ECO 231 Exam 2 Baltes

According to the graph, total economic surplus would be represented by area

B & C

What is true about the burden of a tax imposed on gasoline?

Buyers and sellers share the burden of the tax.

According to the graph, when the market is in equilibrium, producer surplus is represented by area (refer to graph on first page)

C

The four categories of expenditures that make up GDP are ????

Consumption + Investment + Government Purchases + Net Exports

A nation's gross domestic product (GDP): what is the formula?

GDP= C+I+G+Nx

Trade among nations is ultimately based on

comparative advantage.

When Ford and General Motors import automobile parts from Mexico at prices below those they must pay in the United States,

American companies that manufacture automobile parts become worse off.

According to the graph, if the market is in equilibrium, consumer surplus is represented by area (refer to graph on first page)

B

19-20, the graph is like that on pages 162 and 164 In the graph shown, the equilibrium price before the tax is

P1

Total tax revenue received by government can be expressed as

T x Q

3 point Bonus: Discussion What is the principle of the Laffer curve, and in your opinion why did it not work?

The Laffer Curve is a theory that states lower tax rates boost economic growth.

If the United States exports cars to France and imports cheese from Switzerland, Think in terms of comparative advantage

The U.S. has the comparative advantage in cars Switzerland has the comparative advantage in cheese

The producer price index measures the cost of

a basket of goods and services

When a tax is levied on a good

a wedge is placed between the price buyers pay and the price sellers receive.

Trade is beneficial because it

allows each nation to specialize in doing what it does best.

One advantage market economies have over other types of economies is that market economies

are more efficient.

When a good is taxed

both buyers and sellers are worse off.

When two countries choose to engage in international trade,

both countries will benefit.

When a tax is levied on a good

both price and quantity of the good sold will change.

The loss in total surplus resulting from a tax is called

dead weight loss

When a country allows trade and becomes an importer of a good,

domestic producers are worse off, and domestic consumers are better off.

If a tax is imposed on the buyer of a product the demand curve would shift

downward by the amount of the tax.

For any country, if the world price of computers is higher than the domestic price of computers, that country should...import or export?

export

When goods that are produced in the United States are sold to China, the goods are

exports

Net exports are:

exports - imports

One reason for the decline in the U.S. textile industry was

foreign competition.

When a country allows trade and becomes an exporter of a good domestic producers

gain and domestic consumers lose.

The CPI is a measure of the overall cost of

goods and services bought by the typical family

A country has a comparative advantage in a product if the world price is

higher than its domestic price.

Which of the following do national income accountants consider to be "investment"?

housing

Net exports are negative when:

imports are greater than exports

The GDP is the

monetary value of all final goods and services produced within a nation in a particular year.

The GDP is the:

monetary value of all final goods and services produced within a nation in a particular year.

When a tax is placed on the buyer of a product the result is that buyers pay

more and sellers receive less.

In calculating GDP, governmental transfer payments, such as social security or unemployment compensation, are:

not counted

National income accountants can avoid multiple counting by: which, final or intermediate goods?

only final goods and services

If intermediate goods and services were included in GDP: What would happen to the final evaluation, would it be overstated or understated?

overstated

When the consumer price index rises, the typical family pays what?

pays more

To analyze economic well-being in an economy it is necessary to use

producer and consumer surplus.

The benefit received by sellers in a market is measured by

producer surplus

Countries usually impose restrictions on free foreign trade to

protect domestic producers.

A tax on a good

raises the price buyers pay and lowers the price sellers receive.

When Ronald Reagan ran for the office of President of the United States, he promised that, if elected, he would work for

reduced Federal income tax rates.

When a tax is placed on the buyers of orange juice, the

size of the orange juice market is reduced.

Buyers of a product will pay the majority of a tax placed on a product when

supply is more elastic than demand.

An industry that was a major part of the U.S. economy a century ago but is not now is the

textile and clothing industry.

If a country allows trade and the domestic price of a good is lower than the world price,

the country will become an exporter of the good.

If a country allows trade and the domestic price of a good is higher than the world price,

the country will become an importer of the good.

GDP may be defined as:

the market value of all final goods and services produced within a nation in a specific year.

A tax placed on a product causes the price the buyer pays

to be higher and the price the seller receives to be lower.