Economics Final Review

If there is a recession in the United Kingdom, and a reduction in British imports, and an economic boom in the United States, and an increase in U.S. imports, then these events are most likely to cause the British pound to:

Appreciate and the U.S. dollar to depreciate

Developing economic principles or explanations about how individuals behave or institutions act is referred to as:

Economic theory

If a family's income increases by 5% at the same time that inflation is 3.5%, then the:

Family will need to spend more in order to maintain its standard of living

The circular flow model:

Illustrates the interdependence of businesses and consumers

International specialization and trade:

Often requires the exchange of currencies

Which of the following statements about price stickiness or flexibility is true?

Prices of many raw materials are much more flexible than the prices of final goods and services

Which of the following is the most accurate description of events when monetary authorities increase the size of commercial banks' excess reserves?

The money supply is increased, which decreases the interest rate, and causes investment spending, output, and employment to increase

U.S. exports create a:

Supply of foreign currencies to the United States and a demand for dollars in foreign countries

If the production possibilities curve is a straight line, then:

The law of increasing opportunity costs does not apply

Only two resources, capital and labor, are used in an economy to produce an output of 600 million units. If the total cost of capital resources is $300 million and the total cost of labor resources is $100 million, then the per-unit production costs in this economy are:

$0.67

When the price of candy bars decreased from $.55 to $.45 the quantity demanded changed from 19,000 per day to 21,000 per day. In this price range, the price-elasticity coefficient (based on the midpoint formula) for candy bars is:

0.5

If you knew that the intercept for a straight line was 12, and that if the value of the independent variable was 3 the value of the dependent variable would be 18, then the slope of the line would be:

2

A nation's average annual real GDP growth rate is 2.5%. Based on the "rule of 70", the approximate number of years that it would take for this nation's real GDP to double is:

28 years

In 2009, about how many percent of adults in the U.S. were college graduates or more?

30%

The population growth rate of the DVCs (developing countries) as a group in recent decades has:

Been declining

From an economic perspective, when a student decides to attend another year of college, the student has concluded that the marginal:

Benefits of attending college are greater than the marginal costs

Many of the major projects of the World Bank have been for:

Building infrastructure in a nation

An increase in personal income tax rates will cause a(n):

Decrease in aggregate demand

The United States is experiencing a recession and Congress decides to adopt an expansionary fiscal policy to stimulate the economy. In this case, the crowding-out effect suggests that investment spending would:

Decrease, thus decreasing aggregate demand and partially offsetting the fiscal policy

Assume that the MPC is .80. If the Federal Reserve decreases the money supply, interest rates rise, and investment spending falls by $10 billion, then aggregate demand is most likely to:

Decreased by 50 billion

Assume the required reserve ratio is 20 percent. If the Federal Reserve buys $80 million in government securities from the public, then the money supply will immediately:

Increase by $80 million, and the maximum money-lending potential of the commercial banking system will increase by another $320 million

A commercial bank has no excess reserves until a depositor places $5000 in cash at the bank. The commercial bank then lends $4000 to a borrower. As a consequence of these transactions the size of the money supply has:

Increased by $4000

In the circular flow model, households earn their incomes in the:

Resource markets

If the economy is to have significant built-in stability, then when real GDP increases, the tax revenues should:

Rise proportionately more than the change in GDP

Which view of population growth would be associated with the statement: "The standard of living of DVCs will rise when actions are taken to reduce population growth"?

Traditional

The following are incomes earned but not received by the nation's households, except:

Transfer payments

When a banker records how many dollars each of his borrowers owes the bank, money is serving as a:

Unit of account

In the Great Recession of 2007-2009, the stock market values shrank, causing a reverse:

Wealth effect