Econ module 1
A(n) ______ system is a particular set of institutional arrangements and a coordinating mechanism that responds to the economizing problem.
economic
Government failure refers to ______.
economically inefficient outcomes caused by shortcomings in the public sector
Reductions in per-unit production costs that result from increases in output levels are called ______.
economies of scale
the ___________ problem refers to the need to make choices because economic wants exceed economic means.
economizing
which scenarios are illustrated in the given production possibilities curve?
economy in full employment is along the curve, attainable combinations of both goods below the curve
The basis of competition is freedom of ______ exercised in the pursuit of ______.
choice; money
The view of GDP as the sum of money spent on purchases is called the ______ approach.
expenditures
A cost or a benefit accruing to an individual or group that is external to a market transaction is known as a(n) ______.
externality
A(n) -----------is a cost or a benefit accruing to an individual or a group, a third party, that is external to a market transaction. (Enter one word in the blank.)
externality
which combinations are attainable given a consumer's budget line?
combinations on or inside the budget line
Government provision refers to the government's providing a good or service for free in order to correct for ______.
extremely large positive externalities
Social security payments automatically increase when the CPI goes up because of the ______.
cost of living adjustments
Inflation caused by an increase in the per-unit production costs at each level of total spending is called:
cost-push
Gross domestic product calculations count only final goods and services because ______.
counting all intermediate goods and services would lead to double-counting of many activities
The term "economic investment" refers to ______.
creating capital goods that have costs today but provide benefits in the future
In recent years, new MP3 and digital technologies have replaced compact disks. This is an example of ______.
creative destruction
The creation of new products and production methods that completely destroys the market positions of firms that are wedded to existing products and older ways of doing business is called _____.
creative destruction
Modern economic growth has significantly increased the standard of living as well as --------- , social, and political arrangements.
cultural
Macroeconomics deals with the short-run variations in economic growth that make up the business
cycle
Economists say that the economy is at "full employment" when the ______ unemployment rate is zero.
cyclical
The amount of income that households have left over after paying their personal taxes is ______ income.
disposable
The marginal benefit curve for pollution reduction slopes ______ because of the law of ______.
downward; diminishing marginal utility
The business cycle affects output and employment in capital and durable goods industries more severely than in industries producing non-durable goods because, ______.
during a recession, business investment in new capital goods and consumer spending on new durable goods can be postponed
Taken together, the four general categories of economic resources (land, labor, capital, and entrepreneurial ability) are referred to as which of the following?
factors of production
The phase of the business cycle when the economy is near or at full employment and the level of real output is at or near capacity is called a:
peak
Workers that are unemployed because they are "between jobs" are:
frictionally unemployed
Efficiency factor is when an economy must achieve economic efficiency as well as ______ to reach its full production potential.
full employment
The difference between actual and potential GDP is called a GDP---------
gap
The principal source of savings is:
households
The savings of _____ make their way into the banking system and become the investment funds of ______.
households; firms
Land and mineral resources, transportation and communication facilities, factories and farm buildings, equipment, tools and machinery are all examples of _______.
scarce economic resources
Which of the following could be considered a cost of cyclical unemployment?
-Higher crime, suicide, and divorce rates -Severe psychological costs to the job loser -Political upheaval
Which one of the following is the best reason real GDP is an important measurement for an economy?
It is a monetary measure that allows for comparison of a nation's output across time.
Which of the following has the greatest effect on the quantity supplied?
Price
Since the prices of many goods and services take months to change, what type of prices are these?
Sticky prices
Which of the following allow the economy to achieve a higher rate of economic growth?
Stronger productivity growth and heightened global competition
When every economic unit in a society attempts to achieve its own particular goal, usually requiring delivering something of value to others, it is referred to as ______.
self-interest
Human capital refers to ______.
the improvement in labor created by education and knowledge that is embodied in the work force
What is the goal of mechanism design as it relates to democratic voting?
To design voting rules that minimize the chance of inefficient outcomes
Which of the following is the most efficient method of production?
Using a combination of labor, capital and technology
The market value of a firm's output minus the value of the inputs the firm has bought from others is called ______.
Value Added
Why is the provision of public goods and services inherently inefficient?
Voters must select among a bundle of goods and services that does not exactly match their preferences.
The supply factors that are part of the "determinants" of economic growth include increasing the quality and quantity of natural and human resources, increasing the stock of capital, and improvements in---------
technology
Goods and services are produced efficiently when production is organized in combinations and ways ______.
that minimize the cost per unit of output
Modern market economies usually have a(n) ______.
active, but limited, government
Business cycle fluctuations typically arise because:
actual demand ends up being lower or higher than expected
The primary measure of the economy's performance is its annual total output of goods and services, which is called its ______.
aggregate output
A person who cannot get a job despite being willing to work and actively seeking work is considered ------------ . (Enter one word in the blank.)
unemployed
Frictional unemployment is defined as a type of unemployment that is caused by workers who ______.
unemployed as they actively search for a new job.
Forgone output is a basic economic cost of ______.
unemployment
Workers in lower-skilled occupations have higher ______ rates than workers in higher-skilled occupations.
unemployment
Economists define and measure economic growth as ______.
an increase in real GDP per capita over some period of time.
the highest-valued alternative that is given up or sacrificed when choosing to produce or consume one good over another is referred to as
an opportunity cost
when limited economic resources are used to produce one type o good instead of another, there is
an opportunity cost and a cost borne by society in utilizing these resources in lieu of the next best thing
A decrease in supply while holding demand constant results in a(n) ______ in equilibrium price, and a(n) ______ in equilibrium quantity.
increase; decrease
Real interest rates are the ______.
interest rates quoted in the market minus the expected inflation rate
If the demand for a good becomes unexpectedly low, the _____ of the good will increase.
inventory
Output that has been produced but not yet sold is called---------
inventory, investment, or stock
A demand curve shows the ______.
inverse relationship between price and quantity demanded for a product
Firms try to predict future trends so that they can ______.
invest only in projects that are likely to succeed
Disposable income equals ______.
personal income minus personal taxes
Actions by businesses today that incur current costs and provide benefits in the future are called:
investments
Unlawful misdirection of governmental resources or actions that occur when government officials abuse their entrusted powers for political gain is better known as ______.
political corruption
The government will provide a public good where there are extremely large ----------externalities.
positive
Stronger ______ growth and heightened ______ competition allow the economy to achieve a greater rate of economic growth.
productivity; global
If a good is nonrival and nonexcludable, then it is known as a:
public good
The "invisible hand" guides firms and resource suppliers to promote ______ even as they seek to further their own interests.
public or social interests
A good that could be produced by the market system (since exclusion is possible), but government provides it in order to avoid an underallocation of resources is called a(n)------- public good. (Enter one word in the blank.)
quasi
A good that could be produced by the market system (since exclusion is possible) but government provides to avoid an underallocation of resources is called a:
quasi-public good
Direct controls --------the marginal cost of production because firms must operate and maintain pollution control equipment.
raise
Government subsidies decrease producers' costs, shifting the supply curve to the ______ and correcting the ______ of resources by producers.
right; underallocation
Suppose the demand for cars rises and prices are flexible. Firms that produce cars will experience:
rising prices, an increase in production, and an increase in employment
The characteristics of a private good include--------- in consumption and excludability. (Enter one word in the blank.)
rivalry
Ideally, a nation acquires funds for investment spending on plant and equipment by ______ income.
saving
In simple terms, any income that is not consumed is--------
savings
One of the ways that government can raise living standards over time is by encouraging ______.
savings and investment
Sources of funds for investment spending in plant and equipment are ______.
savings by households, governments, and foreigners
___________ economic resources means limited goods and services
scarce
The five questions that every society must address reflect the reality of _________(scarce/infinite) resources in a world of ________________(limited/unlimited) wants.
scarce unlimited
Inflation redistributes:
real income
______ ownership of capital gives capitalism its name.
Private
The estimated amount of capital being used each year is called ______.
depreciation
Which characteristics define a command system? A government-appointed central planning board Firms and households acting in their own self-interest Firms producing what consumers demand Government ownership of most or all resources
- A government-appointed central planning board -Government ownership of most or all resources
Which of the following types of goods affect the demand for another product due to a change in their price? (Select all that apply)
-Complementary goods -Substitute goods
What are the two ways to adjust nominal GDP to reflect price changes?
-Divide nominal GDP by the price index. -Multiply the current year's output by price of the output in the base year.
Which of the following are found in the product market?
- Goods - Services
Which are examples of negative gross domestic by-products?
-Noise -Polluted water -Congestion
The determinants that directly affect economic growth can be grouped into which of the following categories?
-Supply -Demand -Efficiency
Which of the following are determinants of demand?
1. Consumer tastes 2. Changes in income 3. Price of related goods 4. Consumer expectations 5. Number of buyers
What is it called when demand fails to account for the buyer's full willingness to pay?
Demand-side market failure
In the marketplace, what is a good that is used together with another good?
A complementary good
budget line
A curve showing various combinations of two products a consumer can purchase with a specific amount of income
What is potentially the result of overcapacity and the stalling of technological progress?
A decline in productivity growth rates
______,while holding demand constant, results in an increase in the equilibrium price of the good, but a decrease in the equilibrium quantity of the good.
A decrease in the supply of a good
Which of the following is not an example of a personal consumption expenditure?
A fighter jet
Which of the following is characterized by the private ownership of resources and the use of markets to coordinate and direct economic activity?
A market system
The estimate of how much of the private capital equipment is being used up each year is called---------
Depreciation
What does every point on a budget line graph represent?
All combinations of goods that can be purchased with a given income
A decrease in equilibrium price and indeterminate result on equilibrium quantity is a result of which of the following?
An increase in supply and a simultaneous decrease in demand
What is a situation in which one party to a market transaction possesses substantially more information than the other party?
Asymmetric information
Why is it in our self-interest to economize or pick and choose goods and services that maximize our satisfaction?
Because of our limited incomes conflicting with our insatiable wants for goods and services
All markets that have downward-sloping demand curves and upward-sloping supply curves yield -----and surplus-------. (Remember to type only one word per blank.)
Blank 1: buyer or consumer Blank 2: seller, producer, or supplier
Reductions in per-unit production costs that result from increases in output levels lead to --------of ----------. (Enter one word per blank)
Blank 1: economies or economy Blank 2: scale
Efficiency factor is when an economy must achieve economic efficiency as well as --------- -------to reach its full production. (Use one word per blank)
Blank 1: full Blank 2: employment
Because an economy's resources are-------- , decisions to use more resources in the public sector will mean fewer resources for the------- sector.
Blank 1: limited, scarce, or finite Blank 2: private
Private goods exhibit two consumption characteristics, ------and ------. Listen to the complete question
Blank 1: rivalry, rival, or rivalrous Blank 2: excludability, excludable, or exclusion
A new firm focused on creating and introducing a particular new product or employing a new production or distribution method is called a(n) firm
Blank 1: start-up, startup, or start up
Which of the following statements about the public and private sectors is true?
Both sectors are imperfect allocators of resources.
Which of the following would be an example of the system accommodating change?
Buyers want more juice and less milk. Producers increase spending only on juice.
How do interest groups generally attempt to influence the outcome of majority voting?
By convincing voters of the merits of a public good
How does the market system develop methods for analyzing and managing risk?
By presenting businesses with the economic consequences of their decisions
Using the expenditure approach, which of the following most closely defines the composition of GDP?
C + Ig + G + X − M
If C represents consumption expenditure, Ig represents gross investment, In represents net investment, G represents government expenditure, Xn represents net exports, and Xg represents gross exports, GDP is ______.
C + Ig + G + Xn
Which of the following would be considered private goods?
Clothing Automobiles
_____ is defined as the difference between the maximum price a consumer is willing to pay for a product and the actual price.
Consumer surplus
What are leader countries?
Countries that develop and use the most advanced technologies
Which of the following is a resource that lending institutions can use to overcome information problems when considering a loan application?
Credit bureaus
Which of the following refers to reductions of combined consumer and producer surplus associated with the underproduction or overproduction of a good or service?
Deadweight loss
Most short-run fluctuations are the result of --------shocks
Demand
Most short-run fluctuations are the result of what type of shocks?
Demand
The purchase of the economy's expanding goods and services by households, businesses, and the government is known as the ______ factor.
Demand
Identify policies for coping with the overallocation of resources caused by negative externalities.
Direct controls Taxes on producers
Gross --------income includes all income earned from American-owned resources plus government revenue from taxes on production and imports. (Use one word for the blank.)
Domestic
What is the shape of the marginal benefit curve for pollution reduction?
Downward sloping
Identify the three virtues of the market system.
Efficiency Incentives Freedom
Which of the following are excluded from core inflation so that it better reflects the general trend in overall prices?
Energy products Food items
Which of the following is the reason why every society needs to develop an economic system?
Every society faces the economizing problem.
--------about the future are particularly important for firms to consider.
Forecasts
Which of the following ensures that entrepreneurs and private businesses are free to obtain and use economic resources to produce their choice of goods and services?
Freedom of enterprise
The difference between actual and potential GDP is called a ______ gap.
GDP
Which of the following statements best summarizes the growth in real GDP in the United States between 1950 and 2018?
GDP grew at an annual rate of 3.1%
--------failure refers to economically inefficient outcomes caused by shortcomings in the public sector.
Government
Which term best describes the allocation of resources that occurs under the private and public sectors?
Imperfect but necessary
Which of the following is a determinant of demand?
Income
What is savings?
Income minus consumption
What are the effects of taxation on resources?
It reduces private demand for resources. It makes resources available for producing public goods.
How is cost-push inflation unique?
It reduces the overall quantity of real output.
If demand is unexpectedly high for a prolonged period of time, what will happen to unemployment?
It will fall.
Which is considered to be "pure capitalism," in which the role of government is essentially limited to that of protecting private property and establishing a legal environment for enforcing contracts and market activity?
Laissez-faire capitalism
Which of the following is a policy approach to negative externalities?
Levying taxes or charges on the related good
Which of the following is an example of the principal-agent problem in the business world?
Managers buy expensive office furniture
The government can provide the efficient amount of a public good by adhering to which of the following rules?
Marginal benefit equals marginal cost
What is the difference between the actual price a seller receives and the minimum acceptable price?
Producer surplus
Which of the following are methods that private businesses can use to overcome information difficulties without government intervention?
Product warranties Franchising
If a good is nonrival and nonexcludable then it is known as a(n) ------good.
Public
Which of the following specifically refers to demand?
The buyer side of any market
_____ provides goods to correct a positive externality where positive externalities are extremely large.
The government
Which of the following helps explain why the growth rate in the United States has been positive during the 1900s?
The increase in labor productivity.
What does the Consumer Price Index (CPI) measure?
The prices of a fixed "market basket" of goods and services
Which of the following best defines unemployment?
The state of a person who cannot get a job but is actively seeking work
The use of money as a common denominator to sum output into a meaningful measure of GDP creates a problem because ______ changes.
The value of money itself
Which of the following goods would be considered a rivalrous private good?
Tickets to a movie
True or false: GDP reveals nothing about the way output is distributed.
True
Why are private businesses often more efficient than public agencies?
Why are private businesses often more efficient than public agencies?
In a supply and demand chart for a public good, which of the following equates to a marginal-benefit curve?
Willingness-to-pay curve
The formula for a GDP gap is:
actual GDP minus potential GDP
Technological advancements, such as the personal computer and medical discoveries, are primarily driven by the profit motive. However, such advancements eventually promote the public or social interest as though they are guided by _____.
an invisible hand
A cost--------- analysis involves an assessment of marginal costs and marginal benefits associated with a project or program. (Remember to type only one word in the blank.)
benefit
A key issue in macroeconomics is why the economy sees ______.
business cycle fluctuations rather than slow, smooth growth
The straight-line budget constraint indicates ______ opportunity cost.
constant
The supply curve for a public good is society's marginal -------curve.
cost
A ---------(one word) shock refers to unexpected changes in the demand for goods and services.
demand
A change in the number of buyers is a determinant of market __________. (Use only one word for the blank.)
demand
Consumers experience ______ marginal utility the more they consume of a particular good or service.
diminishing
Freedom of _______ ensures that entrepreneurs and private businesses are free to obtain and use economic resources to produce their choice of goods and services.
enterprise
An economy is "fully employed" when the unemployment rate _____.
equals the structural and frictional unemployment rate
The interaction between buyers and sellers determines the equilibrium price and the ______quantity. (Answer in one word.)
equilibrium
Characteristics of a pure private good include:
excludability rivalry
If output prices were fully --------, output would remain constant and unemployment levels would not change.
flexible
In general, a firm will __________(increase/decrease) the output of a good or service if the price of the good is rising.
increase
The vast majority of goods that are not related to one another are called ______ goods.
independent
If a family's income does not increase as fast as the prices of the goods and services that it consumes, its standard of living will decline. This scenario describes the problems with ______.
inflation
The supply curve for any good, private or public is ______.
its marginal-cost curve
An increase in productivity growth is important because real output, real income and real wages are linked to ______.
labor productivity
The two main supply-side elements that contribute to changes in real GDP are increases in hours worked and increases in ______.
labor productivity
The downward-sloping willingness-to-pay curves for public goods are also known as ______.
marginal-benefit curves
In a _______ system, people act in their own self-interest.
market
Regulatory capture often occurs because ______.
nearly everyone who knows the details of the regulated industry works in the industry
A market failure that occurs when a third party to a transaction experiences uncompensated costs is called a(n)--------- externality, or spillover cost.
negative
What is the coordinating mechanism in a market system?
prices
In the short run:
prices are sticky
surplus is the difference between the actual price a seller receives and the minimum acceptable price.
producer
The biggest problem with inflation is that ______.
real income may fall as nominal wages do not keep up with price changes
In the circular flow model, households ______ resources and ______ products.
sell; buy
A(n)------- to a producer is a payment from the government to decrease the producer's cost in order to encourage more output of a product deemed beneficial to society. (Remember to type only one word in the blank.)
subsidy or subsidies
The labor force is the ______.
sum of the employed and unemployed
The supply curve measures quantity ______ on the horizontal axis and ______ on the vertical axis.
supplied; price
A --------shock refers to unexpected changes in the supply of goods and services. (Use one word for the blank)
supply
A change in ______, rather than a change in the quantity supplied, means a change in the schedule or a shift of the supply curve.
supply
Flexible prices are prices:
that adjust feely through the forces of supply and demand
Product and resource prices in a market system are determined by ______.
the interaction between buyers and sellers
Private bargaining, markets for externality rights, specific taxes, liability rules and lawsuits, and direct controls are all examples of methods for correcting ______.
the overallocation of resources caused by negative externalities
Cost-push inflation is caused by an increase in ______.
the per-unit production costs at each level of spending
Deflation occurs when there is a decline in ______.
the price level
Diminishing marginal ______ states that, in any specific time period, buyers will derive less satisfaction from each additional unit of the product consumed.
utility
Government transfer payments include all of the following except:
wage payments to police officers
Which of the following are reasons why teenagers have a much higher unemployment rate than adults?
-Have less geographic mobility -Have lower skill levels -"Fired" more frequently -Quit more frequently
Select all that apply Which of the following describe the concept of laissez-faire? (Check all that apply.) -A market system in which the role of government is unlimited -A market system in which the role of government is limited to protecting private property -A market system in which the role of government is to correct market failures -A market system in which only mutually beneficial economic transactions are completed
- A market system in which the role of government is limited to protecting private property - A market system in which only mutually beneficial economic transactions are completed
Which of the following are used by economists to define and measure economic growth?
- An increase in real GDP per capita occurring over some time period- An increase in real GDP occurring over some time period
Select all that apply Which of the following does competition require? -Two or more buyers and two or more sellers acting dependently in a particular market -Mutually exclusive economic transactions -Two or more buyers and two or more sellers acting independently in a particular market -Freedom of sellers and buyers to enter or leave markets
- Freedom of sellers and buyers to enter or leave markets - Two or more buyers and two or more sellers acting independently in a particular market
Which of these explain why growth is an important economic goal?
- It increases real wages and incomes. - It increases standards of living. - It increases a society's ability to resolve socioeconomic problems.
If increasing numbers of consumers decide to purchase organically farmed fruit rather than conventionally farmed fruit, how is the market likely to respond?
- Organic fruit profits will rise- Conventional fruit profits will fall
Identify policies for coping with the underallocation of resources associated with positive externalities.
-Government provision -Subsidies to producers -Subsidies to consumers
Which of the following collectively direct resources to industries that are meeting consumer wants and away from industries that are not meeting consumer wants?
- consumer sovereignty - dollar votes
Which of the following are components of the expenditure approach to measuring GDP?
-Government purchases -Personal consumption expenditures -Gross private domestic investment
Select all that apply Which of the following are components of the circular flow model?
- resource market - businesses - households - product market
Which of the following ensure that private individuals and businesses are able to utilize property as they wish? (Check all that apply.) -The ability to negotiate legally binding contracts -The ability to negotiate contracts that are not legally binding -The right of public property -The right of private property Public domain
- the ability to negotiate legally binding contracts - the right of private property
Select all that apply Which of the following correctly states why advanced technology and capital goods are important? (Check all that apply.) -The most productive methods are often the least efficient. -The most direct methods of producing a good or service are often the most efficient. -The most direct methods of producing a good or service are often the least efficient. -The new technology can enhance the productivity of workers.
- the new technology can enhance the productivity of workers - the most direct methods of producing a good or service are often the least efficient.
Which of the following are the characteristics of a competitive market? (Check all that apply.)
-A large number of buyers and sellers -Standardized products
Which of the following are some possible reasons for the slowdown in productivity growth rates starting in 2010?
-Accumulation of high debt levels -Recent products like Internet apps that are free and do not generate a measurable effect on GDP -Overcapacity
Which of the following techniques are commonly used by interest groups to influence voters?
-Advertisements -Direct persuasion -Mailings
Which of the following are used by economists to define and measure economic growth?
-An increase in real GDP occurring over some time period -An increase in real GDP per capita occurring over some time period
Which of the following best describe how goods and services should be produced?
-By locating production facilities optimally to hold down production and transportation expenses -By utilizing the right mix of labor and capital
How does the profit system guide entrepreneurs?
-By punishing them with losses when they choose poorly -By rewarding them with profits when they choose wisely
Which steps has the government taken to address the problem of inadequate buyer information about sellers in the gasoline market?
-Establishing a system of weights and measures -Passing laws against false or misleading advertising -Employing inspectors to check for accuracy of pumps
According to some economists, which of the following are positive effects of mild inflation?
-Firms will have a strong demand for labor. -Firms have an incentive to expand their plants and equipment.
Public choice theory provides an economic analysis of which of the following subjects?
-Government decision making -Politics -Elections
Which statements describe how even low levels of inflation may negatively affect real output?
-Households and businesses spend time and effort distinguishing between real and nominal wages and interest rates. -Businesses incur the costs of changing prices to reflect inflation.
Which of the following occur in the resource market?
-Households provide economic resources directly as workers or entrepreneurs. -Households sell resources and businesses buy them. -Businesses buy resources from households because they are necessary for producing goods and services.
Which of the following were economic problems faced by the former Soviet Union, Eastern Europe, and China prior to its market reforms?
-Incentive problem -Coordination problem
Other than a higher standard of living and more innovations, which of the following are true of the impacts of modern economic growth in industrialized nations?
-Increase in democracies -Increased leisure time and arts -Elimination of archaic social norms
Which of the following are consequences of the widespread joblessness of cyclical unemployment?
-Increased poverty -Lower morale -Greater ethnic tensions
What are the two supply-side elements of real GDP?
-Increases in hours worked -Increases in labor productivity
Which of the following comprise technological advancement?
-Innovative production techniques -New managerial methods -New forms of business organization
Which statements about the profit system are true?
-It encourages entrepreneurs to make prudent decisions. -It is actually a profit and loss system.
As a measurement of economic output and the nation's wealth, GDP fails to account for which of the following?
-Leisure time -The underground economy -Improved product quality -Nonmarket activities
Which of the following are characteristics of lower-skilled workers?
-Less likely to be self-employed -Longer spells of structural unemployment
What are the two primary topics studied by macroeconomics?
-Long-run economic growth-Short -run fluctuations in output and employment
Which of the following will cause a change in supply and not quantity supplied? (Check all that apply.)
-Number of sellers -Producer expectations -Technology
The market system attracts inputs and focuses owners' attention on risk management by restricting business risk to which two groups?
-Owners -Investors
Which of the following are growth-promoting institutional structures?
-Patents and copyrights -Competitive market system. -Free trade -Efficient financial institutions -Strong property rights
Which of the following are solutions that governments use to counter overproduction caused by negative externalities?
-Pigovian taxes -Direct controls
What do antigrowth economists cite as evidence in favor of their argument that growth is undesirable?
-Pollution -Materialism -Poverty
In which of the following situations do governments intervene to prevent prices from rising above or falling below their equilibrium levels?
-Prices are too low for firms. -Prices are too high for consumers.
Which of the following are arguments against rapid economic growth?
-Rapid economic growth has not solved sociological problems like poverty and homelessness. -Rapid economic growth results in pollution, global warming and other environmental problems. -Rapid economic growth is unsustainable due to the earth's finite resources.
What are noneconomic sources of well-being that are not considered in a country's GDP?
-Reduction of drug and alcohol abuse -Reduction of crime -Peaceful international relations
Which of the following will lead to better living standards and economic growth?
-Savings -Economic investment
Identify the sources of increasing returns for firms. (Check all that apply.)
-Simultaneous consumption -Network effects -Spreading of development costs -More specialized inputs -Learning by doing
Which of the following are sources of increasing returns?
-Simultaneous consumption which allows large numbers of customers to be served at the same time -Spreading of development costs over greater output -Learning by doing which reduces the time to perform tasks -Network effects which increase the value of the product to each user as the total number of users rises -More specialized inputs such as specialized workers and inventory management systems
What are the reasons that the Industrial Revolution is important to modern economic growth---that is, an increase in output per person?
-The emphasis on research and development -The introduction of automation -The growth of factory production
Which of the following are likely to occur if the technology for pollution-control equipment improves noticeably?
-The marginal cost curve of abatement would shift rightward. -The cost of pollution abatement would fall. -The optimal quantity level of abatement would rise.
Which of the following would be likely to happen in a society that decided it wanted cleaner air and water because of new information about the adverse health effects of pollution?
-The optimal quantity level of pollution control would increase. -The marginal benefit (MB) curve of abatement would shift rightward.
Which of the following are pressures that make government more likely to produce undesirable economic outcomes?
-The pressure to be elected and earn reelection -The pressure to accrue benefits to firms in the politician's home state
For the purposes of GDP accounting, what do government purchases include?
-The purchase of new military equipment -Spending on highway construction
Which of the following are the effects of a subsidy to producers?
-The quantity of the product increases to the economically optimal quantity, eliminating the underallocation of resources. -The supply curve shifts to the right because of an increase in supply. -The subsidy reduces the marginal cost of producing the good.
What are the effects of unanticipated deflation?
-The real incomes of people with fixed nominal incomes will increase. -The purchasing power of savings will increase. -Creditors will benefit at the expense of debtors.
Which of the following statements describe who will get the goods and services produced in a market economy? (Check all that apply.)
-Those who have sufficient income and want to spend money on a particular good -Those who are willing and able to pay for the goods and services
Which of the following are the domestic sectors of the U.S. economy?
-U.S. businesses -U.S. government -U.S. households
What are the results of unanticipated inflation?
-Wealth and real income are redistributed. -Some people are harmed and others are helped.
Identify the five fundamental questions that all economies, whether market or command, must address. -What goods and services will be produced? -How will the prices of goods and services be determined? -What will be the price of goods and services produced? -How will the system accommodate change? -How will the system promote progress? -How will the goods and services be produced? -Who will get the goods and services?
-What goods and services will be produced? -How will the goods and services be produced? -Who will receive the goods and services? -How will the system accommodate change? -How will the system promote progress?
Which of the following are situations in which governments likely to intervene in markets?
-When externalities affect large numbers of people -When community interests are at stake
Select from the following those that contributed to the spectacular advancement in information technology.
-Wireless technology -Fiber-optic cable -The Internet -The computer
which of the following leads to increases in wants over time?
-a lesser good triggering the desire for a better one -the introduction of new and improved goods
All competitive markets involve which of the following?
-demand -quantity -price -supply
Competition among economic units ______.
-diffuses economic power within the businesses and households that make up the economy. -implies that producers can enter or leave an industry
which issues are most explored in microeconomics?
-expenditures of a government entity-measuring the price of specific goods-measuring total revenues of a firm
Economic growth provides society ______.
-higher living standards -more goods and services -greater material abundance
Select all that apply Competition among economic units ______. -implies that producers can enter or leave an industry -should not occur within a market system -is not congruent with the concept of self-interest -diffuses economic power within the businesses and households that make up the economy.
-implies that producers can enter or leave an industry -diffuses economic power within the businesses and households that make up the economy.
Which of the following are signs of a market failure?
-overallocation of resources-underallocation of resources
In order to have competition in a market economy, there must be at least _____ or more sellers acting independently in a particular market.
2
If real economic growth is 3%, the inflation rate is 5%, and the nominal interest rate is 7%, then the real rate of interest is:
2%
Which of the following is true of a market system?
A market system is a combination of centralized government initiatives and decentralized actions taken by firms.
Which of the following in the rental market for housing benefits renters, but makes it unprofitable for suppliers or landowners?
A price ceiling
In the marketplace, what is a good that can be used in place of another good called?
A substitute good
Which of the following is likely to cause an increase in the demand for a good or service?
An increase in the number of buyers
What type of inflation allows people to plan ahead and avoid or lessen the redistribution effects of inflation?
Anticipated inflation
A situation in which a given percentage increase in the amount of inputs a firm uses leads to an even larger percentage increase in the amount of output the firm produces is called ---------returns. (Enter one word in the blank.)
Blank 1: increasing, rising, greater, or larger
The term that covers all expenditures by households on goods and services is known as --------- ---------- expenditures.
Blank 1: personal or private Blank 2: consumption or consumer
A(n)--------- --------- is a measure of a specified collection of goods and services in a given year as compared to the value of a highly similar collection of goods and services in a reference year.
Blank 1: price Blank 2: index
---------prices are prices and wages that change very little in the short run.
Inflexible
Net domestic product is gross domestic product less ______.
Depreciation
Which approach to GDP adds up all the spending on final goods and services that has taken place throughout the year?
Expenditures approach
True or false: A price at or above the price floor is illegal.
False
True or false: Countries that experienced economic growth earlier than other countries have lower average incomes today.
False
True or false: GDP is a perfect and complete measure of the well-being of a country.
False
True or false: Government could correct the overallocation of resources by subsidizing consumers of the product.
False
True or false: In general, GDP includes unpaid work.
False
True or false: Money complicates exchange or trade.
False
True or false: Negative externalities, such as pollution, improve rather than reduce the utility of people and the communities in which they live and work.
False
True or false: The resource market is the place where resources or the services of households are produced.
False
True or false: Everyone except for the super wealthy has a finite, or limited, amount of income.
False; even though jeff bezos literally could not spend all his money in his life time and chooses to exploit workers and not provide any form of service for the general welfare but go awf i guess
Who owns most property resources in a command system?
Government
Which of the following is a common remedy when externalities affect large numbers of people or community interests are at stake?
Government intervention
Which government interventions can be used to counter underproduction caused by positive externalities?
Government provision Subsidies
Match each domestic sector of the economy with its description. Instructions
Household----> Has an inflow of disposable income and outflows of consumption spending and savings Government ---> Has an inflow of revenue from various types of taxes and an outflow of disbursements in the form of purchases and transfers Business ---> Has inflows from three major sources of funds for investment and an outflow of investment expenditures
______ are the principal source of savings.
Households
What are two goods called when a change in the price of one good has little or no effect on the demand for the other?
Independent goods
The ______ Revolution was important to modern economic growth.
Industrial
What creates a problem in using money to value GDP?
Inflation
Including the value of ---------(one word) goods along with the value of final goods in the calculation of GDP would amount to multiple counting of goods and distort GDP.
Intermediate
Which of the following explains how the government provides the optimal quantity of a public good?
It compares the marginal benefit of an added unit of the good against the government's marginal cost of providing it.
Which of the following is true of GDP as a measure?
It fails to capture the full value of improvements in product quality.
Which statement best describes U.S. inflation since 2000?
It has been neither very high nor very low.
How has government intervention in the gasoline market affected market participants?
It has benefited both buyers and sellers.
What occurs in a market transaction characterized by asymmetric information?
One party possesses significantly more information than the other party.
Which term describes the inability of a market to bring about the allocation of resources that best satisfies the wants of society?
Market failure
Which field of economics and game theory studies how to establish procedures that will minimize the chance of inefficient votes?
Mechanism design
Which theory posits that, under majority rule and consistent voting preferences, the median voter will determine the outcome of elections?
Median-voter model
An active, but limited, government is characteristic of which type of economic system in modern advanced industrial economies?
Modern market system
All the income that is earned from American-owned resources is called ______.
National income
Which of the following measures the economy's overall performance?
National income accounting
Legislation limiting specific activities is the most direct method of addressing which market situation?
Negative externalities
Pigovian taxes and direct controls are two government solutions for which market situation?
Negative externalities
Which of the following are characteristics of public goods?
Non-excludability Non-rivalry
Which type of good can be consumed by one person without precluding consumption of the good by others?
Nonrival
---------in consumption means that one person's consumption of a good does not preclude consumption of the good by others.
Nonrivalry
The view that GDP is the sum of money spent on buying final goods and services is called the aggregate --------approach. (Enter one word for the blank.)
Output
Which voting system is associated with the paradox of voting?
Paired-choice majority voting
What are reasons that the underground economy exists?
People want to avoid taxes. People are engaged in illegal activities.
Which of the following are substitutes?
Pepsi and Coca-Cola
All income received by households, whether earned or unearned, is called ---------------income.
Personal
The amount of income that households receive, whether earned or unearned, is called ______ income.
Personal
--------corruption occurs when government officials abuse their entrusted powers for personal gain.
Political
-------agent problems are conflicts that arise when tasks are delegated by one group of people to another group of people. (Enter one word in the blank.)
Principal
Within reason, everyone can benefit from ______ goods and there is no effective way of excluding individuals from the benefits derived from them once they exist.
Public
Which type of analysis seeks to understand government decision making, politics, and elections?
Public choice theory
GDP does not capture the full value of improvements in product quality because GDP is a(n) ---------instead of a qualitative measure. (Enter one word in the blank.)
Quantitative
Which of the following statements best summarizes the real economic growth per capita in the United States between 1950 and 2018?
Real GDP per capita rose nearly fourfold.
What is the market result of a situation in which buyers possess more information than sellers?
Reduced market activity
Which of the following are determinants of supply? (Check all that apply.)
Resource prices; Taxes and subsidies; Technology; Prices of other goods; Producer expectations; Number of sellers
A private good that displays ---------characteristics means that when someone buys and consumes that good, it is not available for someone else to buy and consume. (Enter one word in the blank.)
Rivalry
Identify the correct statement about the government's allocation of resources in an economy.
Since the economy's resources are limited, decisions to use more resources in the public sector will mean fewer resources for the private sector.
The ----------(social/opportunity) costs of negative gross domestic by-products reduce a nation's economic well-being.
Social
More abundant leisure increases ______, but it ______ real GDP.
Social welfare; decreases
(one word)_________ is the use of resources by an individual, firm, region, or nation to produce one or a few goods or services rather than the entire range of goods and services.
Specialization
Which of the following diverts purchasing power from private spenders to government, thereby removing resources from private use?
Taxation
Which of the following factors of productivity growth helps to promote the development of new forms of business organization?
Technological advance
In national income accounts, what does value added refer to?
The difference in the market value and cost of inputs purchased from other firms
One of the shortcomings of GDP is that it doesn't reveal anything about which of the following?
The distribution of output
Based on the reality of political pressures, such as the need to satisfy constituents, which of the following statements is true?
The economic role of government is not always perfectly carried out.
What is the price where the intentions of buyers and sellers match?
The equilibrium price
What determines market price and equilibrium output in a market?
The interaction of buyers and sellers
What is the difference between options in the marketplace and in the public sector?
The marketplace can satisfy preferences exactly, while the public sector requires choosing a candidate who is not always an exact fit.
What is a term for a situation in which paired-choice voting by majority rule fails to produce a consistent ranking of society's preferences for public goods or public services?
The paradox of voting
Why do economists pay so much attention to small changes in the rate of economic growth?
These changes have large effects on the volume of output.
True or false: A subsidy to a producer is a payment from the government to decrease the producers' cost to encourage more supply of a product beneficial to society.
True
True or false: Efficiency losses are reductions of combined consumer and producer surplus associated with both underproduction and overproduction of a product.
True
True or false: Growth enables society to improve nations' infrastructure.
True
True or false: Hyperinflation is extraordinarily rapid inflation.
True
True or false: In a market system, consumers exercise consumer sovereignty, which is crucial in determining the types and quantities of goods purchased.
True
True or false: In the United States, inflation reached double-digit rates in the 1970s and early 1980s but has since declined and recently, has been relatively mild.
True
True or false: Markets that have downward-sloping demand curves and upward-sloping supply curves yield consumer and producer surplus.
True
True or false: Net domestic product is gross domestic product minus consumption of fixed capital (or depreciation).
True
True or false: Resource costs or changes in these costs to production are responsible for shifts in the supply curve.
True
True or false: Special interest groups will often support even failing bureaucratic agencies to further their own agenda.
True
By ignoring the value of leisure time, how does national income accounting affect our well-being?
Understates our well-being
In order to construct a reliable price index, government accountants must assign a ______ to each of several categories of goods and services.
Weight
The real-world, more complex GDP price index used in the United States is called the chain-type annual-------price index.
Weights
Which of the following statements best summarizes how inflation may redistribute real income?
When a change in the price level differs from a change in a person's nominal income
In which situation are buyers capable of taking advantage of sellers?
When buyers possess more information than sellers
When do demand-side market failures occur?
When demand curves underreport how much consumers are willing and able to pay for a product
In which situation are governments likely to use subsidies or government provision to achieve economic efficiency?
When positive externalities cause underproduction
Consumers must forgo certain goods and services based on a limited budget because ______.
a consumer spends his or her limited budget purchasing a combination of goods and services that maximize his or her satisfaction
A comparison of the marginal cost of a project or program with the marginal benefits is known as ______.
a cost-benefit analysis
A decrease in demand while holding supply constant results in ______ in both equilibrium price and quantity.
a decline
A decrease in demand while holding supply constant results in _______.
a decrease in both equilibrium price and quantity
The effects on equilibrium price and quantity due to an increase in supply and a simultaneous decrease in demand are shown by ______.
a decrease in equilibrium price and an indeterminate change in equilibrium quantity
The inverse relationship between price and quantity demanded can be graphically illustrated by ______.
a downward sloping curve
The willingness and ability of a consumer to buy a normal product falls because of ______.
a fall in income
Suppose that demand for hot dogs decreases and prices are flexible. Firms that produce hot dogs will experience
a fall in prices, which will induce them to decrease production and reduce the number of workers.
Business cycles are ______.
alternating increases and decreases in economic activity
A business cycle consists of ______.
alternating rises and declines in the level of economic activity
The supply curve is ______ sloping curve.
an upward
For a market system to maximize its potential, it must develop methods for ______.
assessing and managing risk
The two major benefits that arise from the market system's restriction of business risk to owners and investors are
attracting inputs and focusing attention.
Cost-of-living adjustments are ______.
automatic wage changes that happen when the CPI rises
Who are the main economic investors?
businesses
The product market is the place where _______.
businesses sell goods and services and households buy goods and services
The rationing function of prices refers to the ability of the competitive forces of supply and demand to establish a price at which ______.
buying and selling decisions are consistent
Price controls or ______ mandated in the apartment rental market benefit the consumer by establishing a price ______ the free market equilibrium price.
ceilings; below
Firms and industries producing capital goods are affected most by the business cycle and the negative effects of a recession because purchases of capital goods ______.
can be postponed
A government agency that is supposed to supervise a particular industry is said to have suffered regulatory ---------if its regulations and enforcement activities come to be heavily influenced by the industry it is supposed to be regulating.
capture
A price ------(floor/ceiling) is the maximum legal price a seller may charge for a product or service.
ceiling or cap
The market system depends on ______ both among buyers and among sellers.
competition
Two or more buyers and two or more sellers acting independently in a particular product market with the freedom to enter and leave the market best describes ______.
competition
A ______ good is one that is used together with another good.
complementary
The concept of demand can be summarized by a schedule or curve showing the quantity of a product that would be ______.
consumed at various possible prices
The index most widely used by the government and the private sector to measure changes in the cost of living is the:
consumer price index
Gross domestic product (GDP) may be calculated as the sum of ______.
consumer spending, investment spending, government purchases of goods and services, and net exports
Consumers must make choices about what to buy and what to forgo to fulfill wants because ______.
consumers have limited incomes
In the circular flow model, the market economy creates ______.
continuous flows of goods and services, resources, and money
According to the law of supply, price and quantity supplied have a(n) ______ relationship.
direct
An event that unexpectedly shifts the demand curve is called a(n):
demand shock
The labor force is the sum of the ______ and ______.
employed; unemployed
The four supply factors that constitute changes in physical and technical agents of production ______.
enable an economy to expand its potential GDP
Goods that are produced in a particular period but not sold in that period:
end up in inventories
When demand is unexpectedly high, inventories will _____ as the quantity demanded _______ the factory's optimal output.
fall; exceeds
During hyperinflation, the value of money:
falls rapidly
When inflation occurs each dollar of income will buy ______ goods and services than before.
fewer
which of the following is a result of having scarce economic resources for the production of goods and services?
fewer options that require choices
In order to determine GDP using the expenditures approach, all spending on ______ goods and services, not intermediate goods, is added up.
final
In the circular flow model, households sell resources to and buy products from _______.
firms
Which of the following group of people are hurt by unanticipated inflation?
fixed-income recipients creditors savers
---------prices react within seconds to changing supply and demand while sticky prices sometimes take months to change.
flexible
Prices that adjust very quickly are:
flexible prices
A price --------(one word) is a minimum price fixed by the government, generally imposed above the equilibrium price.
floor
As a result of shocks and things not going to plan there are
fluctuations in output and employment.
A government provision is a good or service provided _______ in order to correct for very large _______ externalities.
for free to everyone; positive
A person who receives benefits from a market transaction without having to pay for them is called a(n) ------rider.
free
People who receive the benefits from a good without having to pay for it are known as ______.
free riders
Strong property rights, ______ trade, patents and ______ market systems are all growth-promoting institutional structures.
free; competitive
____ and ____ satisfy our wants
goods; services
If demand falls for many goods for an extended period of time, firms will be forced to cut production as inventories ______; GDP will ______; and unemployment will ______.
grow; fall; rise
An economy that is experiencing economic ______ is better able to meet people's wants and resolve socioeconomic problems.
growth.
One reason teenagers have a higher unemployment rate than adults is because they:
have lower skill levels
the concept at the core of "there is no free lunch" reflects the notion that
he scarce resources that are used to produce the so-called "free goods" have alternative uses that are given up
Government may place legal limits on prices when it is determined that prices are unfairly __________(high/low) for buyers or unfairly ____________(high/low) for sellers.
high; low
Those countries which experienced modern economic growth earlier than other countries now have significantly ______.
higher standard of living
One of the flaws of GDP is that it ______.
ignores transactions that takes place in illegal markets or nonmarkets
The command economies of the former Soviet Union and of Eastern Europe failed due to:
incentive problems. coordination problems.
Three virtues of the market system include ____, _____, and ______.
incentives, efficiency, and freedom
National --------accounting measures the overall performance of the economy.
income
A nation's economic growth from one year to the next depends on its ______.
increase in labor inputs and increase in labor productivity
A situation in which a given percentage increase in the amount of inputs a firm uses leads to an even larger percentage increase in the amount of output the firm produces is called ______.
increasing returns
Real GDP, unemployment, and-------- are the main statistics used by economists to assess the health of the economy.
inflation
Computers, fiber-optic cable, wireless technology, and the Internet represent advances in a special type of technology known as----------- technology.
information
The short run in macroeconomics is the period in which:
input prices do not change at all or very much
Human capital refers to ______.
knowledge and skills that make a worker productive
4 economic resources/factors of production/inputs
land, labor, capital, entrepreneurial ability
A production possibilities curve with an increasing slope is the result of which of the following?
law of increasing opportunity costs
An economy can produce either guns or butter with all available resources. Suppose it currently produces all butter and it chooses to produce some guns, thereby giving up some production of butter. As a result, the first 200 units of guns are produced at the cost of only 50 units of butter. Not surprisingly, the next 200 units of guns are produced at the cost of 150 units of butter and the last 200 units of guns at the cost of 300 units of butter. What does this describe?
law of increasing opportunity costs
Countries that develop and use the most advanced technologies, which then became available to follower countries, are known as ---------countries.
leader
A decrease in income will shift the budget line to the
left
A price ceiling is the maximum legal price a seller may charge for a product or service where a price at or below the ceiling is ______ and a price above the price ceiling is ______.
legal; illegal
If costs of production rise, the producer has an incentive to produce ________(one word) output.
less
As a result of our ______ incomes and ______ wants, it is in our self-interest to economize or pick and choose goods and services that maximize our satisfaction.
limited; insatiable
Which discipline studies the economy as a whole or its basic subdivisions or aggregates?
macroeconomics
Why the economy sees business cycle fluctuations rather than slow, smooth growth is a central issue of ______.
macroeconomics
the discipline that examines the performance and behavior of an economy as a whole.
macroeconomics
The equilibrium price where the quantity demanded equals the quantity supplied is otherwise known as the____________ -clearing price. (Remember to type only one word the blank.)
market
Under the market system, ______ coordinate the decisions made by households and businesses.
markets and prices
Consumer surplus is the difference between the _____ price a consumer is willing to pay for a product and the price paid.
maximum
Money performs several functions, but first and foremost it is a ______.
medium of exchange
Which discipline studies the decision-making process of customers, workers, households, and business firms on an individual basis rather than as aggregates?
microeconomics
According to the median-voter model, the person holding the ______ position on an issue is most likely to determine the outcome of a majority vote.
middle
The distinction between an increase in output versus an increase in output per person can be made when discussing ______.
modern economic growth
Another policy approach to --------externalities is for government to levy a tax or charge specifically on the related good.
negative
If a market transaction imposes an uncompensated cost on a third party not directly involved in the transaction, the transaction results in a market failure known as a ______.
negative externality
Economic investment represents spending on ______.
newly created capital goods
The demand factor involves households, businesses, and government purchasing the economy's expanding output of goods and services so that there will be ______.
no unplanned increase in inventories and resources will remain fully employed
GDP may be understated because ______.
nonmarket activities are not included in GDP
The phase of the business cycle at which the economy is at or near full employment is known as a(n)---------
peak
A production possibilities curve (PPC) illustrates the attainable combination ______,
of two goods that can be produced given a specific set of resources
Food and energy prices often complicate the measurement of inflation because supply and demand for these products ______.
often change, creating temporary changes in prices
Due to scarce resources, society is faced with a(n) ______ cost when choosing to acquire a good by sacrificing the next best thing that could have been acquired with those resources.
opportunity
Trade-offs arising from limited resources give rise to ______.
opportunity costs
Financial intermediaries are ______.
organizations that receive funds from savers and then channel those funds to investors
The basic economic cost of unemployment is forgone ______.
output
Modern economic growth is best measured as an increase in ______.
output per person
In the short run, as a result of inflexible prices, economies are forced to respond to demand shocks primarily through changes in ______ and ______.
output; employment
In a market system, firm __________ are subject to business risk.
owners
The direct way to reduce negative externalities from a certain activity is to ______.
pass legislation limiting that activity
A GDP gap equals actual GDP minus------- (one word) GDP.
potential
In the short-run, the ---------of many goods and services are sticky or inflexible and unable to rapidly change. (Remember to type only one word in the blank.)
price
The determinants of the supply of a good are any factors other than the product's ______ that cause the supply curve of the good to shift.
price
When drawing a supply curve, _____ is labeled on the vertical axis.
price
The supply curve illustrates the relationship between ______.
price and quantity supplied
All the following are the determinants of demand except ______.
price of substitutes in production
If prices are fully flexible and can adjust freely to unexpected changes in demand, then the economy will
produce its optimal capacity because the quantity demanded will equal the quantity supplied.
The interaction between buyers and sellers in a market system determines ______.
product and resource prices
_______ _________ ________ illustrates that at any point in time, a fully employed economy must sacrifice some amount of one good to obtain more of another good?
production possibilities table
The production of a good or service in the least costly way is known as ______ efficiency.
productive
Competition among corn producers forces them to use the best technology and right mix of productive resources; otherwise their costs will be too high relative to the market price and they will be unprofitable. This is best described as ______.
productive efficiency
GDP or adjusted GDP is an important measure of output because it allows valid comparisons between different years.
real
Which of the following are the main statistics used by economists to assess the health of the economy?
real gross domestic product unemployment inflation
Increasing productivity leads to improved standards of living by increasing ______.
real hourly earnings
Labor productivity is:
real output per hour of work.
Fixed-income recipients, savers, and creditors are hurt by unanticipated inflation because inflation ______.
redistributes real income away from them and toward others
Negative externalities, such as pollution, ______ the utility of those affected.
reduce
Inflation ______ the purchasing power of money.
reduces
Cost-push inflation can contribute to a recession by increasing prices, which ______.
reduces output and leads to lower employment
The price of ______ goods is a determinant of demand.
related
The main reason to participate in the underground economy is to avoid ______.
reporting actual income and paying income taxes
A firm's owners are called ______ because they are only paid after employees, suppliers, and lenders have been paid.
residual claimants
Arable land, water, machinery, and professional athletes are all considered economic _____ used in the production of goods and services
resource
When an economy produces a good such that the marginal benefit equals the marginal cost, this indicates that ______.
resources are being allocated efficiently
What is the cause of a society's increasing opportunity costs with respect to the production of goods?
resources that are not fully interchangeable
An increase in income will shift the budget line
right
A ______ the demand curve represents a change in demand while a ______ the demand curve represents a change in the quantity demanded.
shift of; movement along
A change in demand is represented by a ______ the demand curve while a change in quantity demanded is represented by a _______ the demand curve.
shift of; movement along
A situation in which firms expect one thing to happen, but then something else happens is commonly referred to in economics as a ______.
shock
An unanticipated event that changes the demand or supply of goods and services either positively or negatively is called an economic ------. (Use one word for the blank)
shock
The ratio of the price of two goods on a graphed budget line is measured by its
slope
A business owned and managed by a single person is called a(n) ______.
sole proprietorship
A ____________ proprietorship is a business owned and managed by a single person.
sole, single, or solitary
The goods and services produced by an economic unit through ______ can be exchanged for a full range of desired products produced by other economic units.
specialization
Economists pay attention to small changes in economic growth because small changes in economic growth can make a big difference in the living -------of a country.
standards
A new firm focused on creating and introducing a particular new product or employing a new production or distribution method is called a ______.
start-up firm
Prices that do not adjust rapidly to maintain equality between quantity supplied and quantity demanded are known as _______.
sticky prices
A change in--------- , rather than a change in the quantity supplied, means a change in the schedule or a shift of the supply curve.
supply
Market _______ is a schedule or curve showing the various amounts of a product that producers are willing and able to make available for sale at each possible price during a specific period.
supply
The six "determinants" of economic growth are grouped into three categories: one demand factor, four------- factors, and one efficiency factor.
supply
Which of the following statements are true of a price index?
t is expressed in terms of a base, or reference, year.It measures the price of a set of goods of services in a given year.
Because companies make major efforts to predict trends to decide how to invest in their business, macroeconomics ______.
takes into account expectations about the future
Your next-door neighbors want to go on a European vacation but cannot afford it, so they decide to visit a local amusement park instead. This is an example of ______.
the economizing problem
Direct controls on pollution raise the marginal cost of production because ______.
the firms must purchase, operate, and maintain pollution-control equipment
The core element of the productivity speedup between 1995 and 2010 was an explosion of entrepreneurship and innovation based on ______.
the microchip
The core element of the productivity speedup between 1995 and 2010 was an explosion of entrepreneurship and innovations based on ______.
the microprocessor
The ability of the competitive forces of supply and demand to establish a price at which selling and buying decisions are consistent is called ______.
the rationing function of prices
In a market economy, goods and services are distributed ______.
to consumers on the basis of their ability and willingness to pay the existing market price
Aggregate output is the primary measure of the economy's ______.
total output of goods and services
In this figure, obtaining more books by giving up some movies is called a(n) ______; whereas losing two books in order to gain 1 movie is referred to as ______ cost.
trade-off; opportunity
Social Security payments, welfare payments, and veterans' payments that the government makes directly to households are called government public ---------payments.
transfer
Expectations have a large effect on economic growth, since increased -----------(one word) leads to less current investment and, subsequently, less future consumption.
uncertainty
Government can correct the ______ of resources by subsidizing consumers of the product.
underallocation
Private bargaining, subsidies to producers, subsidies to consumers, and government provisions are all ways for correcting the ______ of resources associated with ______ externalities.
underallocation; positive
A supply shock is an:
unexpected change in the production of goods and services
People desire goods and services that provide maximum utility. In fact, our desires or wants are ______.
unlimited
forms of income include
wages, interest, rent, profit, and even government programs
people have virtually unlimited _____
wants
Which of these are components of government purchases in GDP?
~Expenditures for goods and services that the government consumes in providing public services ~Expenditures for publicly owned capital