eco11

What do economists mean when they use the term "utility"? a. Money b. Happiness c. Usefulness d. Resourcefulness

b. Happiness

Is the following a positive statement or a normative statement? "More people should cycle to work." a. Positive b. Normative

b. Normative

Economists assume that economic agents generally attempt to pick the best feasible option given the information, knowledge, experience, and training they have. What is the process of doing this called? a. Causation b. Optimization c. Correlation d. Inflation

b. Optimization

Economists generally fill one of two roles: either scientist or policy adviser. Which role do most economists fill most of the time? a. Policy Adviser b. Scientist

b. Scientist

On what should we judge an economic model? a. The realism of its assumptions b. The accuracy of its predictions c. The pedigree of the economist who designed

b. The accuracy of its predictions

A production possibilities frontier (PPF) is... a. a curve showing the generally attainable combinations of two products that may be produced with all planned or potential, yet undeveloped , technology. b. a curve that shows the potential productive capabilities of the frontier (defined as the area outside of cities) of a developing economy. c. a curve showing the maximum attainable combinations of two products that may be produced with available factors of production and current production technology. d. a curve that illustrates the demand of two goods for the average consume

c. a curve showing the maximum attainable combinations of two products that may be produced with available factors of production and current production technology.

One lesson regarding ethics that we can learn from the Circular Flow Diagram is that... a. We always need to consider if our employer is in line with our ethics, because we are helping them provide outputs and earn money b. We always need to consider if the producers from which we purchase final goods and services are in line with our ethics, because we are providing them with money via revenue c. Both (a) and (b) are true d. None of the other answers are true

c. Both (a) and (b) are true

Suppose you run a local medicinal marijuana dispensary. Due to the semi-legal status of medical marijuana in the US, there is a particularly strong incentive for you to hold a large portion of your assets in cash. Due to recent inflation, however, the marijuana you buy at wholesale prices has become more expensive. You are now forced to increase the price of your retail marijuana products as a result. One resulting cost of this is that the cash your firm keeps on hand is now devaluing faster than before. This is an example of what type of cost of inflation? a. Menu costs b. The costs of holding cash c. Shoe-leather costs

b. The costs of holding cash

Firms, which is how economists refer generally to types of businesses, seek to maximize what? a. Their Own Utility b. Their Own Profits c. Their Own Total Revenue d. Overall Social Welfare

b. Their Own Profits

Which of the following is true regarding anticipated and unanticipated inflation? a. Anticipated inflation is usually worse b. Unanticipated inflation is usually worse c. Neither anticipated nor unanticipated inflation is usually worse than the other 100. Which of the following groups is particularly hurt by inflation

b. Unanticipated inflation is usually worse

Fill in the Blank: Inflation __________ the value of each dollar. a. increases b. decreases c. does not change

b. decreases

Fill in the Blank: Correlation __________ causation a. implies b. does not imply

b. does not imply

Fill in the Blank: In general, the opportunity cost of moving right by one unit along the production possibilities frontier is equal to the __________. a. slope b. negative of the slope c. square root of the slope d. negative of the square root of the slope

b. negative of the slope

Fill in the Blank: Unemployment arising from a persistent mismatch between the skills and characteristics of workers and the requirements of jobs is called __________. a. frictional unemployment b. structural unemployment c. seasonal unemployment d. cyclical unemployment

b. structural unemployment

An increase in the overall price level in the economy that is originally caused by an increase in food prices is called which of the following? a. Hyperinflation b. Deflation c. Disinflation d. Agflation

d. Agflation

Like Freddie, Brian also spent 20 years working for an automobile manufacturing plant, and he was also replaced by a machine 9 months ago. He actively looked for a new job for the first 6 months after being replaced, but he then quit looking 3 months ago - though he still wants a job. When asked why he quit looking, he specifically cited an economic reason ("lack of available jobs"). How would we classify Brian? a. Structurally unemployed b. Frictionally unemployed c. Cyclically unemployed d. Discouraged worker e. Others marginally attached to the labor force

d. Discouraged worker

In economic terminology, the inputs used to produce output are referred to as which of the following? a. Durables and nondurables b. Tangibles c. Services d. Factors of production

d. Factors of production

In the most basic, standard version of the Circular Flow Diagram, what are the two main categories of participants in markets? a. Domestic participants and international participants b. Firms and the government c. Households and entrepreneurs d. Firms and Households e. Households and bank

d. Firms and Households

The term "ceteris paribus" is Latin for which of the following? a. All else equal b. Supply and demand c. Correlation d. Economics

a. All else equal

Suppose you have two upcoming exams: one in accounting and one in chemistry. Before you begin studying, you are roughly equally prepared for each exam. Assume that each hour spent studying one subject increases your exam score in that subject (but not in the other subject). As you spend more and more time studying for accounting, increasing marginal opportunity costs cause which of the following to be true? a. Studying enough to increase your accounting exam score by 1 additional point costs more and more in terms of the forgone increase in your chemistry exam score b. The more you study for accounting, the more efficient at studying accounting you get, meaning each additional hour spent studying accounting is more productive than the previous c. The opportunity cost of spending an hour studying for biology does not change as you spend more and more hours studying accounting

a. Studying enough to increase your accounting exam score by 1 additional point costs more and more in terms of the forgone increase in your chemistry exam score

Excess demand for goods and services in the economy causes which of the following? a. Demand-pull inflation b. Cost-push inflation c. Deflation

a. Demand-pull inflation

Increased GDP (aka a nation's economic output, or overall production) is associated with what? a. Demand-pull inflation b. Cost-push inflation c. Deflation

a. Demand-pull inflation

Which type of inflation is more common in the economy? a. Demand-pull inflation b. Cost-push inflation

a. Demand-pull inflation

If there is a reduction in the inflation rate, though inflation is still occurring, this is known as what? a. Disinflation b. Deflation c. Hyperinflation d. Uberinflation

a. Disinflation

Which of the following groups is particularly hurt by inflation? a. Fixed-income recipients b. Flexible-income recipients (who receive COLAs) c. Borrowers/Debtors

a. Fixed-income recipients

"Core inflation" measures the change in the overall price level, excluding which two prices? a. Food and energy b. Textiles and automobiles c. Tech goods and tech services d. Consumer and producer goods/service

a. Food and energy

When working as a scientist and trying to explain the world, the goal of an economist is to... a. Identify cause and effect b. Use correlation to imply causation c. Find correlations in seemingly unrelated data

a. Identify cause and effect

Consumer Price Index (CPI) and Producer Price Index (PPI) is true? a. Increases in the PPI usually precede increases in the CPI b. Increases in the PPI usually happen at the same time as increases in the CPI c. Increases in the PPI usually follow increases in the CPI d. There is no relationship between increases in the PPI and increases in the C

a. Increases in the PPI usually precede increases in the CPI

Why is the goal of government policy in the real world not set to target an inflation rate of 0%? a. It is difficult to accurately hit a target inflation rate, and deflation is far worse than inflation ("better safe than sorry") b. Deflation is actually good for the economy, so we just want as low an inflation rate as possible c. The Fed enjoys using inflation to hurt consumer

a. It is difficult to accurately hit a target inflation rate, and deflation is far worse than

Why is the scientific process for most social scientists different from that for most physical and life scientists? a. Laboratory experiments are often difficult/impossible in the social sciences b. Social sciences are less scientifically rigorous than physical and life sciences c. Social scientists don't really perform "true" science

a. Laboratory experiments are often difficult/impossible in the social sciences

What is the "golden rule" of economics (and all of life)? a. MC=MB b. Always do your best to achieve equilibrium c. Markets are always the best solution d. Krystal burgers are delicious

a. MC=MB

Suppose you run a local coffeeshop. Due to inflation, the coffee beans you buy as inputs have become more expensive. You are now forced to increase the price of your coffee products as a result. One resulting cost of this is that you must now print off new menus to reflect these increased prices. This is an example of what type of cost of inflation? a. Menu costs b. The costs of holding cash c. Shoe-leather cost

a. Menu costs

The Circular Flow Diagram illustrates how which of the following flows in the opposite direction of inputs and outputs? a. Money b. Goods c. Services d. Markets

a. Money

in an equilibrium, things are "at rest" because... a. No agent has an incentive to change their behavior b. Economic agents are not properly responding to the incentives they face c. The government is mandating that we operate at an equilibrium

a. No agent has an incentive to change their behavior

Is the following a positive statement or a normative statement? "A global carbon tax is the most efficient solution to climate change." a. Positive b. Normative

a. Positive

Is the following a positive statement or a normative statement? "Increased cigarette taxes reduce teen smoking rates" a. Positive b. Normative

a. Positive

Which of the following is the term for what firms receive in exchange for selling goods and services on the product market? a. Revenue b. Inputs c. Consumers d. Markets

a. Revenue

Economists often say that "people respond to incentives." What do we mean by the term "incentive"? a. Something that induces a person to act (or not act) b. A state of equilibrium c. Social welfare

a. Something that induces a person to act (or not act)

Freddie spent 20 years working for an automobile manufacturing plant. However, he was replaced by a machine 9 months ago. He is now actively looking for a new job. How would we classify Freddie? a. Structurally unemployed b. Frictionally unemployed c. Cyclically unemployed d. Discouraged worker e. Others not in the labor force

a. Structurally unemployed

From a macro perspective, what is the main reason we care about unemployment? a. The unemployment rate is one of three key macroeconomic indicators, signaling how "healthy" our economy is b. We generally want unemployment to be at 0% c. Unemployment is good, and we always want higher unemployment rate

a. The unemployment rate is one of three key macroeconomic indicators, signaling how "healthy" our economy is

Economists assume that individuals seek to maximize what? a. Their Own Utility b. Their Own Profits c. Their Own Total Revenue d. Overall Social Welfare

a. Their Own Utility

Fill in the Blank: A corollary lesson regarding ethics that we can also learn from the Circular Flow Diagram is that boycotts __________ effective. a. are b. are not

a. are

Natural unemployment is made up of... a. both frictional unemployment and structural unemployment b. both frictional unemployment and cyclical unemployment c. both structural unemployment and cyclical unemployment d. only frictional unemployment

a. both frictional unemployment and structural unemployment

n economics, an equilibrium is where... a. every economic agent is optimizing simultaneously b. no economic agents are using cost-benefit analysis c. the government no longer cares about maximizing social welfare d. economic agents are not properly responding to the incentives they face

a. every economic agent is optimizing simultaneously

Fill in the Blank: If we as a society invest more in capital goods today, then the future production possibilities frontier for our economy shifts __________. a. farther out b. less far out c. farther in d. equally as far in

a. farther out

Fill in the Blank: The short-term unemployment that arises from the process of matching workers with jobs is called __________. a. frictional unemployment b. structural unemployment c. seasonal unemployment d. cyclical unemploymen

a. frictional unemployment

Which of the following correctly describes the unemployment rate as an economic signal? a. Unemployment is always bad. The economy is not doing well unless there is 0% unemployment. b. Unemployment is generally bad, but some unemployment is okay because it is an unavoidable byproduct of growth. c. Unemployment is always good. The economy is not doing well unless we have very high unemployment rates

b. Unemployment is generally bad, but some unemployment is okay because it is an unavoidable byproduct of growth.

Hooray! After nearly a half decade of time at West Chester, you've finally graduated! As a hardworking and high-performing student, you've managed to secure 3 job offers. Aramark has offered you a salary of $55,000; GoPuff has offered you $50,000; and Urban Outfitters, Inc. has offered you a salary of $65,000. What is the opportunity cost of accepting the offer at Urban Outfitters? a. $50,000 b. $55,000 c. $105,000

b. $55,000

How long would it take for the price level to double if inflation persisted at 7% every year? (Hint: Use the "Rule of 70") a. 7 years b. 10 years c. 35 years d. 63 years e. 70 years

b. 10 years

Suppose that the CPI in 2019 is 125, and the CPI in 2020 is 130. What is the yearly inflation rate from 2019 to 2020? (Round to the nearest whole number if necessary.) a. 1% b. 4% c. 5% d. 25%

b. 4%

Suppose that the CPI in 1980 is 80, and the CPI in 1981 is 85. What is the yearly inflation rate from 1980 to 1981? (Round to the nearest whole number if necessary.) a. 5% b. 6% c. 7% d. 8% e. 9%

b. 6%

Decreased GDP (aka a nation's economic output, or overall production) is associated with what? a. Demand-pull inflation b. Cost-push inflation c. Deflation

b. Cost-push inflation

increases in per-unit production costs causes which of the following? a. Demand-pull inflation b. Cost-push inflation c. Deflation

b. Cost-push inflation

Which of the following is NOT one of the basic assumptions of economics? a. Economic agents make choices rationally b. Economic agents always make the correct choice c. Economic agents are self-interested d. More is always better e. There is always free storage/dispose

b. Economic agents always make the correct choice

__________ is the study of how society manages and distributes its scarce resources given individuals' unlimited wants a. The market b. Economics c. Scarcity d. Rationality

b. Economics

Which of the following topics is NOT a focus of macro economics? a. Inflation b. Experimental Economics c. Unemployment d. Economic Growth

b. Experimental Economics

After spending years working in IT for a local telecommunications company, Damon decides to quit his job. He is now actively looking for a similar job that more aligns with his preferences, such as flexible work hours. How would we classify Damon? a. Structurally unemployed b. Frictionally unemployed c. Cyclically unemployed d. Discouraged worker e. Others marginally attached to the labor force

b. Frictionally unemployed

What is the term we use do describe extremely high inflation rates? a. Superinflation b. Hyperinflation c. Uberinflation d. There is no term for this concept because it never happen

b. Hyperinflation

Why is the "ceteris paribus" assumption is important in economics? a. It is essential to identifying correlation b. It is essential to identifying causation c. Economists mainly write their academic work in Latin

b. It is essential to identifying causation

Suppose you observe that the price of chicken your local supermarket is cheaper than it was last year. Is it possible that there has been inflation over the past year, even though the price of this single item has gone down? a. Yes b. No

a. yes

What does increasing marginal opportunity costs mean? a. The economy is unable to produce increasing quantities of goods and services. b. Increasing the production of a good requires smaller and smaller decreases in the production of another good. c. Increasing the production of a good requires larger and larger decreases in the production of another good. d. Increasing the production of a good requires decreases in the production of another good. e. Production is not occurring on the production possibilities frontier

c. Increasing the production of a good requires larger and larger decreases in the production of another good.

Dolly is retired, choosing to spend her time with her grandchildren rather than working. How would we classify Dolly? a. Employed b. Unemployed c. "Not in the Labor Force" d. Cannot Choose to be in the Labor Force/"Not in Either

c. "Not in the Labor Force"

Suppose a 1-year bond has a nominal interest rate of 5% and earns a real interest rate of 2%. What was the inflation rate during that year? a. 2% b. 2.5% c. 3% d. 7%

c. 3%

Which of the following groups is generally helped by unanticipated inflation? a. Savers b. Lenders/Creditors c. Borrowers/Debtors

c. Borrowers/Debtors

After spending a few years as a bartender at a local bar, Lauryn was recently laid off due to a downturn in the economy. That is, due to a recession, her employer's business decreased drastically, forcing her employer to lay her off. Lauryn is now actively looking for a new job. How would we classify Lauryn? a. Structurally unemployed b. Frictionally unemployed c. Cyclically unemployed d. Naturally unemployed

c. Cyclically unemployed

Which of the following is NOT an example of an incentive inducing an economic agent (or a group of economic agents) to act? a. A new carbon tax is passed, and the local coal power plant installs cleaning scrubbers in its smokestacks (to decrease its carbon-related pollution) as a result. b. A war against Iran leads to higher gas prices in the US, resulting in more people buying hybrid and electric vehicles. c. Despite the recent increase in cigarette taxes, Mary continues to smoke just as much as before. d. The city of West Chester begins requiring a city-issued parking permit to park on the street in front of Joe's house, so Joe decides to finally register his car with the city to obtain a parking permit. e. A great growing season for corn leads to a drop in the price of whiskey, which induces Pedro to increase his whiskey consumption

c. Despite the recent increase in cigarette taxes, Mary continues to smoke just as much as before.

An individual or a group that makes decisions (in an economic context) is called a(n) what? a. Market b. Supply Chain c. Economic Agent

c. Economic Agent

Which of the following is true regarding equilibria in economics? a. Equilibrium is always the best possible outcome b. Equilibrium is never the best possible outcome c. Equilibrium is sometimes the best possible outcome, but sometimes not

c. Equilibrium is sometimes the best possible outcome, but sometimes not

Regarding GDP (aka a nation's economic output, or overall production) and price levels, "stagflation" is a term that describes when... a. GDP is increasing, and we also see inflation b. GDP is increasing, but price levels are stable (roughly 0% inflation) c. GDP is stagnant/decreasing (recession), but we see inflation d. GDP is stagnant/decreasing (recession), and price levels are stable (roughly 0% inflation

c. GDP is stagnant/decreasing (recession), but we see inflation

Which of the following is NOT a common example of a price index? a. Consumer Price Index (CPI) - A weighted average of the prices of goods and services typically purchased by households/consumers b. Producer Price Index (PPI) - A weighted average of the prices of goods and services typically purchased by firms/producers c. Government Price Index (GPI) - A weighted average of the prices of goods and services typically purchased by the government d. GDP Deflator - A weighted average of the prices of all new final goods and services produced in the US e. Big Mac Index - A measure of the price of a Big Mac in various countries around the world

c. Government Price Index (GPI) - A weighted average of the prices of goods and services typically purchased by the government

The concept of increasing marginal opportunity costs causes which of the following characteristics regarding the shape of the production possibilities frontier (PPF)? a. It will cause the PPF to have a positive slope b. It will cause the PPF to have a negative slope c. It will cause the PPF to be concave (aka, "bow outward") d. It will cause the PPF to be convex (aka, "bow inward") e. It will cause the PPF to be linear (aka, straight/not bowed either direction

c. It will cause the PPF to be concave (aka, "bow outward")

What does our society largely use to decide who gets how much of what? a. Government Mandates b. A "Command and Control" Approach c. Markets

c. Markets

Suppose that, because it makes you better with budgeting, you particularly like to spend only cash. You generally take a trip to the bank every month to withdraw all the cash you'll need for the month. Due to recent inflation, however, you realize that you should start keeping your money in the bank for longer. As a result, you are now forced to make trips to the bank every week instead of every month. Unfortunately, this takes up more time and costs you more in gas money. This is an example of what type of cost of inflation? a. Menu costs b. The costs of holding cash c. Shoe-leather cost

c. Shoe-leather cost

What does scarcity of an object lead to? a. A plentiful bounty of that object b. A communal agrarian society c. That object having value

c. That object having value

Fill in the Blank: If we as a society invest more in capital goods today, then our economy benefits by being able to produce __________ in the future. a. more consumption goods, but no additional capital goods, b. more capital goods, but no additional consumption goods, c. more of BOTH consumption and capital good

c. more of BOTH consumption and capital good

Which of the following is NOT a use of the CPI? a. As an economic indicator b. As a means of adjusting dollar values (indexing) c. As a deflator of other economic series/variables d. As a measure of the overall unemployment rate

d. As a measure of the overall unemployment rate

Which of the following is NOT a focus of micro economics? a. How single economic agents act b. How single markets (made up of multiple economic agents) act c. How a handful of markets act d. How the whole economy acts

d. How the whole economy acts

Economists assume that governments seek to maximize what? a. Their Own Utility b. Their Own Profits c. Their Own Total Revenue d. Overall Social Welfare

d. Overall Social Welfare

Fill in the Blank: Workers who lose their jobs because of a recession are experiencing __________. a. frictional unemployment b. structural unemployment c. seasonal unemployment d. cyclical unemployment

d. cyclical unemployment