Econ Final

The figure shows the production possibilities frontier for Vidalia, a nation that produces two goods, roses and orchids. If Vidalia chooses to produce 60 dozen orchids, how many roses can it produce to maximize production?

50 dozen roses

Economics where goods and services are traded directly for other goods and services are called _________ economies

Barter

What should the Federal Reserve do if it wants to move from point A to point C in the short-run Phillips curve depicted in the figure below?

Buy treasury bills

Higher personal income taxes

Decrease aggregate demand

Macroeconomics, as opposed to microeconomics, includes the study of what determines the level of

Employment in the economy

Monetary policy is conducted by the U.S. treasury department

False

Monetary policy refers to the actions the

Federal reserve takes to manage the money supply and interest rates to pursue its economic objectives

Fiscal policy refers to changes in

Federal taxes and purchases that are intended to achieve macroeconomic policy objectives

Health insurance plans which typically reimburse doctors and hospitals with payment for each service they provide are known as

Fee-for-service-plans

If a country's currency is determined only by the demand and supply for that country's currency, the country is said to have a

Floating exchange rate

Automatic stabilizers refer to

Government spending and taxes that automatically increases or decrease along with the business cycle

Carlos Vanya grows tomatoes and strawberries on his land. His land is equally suited for growing either fruit. Which of the graphs in the figure above represents his production possibilities frontier?

Graph A

Gretchen expects the price level to rise from 104 this year to 108 next year, and she is able to incorporate these expectations into her wage contract. If the price level rises to 106 next year instead of 108, which of the following will occur?

Gretchen's real wage will rise

Commodity money

Has value independent of its use as money

The goals of monetary policy tend to be interrelated. For example, when the Fed pursues the goals of __________, it also can achieve the goal of ____________ simultaneously

High employment; economic growth

Which of the following is an objective of fiscal policy?

High rates of economic growth

The difference between the _______ for a good and the ________ is called consumer surplus

Highest price and consumer is willing to pay; price the consumer actually pays

The three categories of federal government expenditures, in addition to government purchases, are

Interest on national debt, grants to state and local governments, and transfer payments

Social security

Is a system whereby current retirees are paid from taxes collected from current workers

The additional benefit to a consumer from consuming one more unit of a good or service

Is equal to marginal benefit

What is an economic model?

It is a simplified version of some aspect of economic life used to analyze an economic issue

Which of the following would not be considered an automatic stabilizer?

Legislation increasing funding for job retraining passed during a recession

When the value of a currency is determined mostly by demand and supply, but with occasional government intervention, the exchange rate system is defined as

Managed float

Which of the following provides health-care coverage to people age 65 and over?

Medicare

Rising prices erode the value of money as a ___________ and as a ____________

Medium of exchange; store of value

Which of the following is one of the most important benefits of money in an economy?

Money makes exchange easier, leading to more specialization and higher productivity

The money demand curve has a

Negative slope because an increase in the interest rate decreases the quantity of money demanded

The slope of a production possibilities frontier measures the _____________ of producing one more unit of a good.

Opportunity cost

Technological progress has made it possible for firms such as Apple and Alivecor to develop small electronic devices, including smart watches, smart phones, and products that can be attached to the smart watches and smart phones, to serve reacting to which of the three key economic ideas?

People respond to economic incentives

Federal reserve board chairman Paul Volcker, Alan Greenspan, and Ben Bernanke all have focused on which of the following as their main goal of monetary policy?

Price stability

The federal reserves four goals of monetary policy are

Price stability, high employment, economic growth, and stability of financial markets and institutions

Employees at the university have negotiated a 5 percent increase in wages for the next year, based on their inflation expectations. If inflation is actually 6 percent over the next year, which of the following will occur?

Real wages for university employees will fall

The study of economics arises due to

Scarcity

Damian wants to start a business where he is only owner and the company does not issue stock. The type of business Damian wants to start is a

Sole proprietorship

The curve showing the short-run relationship between the unemployment rate and the inflation rate is called

The Phillips curve

Why did the United States abandon the gold standard in the 1930s?

The government wanted to rapidly expand the money supply in response to the Great Depression

The major shortcoming of a barter economy is

The requirement of a double coincidence of wants

Gross domestic product is calculated by summing up

The total market value of final goods and services produced in the economy during a period of time

What is the natural rate of unemployment?

The unemployment rate that exists when the economy is at potential GDP

Suppose, in 2016, you purchased a house built in 2003. Which of the following would be included in the gross domestic product for 2016?

The value of the services of the real estate agent

How do lower taxes affect aggregate demand?

They increase disposable income, consumption, and aggregate demand

Matt's real wage in 2014 is $26.80. If the price level is 104, what is Matt's nominal wage?

$27.87

Based on the following information, what is the balance on the financial account? Exports of goods and services= $5 billion Imports of goods and services= $3 billion Net income on investments= $2 billion Net transfers= $2 billion Increase in foreign holdings of assets in the United States= $4 billion Increase in U.S. holdings of assets in foreign countries= $ 1 billion

$3 billion

Juantita goes to the hardware emporium to buy a new circular saw. She is willing to pay $120 for a new saw, but buys one on sale for $85. Juanita's consumer surplus from the purchase is

$35

Which of the following goods is directly counted in GDP?

A 12 inch Subway sandwich purchased by a student

The gold standard is an example of

A fixed exchange rate system

The statement, "My iPhone is worth $300" represents money's function as

A unit of account

In economics, money is defined as

Any asset people generally accept in exchange for goods and services

The principal agent problem is a problem

Caused by agents pursuing their own interests rather than the interests of the principals who hired them

Silver is an example of a

Commodity money

A __________ is owned by its stockholders

Corporation