Economics LUOA

Which of the following statements is true relative to voluntary exchanges? (Choose all that apply).

- Economic exploitation, properly understood, is to take advantage of a potential voluntary exchange to economically improve one's circumstances. - What is being exploited in a voluntary transaction is not someone who is a party to the transaction but the transaction itself.

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Why does free international trade make it possible for each country to acquire goods, services, and resources more economically? (Choose all that apply).

1. Countries benefiting from various and peculiar natural resources, geographic and climatological circumstances as well as specialization in production techniques as compared to other countries, can produce such products more economically, making their products more attractive to international buyers. 2. People generally benefit more from international markets when they're allowed to purchase products or services at cheaper costs compared to domestic markets.

Many assume, though falsely, that rapid increases in the money supply will have no negative consequences upon general prices but, somehow, increase everyone's purchasing power or enable everyone to buy more goods and services than previously. Why is this not true? Choose all that apply.

1. Even if such an infusion of money doubled purchasing power, people cannot buy twice as many goods and services unless there are twice as many goods and services available. 2. An increase in the supply of money does not lead to an increase in the supply of goods and services, or resources, because the law of supply and demand in relationship to the price system directly impacts the availability of goods and services, not the money supply.

If society held to an economic vision of equality of results, how would this goal alter the role of government? Choose all that apply.

1. Governments should attempt to equalize all human attributes to ensure there's no disparity or inequity in the acquisition of property. 2. Governments should pursue economic measures of social justice to ensure that everyone has the exact same economic success 3. Governments should disregard natural human hindrances and propose policies which economically advance some over others in the name of social justice.

What is the general significance of Supreme Court Case of United States v. Butler, 297 U.S. 1 (1936)? (Choose all the apply)

1. The Supreme Court used the Butler case to authorize the constitutionality of Social Security in the subsequent Helvering v. Davis of 1937. 2. The Supreme Court determined through the famous Butler Case that the "General Welfare" clause must be construed very generally and was not tied down to the the subsequent list of specified powers.

How does the rapid printing of money lead to a general rise in prices? (Choose all that apply)

1. The supply of goods and services is outpaced by the supply of money, resulting in a greater degree of scarcity and a rise in prices generally. 2. Prices rise, generally, because people have more money in their pockets and effectively are able to spend more money on goods and services and, hence, bid up prices

Who actually benefits or favors equality of outcome? (Choose all that apply)

1. Those who typically favor equality of outcome benefit from it too, such as intellectuals and academics. 2.Bureaucrats and administrators granted oversight over the management of programs initiated to equalize conditions and results typically favor equality of outcome.

List the three main functions of the price system.

1. Transit information 2. Incentivize 3. Determine Income Distribution

Egalitarianism promotes (Choose all that applies)

1. equality of opportunity 2. redistribution of wealth 3. equality of results

It was necessary to broach the topic of Article 1, Section 8, clause 1 and the reinterpretation of the General Welfare clause because...

1. it has led to an expansion of national power. 2. it has led to civil, economic, and social intrusion into virtually every area of American life. 3. it has led to a massive federal budget. all of the above

Trade barriers negatively impact economic progress because...

1. trade restrictions reduce imports because countries find it increasingly difficult to pay the tariff and produce a profit. 2. tariffs acts like a subsidy, which discourages competition and efficient use of resources—businesses become subsidy-dependent and, hence, discouraged from wise innovation. 3. costs will also increase for consumers in the form of higher prices, as tariff costs are now built into the total price of a good or service. 4. they create predictable inefficiencies in any industry intended to benefit from the barrier.

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5.15.3 quiz

Which of the following defines the Law of Supply?

A principle that states there is a direct relationship between the price of a good and the quantity of it producers are willing to supply.

Which of the following defines the Law of demand?

A principle that states there is an inverse relationship between the price of a good and the quantity of it buyers are willing to purchase.

What is the best cure for inflation?

A steady reduction in the rate of monetary growth is the only means by which inflation can be remedied.

Which of the following best explains the location or nature of these terms as part of the American constitutional order and system: More Perfect Union, Justice, Domestic Tranquility, Common Defense, General Welfare, and the Blessings of Liberty?

All are found in the Preamble

Which of the following statements is true? 1. The implications of assuming a more broad power scheme relative to the spending power means that Congress can virtually legislate upon any subject matter as long as it is deemed in the general welfare of the country, explaining, in large part, the vast expansion of the national government's role in virtually every area of life, including the economic. 2. Madison would come to conclude that unless a more narrow reading of the spending power is construed, which the framers intended, then the national government would no longer be one of limitation and, therefore, tied down to the specified enumerated powers. Congress could then legislate on virtually any issue, including economic ones.

Both are true

If the interpretation of the congressional authorization to meet the general welfare of the United States as indicated in Article 1, Section 8, clause 1 is separated from the subsequent list of enumerated powers, then Congress has what sort of authority in securing the General Welfare of the United States?

Congress has an unlimited grant of congressional taxing and spending authority in order to achieve the general welfare of the United States and can use its own discretion to determine what the general welfare is.

Which of the following best identifies the subjective theory of value?

Consumers will weigh the value of any good or service relative to their incentives and the importance of such a good or service relative to their self-interest.

Just who exactly are the beneficiaries of pro-inflationary policies?

Debtors benefit the most and never creditors or savers!

You have $10,000 in cash and decide to deposit it in your checking account at your local bank. Since the reserve requirement is 10 percent, your bank must keep $1000 or 10 percent of your $10,000 deposit as reserves. But the other $9000 generates excess reserves for the bank which can be used to extend additional loans. The bank extends a new loan to someone borrowing $9000 in the form of either checkable deposits or cash. No one else has less money, and the person taking out the loan now has an additional $9000. How much money has been added to the money supply?

Due to excess reserves, $9,000 has been added to the money supply.

In the final analysis, why do economic exchanges even occur?

Economic exchanges occur because individuals value a product they exchange another for more because they believe that product will better satisfy their personal needs or wants.

Which of the following best defines or characterizes economic profit in a free market?

Economic profit is understood as total revenue minus total cost.

Which of the following does not express how exchange promotes economic progress?

Economic transactions promote the economic progress of one party at the expense of another due to the principle of exploitation.

Free International trade allows domestic producers and consumers to benefit from economies of scale. What is meant by this? Please read the options carefully.

Economy of scale relates to the cost advantages of enterprises in relation to the amount of goods and services they're able to produce relative to the size of their operations. Larger firms are able to reduce costs per unit given increased production and operational efficiencies and require large markets, often supplied through international trade.

Equality of outcome is now the passionately pursued goal of numerous organizations and the purpose of federal legislation. Which of the following identifies this?

Everyone ought to reach the economic finish line at the same time.

Which of the following is incorrect?

Federalism assumes that all power is lodged within the people generally.

Which of the following is not a consequence of free international trade? Please read each option carefully.

Free international trade results in the dumping of products in international markets, thus intentionally undercutting domestic labor forces, driving up costs and, therefore, producing antagonisms between nations. The only peaceful option is to promote tariffs, which are a natural consequence of free international trade.

GDP can be measured in two ways. Which of the following represents the Expenditure Approach?

GDP can be derived by totaling the expenditures on all final-user goods and services produced during the year.

GDP can be measured in two ways. Which of the following represents the Resource Cost-Income Approach?

GDP can be determined by totaling all the income payments to the resource suppliers and the indirect cost of producing the goods and services.

GDP is the most widely used indicator of economic performance. Which of the following defines it?

GDP represents the market value of final goods and services produced within a country during a specific time period, usually a year.

Why do governments increase the quantity of money too rapidly?

Government demand for growth in spending, or government expenditures.

Why do we find that the values of different goods are very different in degree and that the value of a good frequently changes?

In a free market, the value of any good is established based upon the satisfaction of our needs and, therefore, differences in importance relative to individual preferences.

________ affect our economic choices, that is, our choices among alternative, incompatible uses of scarce resources.

Incentives

Friedman identifies five general truths relative to inflation. Which of the following is not part of that analysis?

Inflation always benefits creditors and especially banks and, therefore, is a favorable monetary policy to implement.

Is the monetary policy of inflation best equated with a mirage or oasis?

Inflation is a mirage, as people confuse money with wealth, as opposed to products and services and, therefore, assume the more dollars they acquire, the wealthier they are.

GDP and CPI, employment, fiscal policy such as taxation, monetary policy, the money supply, and inflation, which includes a discussion of the Federal Reserve System, as well as international trade are all

Macroeconomic concerns.

Which of the following correctly identifies macroeconomics?

Macroeconomics emphasizes aggregate markets to discern GDP and CPI.

Which of the following represents a term used to describe the effects of a change in the current production situation or process?

Marginal

Which of the following represents the change in total value of benefit derived from an action such as consumption of an additional unit of a good or service? It reflects the maximum amount that the individual considering the action would be willing to pay for it.

Marginal Benefit

Which of the following represents the change in total cost resulting from an action such as the production of an additional unit of output?

Marginal Cost

Decisions are made at the ________, as individuals should exchange when marginal benefits exceed marginal costs.

Margins

Which of the following correctly identifies monetary policy?

Monetary policy is a national policy pursued to ensure money is available for the whole economy.

What represents the policy plank of the Franklin Delano Roosevelt Administrations?

New Deal

Which of the following describes a Federal Reserve monetary tool known as Open Market Operations?

OMO consists of the buying and selling of U.S. government securities, like U.S. Treasury bonds and other assets on the open market, to expand or contract the money supply.

Which of the following does not identify a condition necessary for exchanges to occur?

One party to the exchange must have sufficient power to coerce the other party into the transaction.

The ________ to the U.S. Constitution represents a justification clause, or enacting clause, by which is meant that it justifies the creation of the Constitution for the purpose of achieving six great and grand objects for which the various power schemes and checks and balances are intended to serve and achieve.

Preamble

Why are price-coordinated economies superior to command economies in allocating scarce resources and meeting demand?

Price-coordinated economies are able to harness variable uses of scare resources in order to meet consumer demand.

How does the market price system incentivize production to meet consumer demand?

Prices incentivize producers to meet demand by drawing them into various production efforts through the profit motive, thus meeting consumer demand.

Which of the following is not characteristic of the nature of profit in free market economics?

Profits are generally the result of the continual rise of prices.

Which of the following represents a consequence(s) of profits?

Profits will positively alter innovation, resulting in quality products, efficiently distributed goods and services, and an economical use of scare resources.

Why do nations adopt such strict import laws and raise barriers to trade?"

Protectionism; that is, to protect domestic industries from foreign competitors.

Which of the following identifies the two main categories of external incentives?

Rewards and Punishments

How does the price system solve the problem of alternative applications of labor and capital to meet thousands of different needs and wants of different urgencies in society?

Since there is no fixed supply of labor and capital, or any resource for that matter, the price system communicates to producers what to make more efficiently and to consumers where to purchase quality items more cheaply.

________ represents a condition in which the amount of a good offered for sale by producers is greater than the amount that buyers will purchase at the existing price. A decline in price will eliminate the surplus.

Surplus

Which of the following is incorrect biblically?

The Bible asserts an egalitarian approach to life, whereby all individuals should relinquish any rights to the private ownership of property for the public good.

What is the monetary policy institution of the United States?

The Federal Reserve

Which of the following best identifies the significance of the Federalist Papers (1787-1788)?

The Federalist Papers represent the best commentary on the problems of the Articles of Confederation and the nature of the U.S. Constitution (1787).

What is the purpose of the Preamble to the U.S. Constitution?

The Preamble limits and defines the general scope of the national government's authority, and the powers the Constitution delegates to the various branches are intended to meet these great objects!

Explain how the price system functions in the free market. In order to answer this question correctly, you must incorporate the three functions of the price system and the following terms: signals or signaling, scarcity, scarce resources, supply and demand, efficiency, consumers, and producers. Your response, of course, need not be isolated to only these terms.

The Price System is a way of organizing activity going on in the economy. It coordinates decisions made by consumers, owners of companies, valuable resources and producers. These people usually have no way of contacting other people who work in the economic industry except through the Price System. The Price System leads them through process after process to ultimately get them to their goal of distributing what someone needs and getting something they need themselves. First information is exchanged notifying people what someone else needs and if they can provide they do in return for something they need. Before they trade, they need to incentivize. For example if Susan can give Rachel 7 loaves of bread, Rachel has to give Susan 7 bottles of diet soda. It has to be an equal trade, and that's where incentivizing comes in to play. Lastly, they determine what they earn from distributing their products for trade. Now Rachel can sell her loaves of bread and if each loaf is $10, she ultimately gains $70, and if Susan sells her bottles for the same price, then she would gain $70. (it's never that simple I just made up an example to help understand) Then after both parties figure their income, they can decide if the trade is worth it or not.

Which of the following defines a Market Supply Curve?

The market supply curve is the sum of the individual supply curves of the firms.

When considering the fallacy of what is seen and what is not seen, what typically fails people's notice relative to protectionist policies? In other words, what is not immediately seen, but nevertheless, very real?

The new industry would be visible, but given the shift in the concentration of capital, other industries would be prevented from coming into existence—this is what is not immediately seen: all the losses!

Which of the following does not adequately explain why an inequality of external property exists?

There exists an obvious inequality of ownership and, in large part, because those who are wealthy take advantage of those who are poor, and thus accumulate wealth through the systematic theft of their property, social injustices represent the main reason for such disparities in property ownership.

________ promotes economic progress because individuals exchange products, or trade, resulting in vast quantities of goods and services due to specialization and mass production.

Trade

Which of the following is incorrect relative to either the nature of a trade barrier or its consequences?

Trade barriers lower the cost of doing business with those protected industries.

Choose one price system function from your list and elaborate on its characteristics as a price-system signal, or as part of the price system.

Transferring information is when the price system send out needed/important information to consumers and producers about the best way to sell and distribute products. It is a very important function and it is very much apart of the price system.

The Price System Utilizes Alternative Applications of Labor and Capital to Meet Market Demands.

True

Does voluntary exchange permit individuals to realize gains derived from cooperative effort?

Yes. Cooperation assumes interdependence among individuals with diverse gifts and talents and, therefore, individuals exchange what they create for what they need.

Inflation is best defined as...

a general rise in prices across an entire economy.

Which of the following defines subsidy?

a government payment or tax credit provided to either the producers or consumers of certain goods

GDP represents...

a macroeconomic measurement

Deflation results from...

a swift contraction of the money supply.

What is meant by, or implied by equality of opportunity as an economic principle? 1. Arbitrary obstacles such as gender, class status, race, and ethnic differences should never be erected to obstruct individuality in the market. 2.Natural hindrances and differentiation do exist, resulting in differences in individual performance. 3.Some suffer loss, while others reap benefits; a natural equality of outcome or results cannot exist.

all of them

Which of the following is incorrect biblically? 1. higher and unequal taxes 2. economic leveling 3. equality of conditions 4. wealth redistribution

all of these are correct

Thomas Sowell has proposed a thesis which attempts to explain differences in policy outlooks ultimately located in contrasting worldviews. Which of the following identifies this thesis?

conflicting visions of a constrained and unconstrained nature

Profits are calculated by relating ______ to prices by communicating which goods to produce and how to most efficiently produce them.

costs

Profits will quickly solve a shortage and provoke greater levels of economic ______, especially a more efficient use of property and scarce resources.

efficiency

In 19th century early America, private charity and philanthropy were possible because those who accumulated fortunes were able to donate freely. Which of the following allows these sorts of moral obligations of serving one's neighbor?

equality of opportunity and personal liberty which allows one to fulfill his moral obligations under God

________ represents a state in which the conflicting forces of supply and demand are in balance.

equilibrium

Banks in the United States assist in the creation of money through the...

fractional reserve system.

An ______ is a basic motivating element which spurs us to make decisions and pursue actions—any kind of action—as well as market-related ones.

incentive

A price index measures the cost of purchasing a market basket of goods at a point in time relative to the cost of purchasing the identical market basket during an earlier reference period. A base year is chosen and assigned a value of 100. As prices increase and the cost of purchasing the reference bundle of goods rises relative to the base year, the price index increases proportionally. A price index of 110 indicates that the general level of prices

is 10 percent higher than during the base period.

Profits actually guide the factors of production such as ______, labor, and capital in accordance with demand.

land

The objective of the Federal Reserve is...

monetary equilibrium, by providing liquidity through lending to member banks.

If the amount of goods and services for purchase increased in tandem with the supply of money, prices would be...

more or less stable.

GDP measures...

production output of a nation's legal economy, which includes all final goods and services.

The bottom line is that incentives do matter, and ______ direct productive efforts and activities to gain advantages and benefits.

profits

A key source of economic progress is free trade relations between nations, and such trade views ________via tariffs as detrimental and destructive to economies.

protectionism

As Beisner notes in his article "Biblical Justice vs. Social Justice," the Bible does not demand wealth ________ or equalization.

redistribution

What is meant by Enumerated Powers found within the U.S. Constitution?

relates specifically to a particular delegation or accounting, crediting of power or vestment

CPI represents an economic index which...

represents the general level of prices related to the cost of purchasing a basket of goods compared to the purchase of that same market basket at a previous period.

Progressives and modern critics of equality of opportunity have launched two significant criticisms against the Founders' view. First, that equality of opportunity is impossible to achieve. Second, to the extent that equality of opportunity has been tried, it has resulted in a gigantic inequality of outcomes. Equality of __________, in the Progressive view, is desirable and can only be achieved by massive government intervention.

results outcomes

Which of the following represents a core economic fallacy from which other economic fallacies are derived?

the fallacy of examining only the short-term consequences of any given economic policy

What sort of economic fallacy does protectionism rest upon?

the fallacy of looking only at one side of the policy or of noticing what is immediately seen, while neglecting the results that are not seen

One reason prices are "inflated" is because...

the money supply grows too quickly—the supply is much greater than the demand for it, leading to a general rise in prices.

The money supply in the United States is mainly measured...

through two units: M1 and M2.

In free economies, ________ always expresses a judgment of the estimation in which something is held because individuals will judge an item to have value if they want it, desire it, or need it.

value