Economics 202 - Final Exam (Practice Test)
In the short run,
we make decisions that reflect our immediate or short-term wants, needs, or limitations.
Mia Denton was an accountant in 1943 and earned $21,000 that year. Her son is an accountant too and he earned $270,000 this year. Suppose the price index was 18.3 in 1943 and 20.2 in the current year. Mia's 1943 income in current year dollars is
$23,180
A demand curve
A graph of the relationship between the prices in the demand schedule and the quantity of those prices
A variable is
A quantity that can take on more than one value
Binding price ceiling creates
A shortage for a good or service
A demand schedule
A table shows the relationship between the price of a good and the quantity demanded
What of the following statements about models is correct? - Because economic models omit many details, they allow us to see what is truly important. - Economic models are usually plastic representations of the economy. - Economic models are built to mirror reality exactly. - Economic models are useful, but they should not be used for the purpose of improving public policies.
Because economic models omit many details, they enable us to see what is truly important.
Shifters of the Demand Curve:
Changes in. Income Changes in tastes and preferences The price of related goods Price expectations The number of Buyers
WHich of the following pairs of portfolio exemplifies the risk-return trade-off
For Portfolio A, the average return is 5 percent and the standard deviation is 15 percent; for Portfolio B, the average return is 8 percent and the standard deviation is 25 percent.
Malthus predicted that the power of population growth was
Greater than the power of the earth to produce subsistence. His forecast was off the mark.
Which of the following is an important cause of inflation in an economy? - increases in productivity in the economy -The influence of positive externalities on the economy - Lack of property rights in the economy - Growth in the quantity of money in the economy
Growth in the quantity of money in the economy
Which of the following statements about agriculture in the United States is correct? - Because technological improvements increase the supply of a product for which demand is inelastic, an individual farmer would be better off not adopting the new technology. - Technological improvements typically increase both supply and revenue for individual farmers. - From the 1950s to today, agricultural output has approximately doubled. - Increasing the supply of agricultural products typically benefits consumers but harms farmers as a group.
Increasing the supply of agricultural products typically benefits consumers but harms farmers as a group.
Causality
Occurs when one variable influences another
Negative Correlation
Occurs when two variables move in opposite directions
Rent-control laws dictate
Only a maximum rent that landlords may charge tenants.
When economists talk about growth in the economy, they measure that growth as the
Percentage change in real GDP from one period to another
Absolute Advantage is
Refers to one producer's
Shifts of the Supply Curve
The Costs of Inputs Changes in Tech Taxes and Subsidies The # of Firms in the Industry' Price Expectations
Specialization is
The limiting of one's work to a particular area
In the long run,
The period in which we make decisions that reflect our needs, wants, and limitations over a long time horizon. In the long run, consumers have time to fully adjust to market conditions.
in the long run,
The period in which we make decisions that reflect our needs, wants, and limitations over a long time horizon. In the long run, consumers have time to fully adjust to market conditions.
Which of the following can be measured by the level of real GDP per person?
The standard of living but not productivity
Market demand
The sum of all individual quantities demanded by each buyer in the market of each price
An outcome is considered efficient
When resources are fully utilized and potential output is maximized
production possibilities frontier
a graph that shows the combinations of output that the economy can possibly produce given the available factors of production and the available production technology
Common Cause
a single cause responsible for two phenomena observed to correlate with each other
The quantity demanded is the
amount of a good or service that buyers are willing and able to purchase at the current price.
You hold bonds issued by the city of Sacramento, California. The interest you earn each year on these bonds
is not subject to federal income tax and so these bonds pay a lower interest rate than otherwise comparable bonds issued by the United State government
Reverse causation
occurs when causation is incorrectly assigned among associated events
Positive Correlation
occurs when two variables move in the same direction (Technological Innovation and Productivity)
Capital goods help produces
other valuable goods and services in the future.
Consumer good si any good produced for
present consumption.
slope
refers to the change in the rise along the y axis (vertical) divided by the change in the run along the x axis (horizontal). Slope = Delta Y / Delta X
Trade allows
society to specialize and trade what they produce for other goods and services
Society is better off if individuals and firms
specialize and trade on the basis of the principle of comparative advantage.
The law of increasing opportunity cost
states that the opportunity cost of producing a good rises as a society produces more of it.
The law of demand
states, that all, other things being equal, quantity demanded falls when the price rises, and rises when the price falls
in the short run,
the period in which we make decisions that reflect our immediate or short-term wants, needs, or limitations. In the short run, consumers can partially adjust their behavior.
Investment is
the process of using resources to create or new capital
As long as the terms of trade fall between the opportunity costs of both trading partners,
the trade benefits both sides
