Econ 201 Final Exam
Refer to figure 3.1 (market for cigarettes) A negative advertisement for cigarettes would be represented by a movement from
D2 to D1, demand is shifting to the left
If the Fed sells more bonds to the public, then the money supply will
Decrease and the aggregate demand curve will shift to the left
Suppose the price elasticity of demand for tacos is -.80. If the price of tacos increases by 10%, then the demand for tacos should:
Decrease by 8%
If the unemployment rate is lower than the full employment rate and prices are higher than normal, what may have caused this?
Decrease in interest rates
What term describes a situation when overall consumer prices in the economy decrease from one year to the next?
Deflation
Social demand is equal to market
Demand plus externalities
Refer to figure 3.1. The price of gasoline is expected to significantly decrease next week. what happens in the market for gasoline today
Demand shifts left
A monopolist sets price at a point on the _____, corresponding to the rate of output determined by the intersection of ______
Demand; marginal revenue and marginal cost
External shocks to an economy include:
Disruptions in trade, wars, and natural disasters
The market overproduces goods that have external costs because producers:
Do not experience the full costs of production for these goods
The free rider problem arises because those who:
Do not pay cannot be excluded
If an economy is experiencing a recession, the classical approach to achieving full employment is to:
Do nothing and wait for natural market forces to improve the economy
Both buyers and sellers are price takers in a perfectly competitive market because
Each buyer and seller is to small relative to others to independently affect the market price
If an increase in the size of a factory results in reductions in minimum average total costs, this is known as:
Economies of scale
If a firm finds that it can sell 20,000 units at a price of $5 per unit and 25,000 units at a price of $4 per unit in the price range is
Elastic
The employer mandate of the PPACA requires that
Every firm with 50 or more full-time employees must purchase health insurance for their full time employees or pay a $3000 fine per employee
Which of the following Federal Reserve policies is recommended if the economy is performing below full employment output
Expansionary policy
U.S. monetary policy relies on the:
Federal Reserve System's control over the money supply
Which of the following relies on government taxes and spending to change macro outcomes?
Fiscal Policy
After quitting one job, some people with marketable skills find that it takes several months to find a new job. This is an example of which type of unemployment?
Frictional Unemployment
The money multiplier
Gets smaller as the required reserve ratio increases
Which of these is not a part of M1
Gold bars
Which of the following is not an example of market failure
Government Intervention
Which of the following is not a monetary policy tool for shifting the aggregate demand curve?
Government spending
What fiscal policy tools are used to shift the aggregate demand curve?
Government spending and taxes
Refer to the figure that shows the market for U.S. health care. Other things equal, which of the following would shift the supply curve for medical care from S1 to S2
Greater reliance on skilled nurses rather than physicians
In perfect competition the product of a single firm
Has many perfect substitutes produced by other firms
How can improvements in health care increase a country's total income
Healthy workers are more productive
How can changes over time of the average height of the people in a country help to indicate the standard of living of a country
Height is an indicator of access to better nutrition
When considering a consumer good with a positive externality, the social demand for that good is ________ the private demand for that good
Higher than
Which of the following is a characteristic of a downturn in the business cycle?
Higher unemployment rates
A perfectly competitive firm's demand curve is
Horizontal
How are the fundamental economic questions answered in a mixed economy?
Households, firms, and the government interact in the markets to decide the answers.
Aggregate demand includes demand from:
Households, firms, government and foreign countries
The study of economics focuses on:
How to best allocate scarce resources
If Q3 represents full employment, what is a possible explanation for the economic situation shown by the intersection of the AD AS curves in FIgure 11.1
Increase in consumer confidence
If, for a perfectly competitive firm, price exceeds the marginal cost of production, the firm should:
Increase its output
The availability of health insurance tends to
Increase the quantity of health care demanded and cause an over allocation of resources to the health care industry
Ceteris Paribus, a leftward shift of the aggregate supply curve will cause the equilibrium price level to __________ and equilibrium real output to _______
Increase; decrease
With a greater amount of consumption, total utility:
Increases as long as marginal utility is positive
Ceteris Paribus lowering the discount rate ______ the money supply and ultimately _____________ aggregate demand
Increases; increases
Decreasing marginal costs result from:
Increasing marginal physical product
Which one of these is not a critical service performed by the Federal Reserve?
Increasing taxes on private banks
Using Figure 11.1 Suppose we shift the AS curve to the left and we shift AD curve to the right:
Inflation will rise. We cannot say for sure what will happen to output
Which of the following is most consistent with a market economy?
Invisible Hand
Which of the following information about fiat money is false? Fiat money
Is backed by gold
The price elasticity of demand for canned soup is estimated at -1.62. What happens to the sales revenue if the price of canned soup rises?
It falls
Which of the following is not true for a monopoly?
It is a price taker
Which of the following is not an essential characteristic of money
It is backed by gold or silver
Which of the following is not true about money
It must backed by a commodity such as gold to have value
Refer to figure 6-1. If the firm is producing 700 units
It should cut back its output to maximize profit
Which of the following does not occur when a bank makes a loan?
It transfers money from spenders to savers
Which of the following best describes the comparative advantage of the two countries illustrated in Figure 17.1
Japan has the comparative advantage in motorcycles: the United States in DVD players
Why is it harder for small companies to offer health insurance relative to large companies
Large companies have more workers so the pooled risk is smaller and they can negotiate better rates
A perfectly competitive firm produces 3,000 units of a god at a total cost of $36,000. The price of each good is $10. Calculate the firm's short-run profit of loss.
Loss of $6000
If consumers spend 98 cents out of every extra dollar received, the
MPC is .98
The fraction of each additional dollar of disposable income not spent on consumption is referred to as:
MPS
If consumers save 21 cents out of every dollar received, the:
MPS is .21
Refer to figure 7-1 If the firms average total cost curve is ATC1, the firm will
Make a profit
The price of a sellers's product in perfect competition is determined by
Market demand and market supply
When the market mechanism causes the economy to arrive at the wrong mix of output, economists call this:
Market failure
Based on the number of substitutes available, the demand for all carbonated beverages is likely to be ______ the demand for Dr. Pepper
More inelastic than
Net exports for the United States are:
Negative if American exports are less than imports
Refer to figure 6.2 for a perfectly competitive firm. if the market price is $30:
No entry or exit will occur
If an increase in income leads to an increase in the demand for peanut butter, then peanut butter is a:
Normal godd
Central planning is the principal method for making economic decisions in:
North Korea
An effect of asymmetric information is that
Not enough healthy people purchase insurance
When the Fed makes bonds more or less attractive it influences the
Open market decision
Buying bonds is an example of which of the tools available to the Fed for controlling the money supply?
Open market operations
The purchase and sale of government bonds by the Fed for the purpose of altering bank reserves is refferd to as
Open market operations
Give that resources are scarce:
Opportunity costs are experienced whenever choices are made
If the government increases taxes and the MPC is .5 how this will affect the economy?
Output decreases
Refer to figure 7-1 The firms maximizing price is
P3, where MR and ATC1 meet
For perfectly competitive firms, what is the relationship between market price (P), average revenue (AR) and marginal revenue (MR)
P=AR=MR
Defensive medicine refers to the idea that
Physicians may require unnecessary testing as a means of protecting themselves against malpractice suits
According to the text, which of the following is not a macroeconomic outcome?
Policy Levers
Following 9/11 the Fed increased the amount of reserves in U.S. banks overnight by billions of dollars in order to
Prevent bank panic by making sure funds were available to the many people trying to withdraw funds
When the price of yogurt rises, total revenue for yogurt also rises. This indicates that yogurt is a:
Price inelastic good
The following are key features of a monopoly EXCEPT:
Price taker
If the Consumer Price Index (CPI) had a value of 128 in year Z this means during the period between the base year and year Z
Prices of goods and services that the typical consumer buys increased by an average of 28%
Monetary policy by the Federal Reserve operates through the Aggregate Demand curve, in the Keynesian view the Aggregate Supply curve is horizontal for a period of output. Suppose the Fed uses restrictive monetary policy in this horizontal region of the Aggregate Supply. What happens to the average price level?
Prices stay the same
Which of the following is true for a monopolist?
Profit is maximized where marginal cost equals marginal revuene
The aggregate supply curve is positively sloped because as the price level increases
Profit margins increase in the short run
Refer to figure 7-1 To maximize profit, the firm will produce
Q2, where the MR and MC meet
Ceteris paribus, according the the law of supply, if the price of lawn mowing decreases from $50 per lawn to $45 per lawn, then the:
Quantity supplied of lawn mowing will decrease
Which one of these is NOT a policy option available to the government if the economy is out of equilibrium?
Raise prices
If the Fed wants to increase bank reserves it can:
Raise the reserve requirement
To decrease the money supply the Fed can
Raise the reserve requirement, raise the discoutn rate, or buy bonds
If taxes increase by $1 million, what is the total change in real GDP? [MPC=.5]
Real GDP is going to decrease by 2 million
A good measure of the standard of living is the
Real GDP per capita
Which of the following will occur if aggregate demand is below full-employment GDP
Recession
A period of inflation requires the government to
Reduce its spending and increase tax rates
Infant mortality rates are higher in the U.S. than other industrialized countries mainly due to:
Reduced access to prenatal care for low income women
Real income
Reflects the purchasing power of money
The price elasticity of demand of health care is
Relatively inelastic
Olive oil producers want to sell more olive oil at a higher price. Which of the following events would have this effect?
Research finds that consumption of olive oil reduces the risk of heart disease
When there is a shortage in a market, prices are likely to:
Rise because some buyers will offer to pay a higher price
Refer to figure 11.5 Ceteris paribus, an increase in the labor force would be represented by a movement from
SRAS1 to SRAS2
Refer to figure 11.5 Ceteris paribus, an increase in the expected price of an important natural resource would be represented by a movement from
SRAS2 to SRAS1
When construction workers seek work because the ground is covered in snow and ice, the unemployment rate goes up. This situation is an example of:
Seasonal unemployment
If the Fed wants to decrease the money supply it can:
Sell Government Bonds
Which of the following is an example of structural unemployment?
Shelly is looking for work but never finished high school so her skills are perceived as limited by employeers
Monetary policy involves the use of money and credit controls to:
Shift the aggregate demand curve
Due to a successful advertising campaign for Chobani yogurt, we would expect demand to:
Shift to the right and become more inelastic
Suppose a perfectly competitive firm increases its output. In order to sell this additional output, the firm:
Should price it at the market price
One reason why adverse selection problems arise in health insurance markets is that:
Sick people are more likely to purchase health insurance than healthy people
Which of the following is most likely a public good
Social Security payments
Whenever external benefits exist
Social demand will exceed market demand
A critical macroeconomic controversy is whether a market economy is inherently:
Stable or unstable
When the market value of goods and services is expressed in prices, money is functioning as a
Standard of value
Which of these is NOT a type of unemployment:
Standard unemployment
When the price of potato chips rises, the demand for pretzels also rises. This indicates potato chips and pretzels are
Substitutes
Which of the following is not a basic monetary policy tool used by the Fed?
Taxes
Which of the following events will most likely cause the production possibilities curve to shift outward?
Technology
If the first, second, and third and fourth worker employed by the firm add 15,21,12,and 8 total units of product respectively we can conclude that:
That after the second worker marginal product declines
Using all available resources, the US can produce 30 burgers or 20 tacos and Mexico can produce 10 burgers or 18 tacos. This means:
The US has an absolute advantage in producing both goods
If a country has an absolute advantage, it has:
The ability to produce more of a specific good than its trading partners
Suppose the First National Bank has zero excess reserves. If the required reserve ratio increases which of the following will happen immediatley?
The bank will not have enough required reserves
Which of the following is not a reason for the downward slope of the aggregate demand curve?
The cost effect
An increase in the supply of frozen yogurt will take place when:
The cost of producing frozen yogurt decreases
Private costs are identified as
The costs of an economic activity borne directly by the immediate producer or consumer.
Which of the following is an economic justification for a policy of laissez-faire?
The efficiency of the market mechanism
Assume the market for organic produce sold at farmers' markets is perfectly competitive. All else equal, as more farmers choose to produce and sell organic produce at farmers' markets, what is likely to happen to the equilibrium price of the produce and profits of the organic farmers in the long run?
The equilibrium price is likely to decrease and profits are likely to decrease
Which is not a barrier to entry into a monopoly market?
The existence of substitute goods
Which of the following is true of a natural monopoly such as an electric company?
The firm can supply the entire market at a lower cost than could two or more firms
The marginal propensity to save is
The fraction of each additional dollar of disposable income that goes to saving
A very large number of small sellers who sell identical products imply
The inability of one seller to influence price
All persons over age 16 who are either working for pay or actively seeking paid employment refers to
The labor force
In economics, which of the following is the best example of capital? a. money held in a checking account b. plastic bags used to put groceries in at the supermarket checkout line. c. investing in the stock market. d. the laptop of a computer programmer
The laptop of a computer programmer
Assume a toy company hires an additional worker to assemble toys, and the size of the factory and amount of equipment remain constant. As a result, the level of output increases but by a smaller amount than when the previous additional worker was hired. This is an example of:
The law of diminishing returns
Based on figure 9.2
There are external costs associated with cigarette smoking
Which of the following is not a characteristic of a perfectly competitive market structure?
There are restrictions on exit of firms
Refer to figure 6.2 for a perfectly competitive firm. If the market price is $46
There will be economic profits
Which of the following is not true about the excess reserves
They are equal to the required reserve ratio times checking deposits
At the current price of $10 in Figure 1.1 what can we say about profit and entry and exit?
This firm is making positive profit so firms will enter and price will decrease
Employer provided health insurance began during WWII:
To attract employees at a time when wages were kept low
Which of the following will always increase as output increases? a. total cost b. average total cost c. marginal cost d. fixed costs
Total Cost
Which of the following statments concerning the relationship between total product (TP) and marginal physical product (MPP) is not correct
Total product (TP) will fall if marginal physical product (MPP) is falling
If a perfectly competitive firm produces and sells more output, its ______ will definitely increase
Total revenue
The difference between total utility and marginal utility is that
Total utility is the complete satisfaction from consuming a good while marginal utility is the satisfaction from consuming one additional unity of a good
If marginal utility is negative, then:
Total utility will decrease with additional consumption
The average total cost curve is always
U-shaped
If the economy relies entirely on markets answer the WHAT question, it tends to ______ goods with external benefits and _______ goods with external costs
Under produce; overproduce
If a consumer recieves 20 total units of utility from consuming two candy bars, and 25 total units of utility from consuming three candy bars, the marginal utility of the second candy bar is
Unknown as more information is needed to determine the answer
If the economy is experiencing a recession, the Keynesian approach to achieving full employment is to:
Use tax cuts or more government spending or both
Nominal GDP is defined as the
Value of output in current dollars
If a firm increases output, total costs will rise because of change in the:
Variable costs
Given the current level of spending on health care in the United States, what can be said about infant mortality and life expectancy relative to other industrialized countries?
We spent the most per capita but have poor outcomes
The statement "my iPhone is worth $300" represents money's function as
a standard of value
The term externalities refers to
all costs and benefits of a market activity borne by a third party
In table 5.4 fixed costs:
are equal to $40
Specialization and trade benefits:
both rich countries and poor countries
Who supplies labor if we are looking at the general market for labor?
consumers
The basic money supply includes
currency, checking accounts, and travelers checks
The purpose of fiscal stimulus is to shift aggregate
demand to the right
Rising marginal costs result from
falling marginal physical product
A tax cut is known as
fiscal stimulus
The communal nature of a highway means that no one individual is motivated to pay for it because even those who do not pay will still benefit from using it. This is an example of the
free rider deliemma
One reason our full employment goal is not zero percent is because
frictional unemployment will always exist
If a seafood restaurant can raise the price of its fried shrimp without losing all of its customers, then the restaurant definitely
has market power
Specialization and trade
increase the standard of living
suppose the banks in the Federal Reserve System have $100 million in checking accounts and are currently holding the minimum reserve requriement of .10 Ceteris paribus, if the reserve requirement is decreased to .07 then excess reserves will immediately be:
increased by $3 million
Monetary policy affects the aggregate demand
indirectly through the interest rate
Monetary policy:
is controlled by the Federal reserve
Since a monopoly has market power
its marginal revenue curve is below its demand curve
In a graph of the aggregate demand curve, a decrease in the investment by businesses is represented by a:
leftward shift of the curve
A monopoly will not only charge a higher price but it will also produce __________ output than a competitive market would produce:
less
Which of the following is an argumetn in support of market power?
money for research and development
Refer to figure 11.4 Ceteris paribus, an increase in business taxes can be represented by a movement from
point B to A
Which of the following does not explain why the market sometimes fails to produce the optimal mix of output
private goods cannot be consumed jointly
The free rider problem arises because
public goods can be jointly consumed
All points on the production possibilities curve
represent the use of all available resources
Which of the following functions of money would be violated if inflation were high?
store of value
Refer to figure 7-1 If the firms average total cost curve is ATC3 the firm will
suffer a loss
From figure 1.2 above it can be determined that the mushroom farmer is
suffering a loss of $1080
According to the supply side theories, if the costs of production rise, then aggregate
supply shifts to the left
Which of the following will occur if the Fed raises the reserve requriement, ceteris paribus?
the aggregate demand curve should shift leftward
A merger between U.S. Steel and General Motors would be an example of a
vertical merger
As a result of Kristy's deposit, Bank A's reserves immediately increase by
$10,000
Using the information in Table 1.3, if the 2005 is the base year, what is real GDP in 2014?
$12,900
Suppose you deposit $8000 into your checking account. If the required reserve ratio is 65% how much money can the 4th bank loan?
$120.05
As a result of Kristy's deposit Bank A's required reserves increase by
$2000
What is the total cost of 2 units in Table 5.5?
$22
In table 5.6 the marginal cost of the third unit of output is
$3
Table 5.5 shows the costs for producing muffins. What is the marginal cost of the 3rd muffin?
$3
Suppose a monopoly firm produces software and can sell 10 items per month at a price of $50 each. In order to increase sales by one item per month, the monopolist must lower the price of the software by $1 to $49. The marginal revenue of the 11th item is
$39
As a result of Kristy's deposit the money supply increases by
$40000
Suppose Butch Jones deposits $100 into a bank account the required reserve ratio is 5%. The money multiplier in this case is:
20
In table 1.1 what is the opportunity cost of producing 4 missiles?
23,000 houses
Refer to table 10-5 consider the following values of the consumer price index for 2010 and 2011 the inflation rate for 2011 was equal to
3.9 percent
Refer to the figure above. If the legal rental price of apartments is $1500 per month this will result in:
300 apartments being legally rented
Based on the information in Table 17.1, the opportunity cost of producing 1 bushel of corn in country B is:
4.5 bushels of wheat
If a consumer receives 20 total units of utility from consuming two cigarettes, and 25 total units of utility from consuming three cigarettes, the marginal utility of the third cigarette is
5 units
If taxes decreae by 500 million and the MPS is .8 what will be the total effect of the tax cut on the economy?
625 million
In table 1.1 What is the opportunity cost of increasing the production of missiles from 2-3 in terms of houses
7000 houses
Assume the price is $10 and the marginal revenue equals marginal cost at $7 at a quantity of 400. If the firms profit at that point is $800 find the ATC:
8
What was the unemployment rate in 1991?
8.2%
Which of the following would cause a depression?
A decrease in both aggregate demand and supply
Because of the slope of the aggregate demand curve, we can say that:
A decrease in the price level leads to a higher level of real GDP demanded
Ceteris paribus, ____ in consumer confidence will cause ______ in aggregate demand
A decrease: a decrease
A monopolist faces
A downward sloping demand curve
A price floor is:
A lower limit on the price of a good
Ceteris Paribus, which of the following events would most likely cause the production possibilities curve to shift inward?
A major earthquake destroys several industrial centers
The Consumer Price Index is
A measure of changes in the average price of consumer goods and service
Refer to Figure 3.5. With rent control, the legal rental price is $1,000 per month. This will result in:
A shortage of 300 apartments
Which of the following would shift AD to the left:
A sudden decrease in exports
Refer to figure 3.1. consider the market for smartphones made in China. Which graph shows the immediate effect on an increase in the cost of labor in China
A, Supply shifting to the left
How can we describe a typical recession with AD and AS curves?
AD curve shifts left and AS curve is constant
Refer to Figure 11.2 Ceteris Paribus, a decrease in interest rates would be represented by a movement from
AD1 to AD2 demand shifts to the right
Refer to Figure 11.4 ceteris paribus an increase in personal income taxes can be represented by a movement from
AD2 to AD1
Comparative advantage refers to a country's
Ability to produce a specific good at a lower opportunity cost than another country
Absolute advantage refers to a country's
Ability to produce more of a specific good than another country
Marginal Utility refers to the:
Additional utility from consuming one more unit of a good
At macro equilibrium:
Aggregate demand equals aggregate supply
Given an upward-sloping aggregate supply curve, attempts to reduce unemployment through monetary policy could result in inflation when:
Aggregate demand shifts too far to the right
Which of the following is likely to occur if people reduce their spending because they are worried about an economic downturn, ceteris paribus
Aggregate demand will shift to the left
Using aggregate supply and demand curves drawn according to the Keynesian view, which of the following will occur if the Fed buys bonds in the open market and the economy is below full employment
Aggregate demand will shift to the right and the unemployment rate will fall
Which of the following is likely to occur if OPEC increases the amount of oil it supplies and domestic energy prices fall, ceteris paribus
Aggregate supply will shift to the right
When producing jeans, which of the following is a variable cost in the long run? a. worker hourly wages b. cost of denim material c. cost of renting the factory space d. all of the above
All of the above
Market failure occurs when
An imperfection in the market mechanism prevents an optimal outcome
Market failure occurs when:
An imperfection in the market mechanism prevents an optimal outcome
Fiscal policy includes
An increase in government spending
If aggregate supply is upward sloping an increase in aggregate demand will result in:
An increase in prices and an increase in output
Ceteris paribis, which of the following will cause the demand for pizza to increase in a college town?
An increase in the number of students who eat pizza
Ceteris paribus, the money supply becomes smaller when:
An individual repays the money that he borrowed from a bank
Required reserves
Are the minimum amount of reserves a bank is required to hold
Typically an individual person knows more about their health status than an insurance company. This unequal balance of knowledge is an example of:
Asymmetric information
Inflation is measuring changes in:
Average level of prices
which market would be considered perfectly competitive?
Avocado
If a construction company is producing positive output at an inefficient level, this can be represented in figure 1.1 at point:
C, behind the production possibilities curve
A private good is a good that
Can be denied to those who do not pay for it
A public good is a good that
Can be jointly consumed
The government passed a stimulus bill and consumers have received a rebate, the result is that the AD curve has shifted to the right. The new equilibrium GDP ______
Cannot be determined, we dont know the slope of the AS curve
Which of the following does the united states import:
Cell phones and clothing
Which of the following is involved in a competitive firm's short run decision?
Choosing a rate of output using existing plant and equipment
Which of the following is NOT an example of a positive externality?
Cupcakes
In table 10.1, what is the unemployment rate in Year 1?
16.7%
Suppose a perfectly competitive firm has the following cost. If the market price is $9 per unit, how much should the firm produce?
17
Based on the information in table 17.1, the opportunity cost of producing 1 tank in the United States is:
2 automobiles
Figure 9-1 shows the market for toaster ovens. Producing them creates pollution. What is the appropriate per unit fee so that the toaster producer completely accounts for the externality?
$5
Consider the following date for Tyrovia, a country that produces only two products: guns and butter. Refer to table 10-3 Real GDP for tyrovia for 2011 using 2005 as the base year equals
$690
Suppose you deposit $5000 into your checking account. If the required reserve ratio is 75% how much money can the 3rd bank loan
$78.13
Assume an MPC of .75 the change in total spending for the economy as a result of a $20 billion new government spending injection would be:
$80 Billion
As a result of Kristy's deposit, Bank A's excess reserves increase by
$8000
Refer to table 10-2 suppose that a simple economy produces only four good and services: sweatshirts, dental examinations, coffee drinks, and coffee beans. Assume all of the coffee beans are used in the production of the coffee drinks. Using the information in the above table, nominal GDP for this simple economy equals
$8750
Use the profit maximizing rule, a monopolist in Table 1.2 will charge a price of
$90
Local police have estimated that when the price of marijuana in Knoxville goes from $150 to $200 per ounce, the quantity sold decreases from 1000 to 800 ounces. Using your fancy new skills as an economist, what is the elasticity of demand for marijuana in Knoxville with this price increase?
-0.6
Refer to table 10-4 assume the market basket for the consumer price index has two products- bread and milk- with the following values in 2006 and 2011 for price and quantity: the consumer price index equals
116
Refer to Figure 3.1 An increase in price of pickles would be represented by a movement from
B to A
Money creation occurs when:
Banks make loans to borrowers
Money is used as a tool to reduce the inefficiency of
Bartering
Professor sims tutors her next-door neighbors son in economics instead of payer her for this service the neighbor washes the professors car. This is an example of
Bartering
When quantitative easing (QE) was used after the great recession of 2008, the government was:
Buying different types of bonds to rapidly increase the money supply
Classical Theorists think that
The market self-corrects and no government intervention is necessary
What happens to the money supply as soon as you repay a car loan from the bank?
The money supply will decrease
As more labor is hired in the short run, diminishing returns are observed because
The new workers have less capital to work with
Competition in a market results in:
The optimal mix of goods and service being produced
If a fire insurance company requires firms buying fire insurance to install automatic sprinkler systems, the insurance company is trying to reduce
The problem of moral hazard
When economists talk about a trade-off between "guns and butter" they mean
The production of more military goods requires giving up consumer goods.
Which of the following determines the amount of money the banking system as a whole can create?
The quantity of bank reserves
If Herbie Husker takes $75 from his cookie jar and deposits into his checking account. The immediate result is that:
The value of M1 stays the same