ Industrial Average is an index tracking 30 of the most influential American companies.

Dow Jones

The ______ movement influenced the foundational ideas of the market economic system.

Enlightenment

_____ might lead a business to reduce prices on a certain smartphone because the manufacturer is likely to soon introduce a new model.

Expectations

_____ student loans do not have to be repaid until after a student finishes attending college.

Federal

The Fed sets policy at the ___ meetings.

Federal Open Market Committee's

The _____ System was created during the Woodrow Wilson administration.

Federal Reserve

_____ money must be accepted as such by law.

Fiat

The Takings Clause is a part of the ___.

Fifth Amendment

Members of the Fed's Board of ______ serve 14-year terms.

Governors

With support from the _______ Party, R.H. Tawney pushed Great Britain toward a mixed economic system.

Labour

_____ policy is what controls money in circulation.

Monetary

This organization enjoys the benefit of operating as a legal monopoly.

National Football League

______ profit is the least amount of profit that matches what could be gained by doing something else.

Normal

______ is the moving of services or production to another country in order to save money.

Offshoring

___ states that real GDP will decline 2% for every 1% increase in unemployment.

Okun's Law

_____ cost is what is given up when a business decides on a specific action plan.

Opportunity

The depression of 1893 was directly responsible for the growing popularity of the ______ Party.

Populist

______ is a dangerous economic condition whereby inflation and unemployment rise at the same time.

Stagflation

This is another name for a new business.

Startup

Dividing the total products produced by the number of workers is the way to compute ______.

productivity

______ typically increase in value over time due to employee labor, new trade opportunities, new ideas, and technological advancements.

Stocks

____ goods are goods that can be used in place of another.

Substitute

This event exposed the need for and led to a more centralized banking system in the United States.

The revolutionary war

Why were some of the states upset at the federal government paying off their debts?

The states did not want to be answerable to the federal government and therefore be put in a weaker position.

A(n) ____ good is something provided by the government that may be used by many citizens at the same time without reducing the benefit.

public

recognizing the difference between a 2001 cell phone and a 2009 smartphone

quality change effect

David Hume's ______ theory states that too much money in circulation leads to inflation.

quantity

Economically, the government divides its earning marks into ______, each of which lasts three months.

quarters

In a market or free enterprise economy, competition ensures ___.

reasonable prices and consumer choice

A country's GDP economic peak is followed by ____.

recession

Every commercial bank must be sanctioned by the U.S. Department of the ______.

Treasury

Credit refers to ___.

a consumer's record of going into and getting out of debt in a faithful and punctual way

A company that can offer a product at a much lower price due to some advantage holds ___.

a natural monopoly

Which agency is responsible for putting together business cycle information, particularly when business economies peak and plummet?

a private company outside of the government

It is important to evaluate _____ before committing to an investment.

risk

A(n) _____ must give up valuable assets to help pay debts when declaring bankruptcy.

borrower

If the Fed wanted to risk inflation by encouraging growth, it would ___.

buy securities in the open market

Karl Marx and Friedrich Engels believed that ________ was(were) wrong and that workers should control the economy.

capitalism

Which country or region best exemplifies a traditional economy?

rural Africa

A carpenter who loses work during the winter every year experiences _____ unemployment.

seasonal

A _____ is a charge for financial advice or a transaction.

commission

switching from a soft drink to tap water

commodity substitution effect

Which answer is NOT a stage of the business cycle?

consolidation

The _____ theory blames a rise in inflation on a rise in wage rates and the price of natural resources.

cost-push

It is required that you have good _______ in order to purchase a home.

credit

Making payments on time will boost one's ____ score.

credit

A(n) ______ serves as a means of identification for purchases.

credit card

A(n) _____ serves a particular group only.

credit union

Ben and Jerry's lays off 500 workers during a recession, creating _____ unemployment.

cyclical

According to the law of ______, the demand for a product will increase when prices decrease.

demand

Seeking a financial advisor is an especially good idea for _____ investors.

passive

Which of the following would happen if the Fed were to sell securities?

Interest rates increase.

What was the importance of the Supreme Court case Kelo v. New London (2005)?

It gave the government more power in practicing eminent domain.

____ believed the best way to reverse an economic downturn was to increase government spending.

John Maynard Keynes

A(n) _____ advantage is held by the economy that produces the highest total number of items.

absolute

As ______ increases, demand for normal goods also increases.

income

The performance of a segment of a market or even an entire market may be tracked by a(n) _____.

index

This type of account allows an individual who earns income to make tax-deferred investments for retirement.

individual retirement account

The things you miss out on when you decide to spend your money on something else are considered ___.

opportunity costs

going online to a discount website to purchase old CDs

outlet substitution effect

going to an outlet store for a new suit

outlet substitution effect

The free enterprise system is based primarily upon Americans' right to ___.

own their own businesses

Multiple people share the profit, loss, risk, and work of ownership in a(n) _____ business structure.

partnership