Econ final

Which of the following will fall when the economy is expanding? Consumer confidence Nonfarm payrolls Business confidence Applications for unemployment benefits

applications for unemployment benefits

What is quantity supplied?

It is the amount of an item that a seller is willing to sell at a particular price.

Quantity demanded is on the horizontal axis when you plot a demand curve and shows the:

amount of a good that a person is willing to buy at each price.

The cost-benefit principle states that _____ are the incentives that shape decisions.

cost and benefits

real intrest rate

nominal intrest rate - inflation rate

permentn income and consumption smoothing

permanent income: your best estimate of your long term average income consumption smoothers: spend permanent income hand to mouth: consumers spending current income

The GDP deflator is an index that tracks the:

price of all goods and services produced domestically.

Graphically, the equilibrium quantity can be identified as the:

quantity corresponding to the intersection of the demand and supply curves.

A shortage occurs when:

quantity demanded exceeds quantity supplied.

Suppose that an economy is in a recession. You would expect to see the unemployment rate:

rise above the equilibrium unemployment rate

An example of a leading indicator is:

stock market

If there is _____ rise in income, there will be an intermediate increase in total consumption in the economy.

temporary

Dale is a stay-at-home-parent whose typical day consists of getting the kids ready for school, doing the laundry, cooking three meals, and cleaning the house. How are Dale's home activities counted in GDP?

they are not counted

unemployemnt rate

unemployed/labor force x 100

An equilibrium in a market occurs:

when the quantity supplied equals the quantity demanded.

shifters of consumption function

1. real intrest rates 2. expectations 3. taxes 4. wealth

How is the economic surplus generated by a decision calculated?

It is the total benefits minus total costs arising from the decision.

Which of the following scenarios illustrates the law of demand?

Kathleen eats more steak when the price is low, and less when the price is high. the law of demand: tendency for the quantity demanded to be higher when price is lower

If there is a temporary rise in income, a consumption smoother will exhibit _____ in consumption, and a hand-to-mouth consumer will exhibit _____ in consumption.

a small increase; a large increase

Graphically, shortages will always occur:

at prices below the equilibrium price

Property rights refer to:

control over tangible or intangible resource

An equilibrium price is:

determined by the intersection of the demand and supply curve

labor force participation rate

employed + unemployed / working age population x 100

he key to using the cost-benefit principle is to think about _____ aspects of a decision.

financial and nonfinancial

Which of the following will probably rise when the economy is in a recession? Initial unemployment claims Employment Real GDP growth Real retail sales

initial unemployment claims

Nerida Kyle could either commute to work via Uber or purchase a new car. The average cost of her one-way Uber trip is $15. Nerida works five days a week for 50 weeks a year. Based solely on avoiding the cost of an Uber, Nerida should purchase a car if the cost of the car is _____ than _____ per week.

less;150

The __________ suggests, decisions about quantities are best made incrementally.q

marginal principle

If you see that the consumer price index this year is lower than the consumer price index last year, this means that:

on average prices went down across the economy

Along the same aggregate production function, the level of _____ is the same.

technology

An individual demand curve is a graph:

that plots the quantity of an item that someone plans to buy, at each price.

When plotting a supply curve

the quantity supplied goes on the horizontal axis.

Kevin Williamson goes to a local coffee shop and orders a medium-sized latte. His willingness to pay for that latte is $6. The price of the latte is $2. The cost to the coffee shop to produce the latte is $1. How much economic surplus does Kevin gain when he purchases the latte?

$4

What is the difference between spending from a microeconomic standpoint versus spending from a macroeconomic standpoint?

In microeconomics, spending refers to spending by you, or your family, or your company, whereas in macroeconomics, spending refers to the spending by all consumers, all businesses, and the government in the economy.

You have four friends. Which of your friends can be described as "cyclically unemployed"? Arthur, who quit his job to look for a better job Keele, who lost her job after her company lost a lot of customers during an economic downturn Martha, who is a full-time stay-at-home parent Regan, who is in a nursing home

Keele

The government passes a new investment tax credit initiative. Which input in the production function changes, and what is the effect on economic growth in the country?

The capital stock increases, and economic growth is positively affected.

Why are supply curves typically upward-sloping?

They slope upward because higher prices lead individual businesses to supply a larger quantity and more businesses are willing to supply goods and services.

Which of the following would lead to a slowdown in economic growth?

a reduction in the birth rate coupled with an increase in the retirement rate of a population

A decreasing returns to scale production function is one where increasing all inputs by a certain proportion leads to output rising by:

a smaller proportion

Which of the following would lead to a slowdown in economic growth?

an increase in the dependency ratio

According to the marginal principle, keep increasing quantity until the marginal benefit of an additional item is _____ the marginal cost of an additional item.

equal to

3 types of unemployment

frictional: unemployment due to time it takes employers to search for workers and workers to search for jobs structural: unemployment occurs because wages don't fall to bring labor demand and supply into equilibrium cyclical: unemployed due to temporary downturn in economy

When there is a shortage of highly skilled workers in a particular region:

highly skilled workers can negotiate higher salaries.

Jonathan Mendez is deciding whether to study for his economics exam at a café down the street or go to a concert a few cities over. The time spent commuting to the concert is ____ in his opportunity cost calculations and represents a _____ cost.

included; non financial

expected rate of return

increase in profit a firm anticipates it will obtain by purchasing capital - if expected rate of return > real intrest rate: yes - if expected rate of return< real intrest rate: no -expected economic profit/ cost of investment

he rational rule of consumption is to consume more today if the:

marginal benefit of a dollar of consumption today is greater than (or equal to) the marginal benefit of spending a dollar plus interest in the future.

loanable funds market

market for funds used to buy, rent, or build capital know the shifters for demand and supply

When you calculate marginal costs, they should include:

only variable costs

Which principle tells you that the true cost of something is the next best alternative you have to give up to get it?

opportunity cost principle

business cycle:

short-term flucuations in economic activity

Technological advancement is NOT represented by which of the following? the adoption of an existing technology by new firms the invention of robotic meal preparation the creation of new apps designed to enhance efficiency and reduce wastage in production lines the invention of the light bulb

the adoption of an existing techology by new firms

Decisions should reflect the _____ costs, rather than just the _____ costs.

opportunity; financial

Which of the following lists only the factors that would cause a decrease in the supply of an item? A rise in the price of a substitute-in-production; a rise in the price of a complement-in-production; an expectation that the price of the item will rise in the future. A rise in input prices; a decrease in the number of sellers in the market; a rise in the price of a substitute-in-production. A decrease in the number of sellers in the market; a fall in the price of a complement-in-production; an increase in productivity. A fall in input prices; an increase in productivity; a fall in the price of a substitute-in-production.

A rise in input prices; a decrease in the number of sellers in the market; a rise in the price of a substitute-in-production.

Why does an anticipated change in income lead to no change in consumption for a consumption smoother?

Consumption is based on permanent income, which is already factored into anticipated future changes in income.

What is the difference between microeconomics and macroeconomics?

Microeconomics is the study of individual decisions in specific markets, whereas macroeconomics is the study of the economy as a whole.

GDP deflator=

Nominal GDP/Real GDP x 100

real gdp nominal gdp GDP

average price x quantity price x quantity sold Y= C+I+G+NX

A rational buyer will:

keep buying a product until marginal benefit equals price.

A downward-sloping demand curve implies:

there is an inverse relationship between price and quantity demanded.

law of supply:

general tendency for quantity supplied to be higher when price is higher

An underemployed person is one who is:

working but whose skills are not fully utilized.

The four stages of the business cycle are:

peak: high point, economy producing max, demand exceeds supply recession:decline in gdp, demand and spending fall, causes business to decline trough: low point, decline in growth curbs expansion: economy recovers and goes up, caused by confidence, low unemployment price increase, investment increase

The opportunity costs of attending college include the:

potential income that could be earned working

Consumer price index

price level this year-price level last year/ price level last year x100

A constant returns to scale production function means that if all inputs are increased by 75%, this should lead to output:

rising by 75%

Diminishing marginal benefit:

is when buying an additional item yields a smaller marginal benefit than the previous item.

Southeast Asian countries experience high temperatures and high humidity during the monsoon seasons. This makes working conditions difficult. Because air conditioners are expensive and consume a lot of electricity, an alternative air cooler called an Eco-cooler was invented. This device does not use electricity, is made from readily available soda bottles, and works by funneling air into a room. This scenario is an example of:

a technological innovation that can increase labor productivity and thus increase economic growth.

The interdependence principle:

implies that buyers decisions are affected by many factors other than the price of an item.

Dependencies between your own choices reflect the fact that:

you have limited resources

The moral of the story of the Solow growth model is that:

capital accumulation alone cannot lead to sustainable economic growth.

whos counted as employed and unemployed

employed: working age people who are working unemployed: part of workimg age population, not currently working, actively seeking work, and able to accept a job if it were offered labor force= employed + unemployed

expected vs unexpected of inflation

expected: - menu costs: marginal cost of adjusting prices -shoe leather cost: cost incurred when trying to avoid holding cash unexpected: -confusing signals that prices sense -redistributing income

You are considering whether you should go out to dinner at a restaurant with your friend. The meal is expected to cost you $50, you typically leave a 20% tip, and a round-trip Uber ride will cost you $15. You value the restaurant meal at $30 and the time spent with your friend at $50. You should ____ to dinner with your friend because the benefit of doing so is _____ than the cost.

go; greater

economic growth and why its important

increase in real GDP per captia occuring over a period of time, increase in real GDP occuring over some period of time. important because: lessens burden of scarcity, allows economy to produce more, can consume more today and increase consumption, increase income and standrd of living for individuals, allows for improvement in education health care and environment

Which of the following is NOT a factor that can shift supply? The price of a substitute-in-production. The price of a complement-in-production. The market price of a product. The expected future price of a product.

market price of a product

When plotting a demand curve

price is on the vertical axis

Joshua Murphy is planning on studying late into the night for his economics exam. How many cups of coffee should he buy tonight?

benefit of purchasing one more coffee equals the marginal cost.

Kathleen Alvarado is binge-watching her favorite show on Netflix. She is attempting to decide how many more episodes to watch. Kathleen should continue watching episodes as long as the marginal:

benefit of watching another episode exceeds the marginal cost.

In a voluntary economic transaction between a buyer and a seller, _____ can earn economic surplus from the transaction.

both the buyer and the seller

A normal good is:

a good for which higher income causes an increase in demand.

Which of the following changes will lead to a decrease in the price level but an increase in the quantity of output in an economy? a rise in aggregate demand a fall in aggregate demand a rise in aggregate supply a fall in aggregate supply

a rise in aggregate supply

The Rational Rule for Sellers says that a seller should sell one more unit of an item if the price is:

greater than or equal to the marginal cost.

The principle that your best choice depends on your other choices, the choices others make, developments in other markets, and expectations about the future is known as the _____ principle.

interdependence

Which of the following countries enjoyed significant catch-up economic growth in the second half of the twentieth century? Argentina South Korea United States Spain

south korea

Which of the following events would lead to a shift of the supply curve from Old supply to New supply? increased taxation of raw materials used by producers technological advance in production techniques a natural disaster that causes a shutdown of production a decrease in the size of the market

technologixcal advance in production techniques

Diana is a student studying economics and currently working on her class schedule for next semester. She decides to enroll in a course on economic data analysis because she knows that data analysis is a highly sought-after skill from employers in her career field. Weighing what may affect her in the future opportunities demonstrated dependency:

through time