1. Econmoics can be described as the study-limited; unlimited

    -a friend want to learn how macro-Micro is - how individuals

    -Normative econ- a state of "what should be"-"if A occurs then B will follow"

    -positive statement-"No indiv. shoud have less than $20,000" ex- notmative will follow"

    -positive statement-"No indiv. shoud have less than $20,000" ex- notmative
    Q 1
  2. -Scarcity implies- make choices

    -All of the following ex physical cap except- company stocks and bonds

    -Factors of production- I, II, III, IV

    -value of best altern. sacr- opportunity cost-one oppor. cost college- giving up employ possib.

    -Bill Bonecrusher- 50,000; 2 mill

    -suppose you have 4 choices- the value of the activity that you would have selected
    Q 2
  3. -law of demand states- QD will vary inversely

    -demand curve- slopes down-example of law of demand

    -an increase in the price of gasoline-suppose the short skirts

    - a leftward shift in the DC-increase in demand is shown graphically- a shift of the demand curve to the right

    -Sarah gets a salary- hamburger is an inferior good and steak is normal

    - in the figure above, when the price B good increases- the movement along D0 from P1 to P2
    Q 3
  4. -which terms describe few or too many resources

    - a market failure-a situation benfits or a cost associated- an externality
    Q 4
  5. -when market failures occur- the price system will

    -An ex. of 3rd parties in the market of auto- a pedestrian

    -a negative externality such as pollution- a tx on producers

    -a government subsidy is typically used- to provide a govnt

    -inhibited good-in the US, which of the following is ex of- cigarettes
    Q 5
  6. -suppose income tax rate is 0% on 10,000, 10% next 20,000- 40% on A 20% on B

    -suppose income tax rate is 0% on 10,000, 10% next 20,000- 32,000 for A & 7500 for B

    -A tax rate system characterized- a progressive tax system

    -the federal income tax code of the US- progressive
    Q 6
  7. -true about unemployment- all of the above

    -is true about the labor force-both a and b are correct

    -which ppl woudl be considered unemployed- Edna, who lost her job as a teacher

    -individuals who have stopped looking for work- discouraged workers

    -suppose that Matt quits a job- counted as frictionally unemployed

    -If a person loses her job cuz her ablit- structurally unemployed

    -a lifeguard- seasonally unemployed
    Q 7
  8. -total market value of final g&s- Gross Domestic Product

    -2 principle methods of measuring GDP- expenditures approach & the income approach

    -included in deter. GDP- the purchase of a new car

    -goods that are used up entirely in the production- intermediate goods

    -included in GDP- none of the above

    -goods that are used up entirely- intermediate goods

    -which included in calculating GDP- none of the above

    - wheat used for producing bread- an intermediate

    -suppose that the economy of Springfield- 7,100
    Q 8
  9. -full employment is not zero- there is "normal"

    - unemployment resulting from business recession- cyclical

    -a person graduates from college- frictional

    -the rate of inflation and purchasing power- inversely

    -the nominal value of a good- the price of the good in today's dollars-when econ discuss the nominal value of an econ.

    - expressed in current dollars-suppose that in 2006, nominal GDP- 5 Trillion
    Q 9
  10. -longrun aggregate supply reflects- total production in the economy

    -long-run aggregated supply curve-vertical at the full-employment level of RGDP

    -as the capital stock grows & tech- shift right

    -longrun aggregate supply surve will shift to the left- population

    -would cause increase in AD- a decrease in price level

    -AD reflects-??? not d

    -the ADC is usually- downward sloping
    Q 10
  11. -the idea that supply creates its own demand is known- Shays Law

    -if you become elated when you recieve a 20%- money illusion

    -if a shift in AD only affects RGDP- horizontal

    -in the above figure, assume current AD is represented by AD2- the new equilibrium RGDP will be x

    -a key component of the Keynesian model- proces are sticky

    -according to the above figure, an increase in AD between RGDP y0 to Y1- would most likely result in some inflation

    -according to the above figure, an increase in AD beyond RGDP level Y1- a higher price level but no change in RGDP
    Q 11
  12. -which would NOT be considered a consumption good- shears that cut metal

    -saving and savings- savings is a stock and savings is a flow

    -the expression 1/mps- multiplier

    -suppose the MPC is .75- 750,000-the larger is the MPC - the larger is the multiplier

    -if the MPC is 0.9, the multiplier- 10

    -suppose that when disposable income increases by 1,000- .75

    -dissaving- disposable income is less than consumption.
    Q 12
  13. Q 13 dont have
  14. -which one is NOT a part of M1- savings accounts

    -which is true about M2- it is larger than M1

    -a business owner applies for a bank loan- moral hazard

    -the liklihood that individuals who seek to borrow money- adverse selection

    -a system in which depository institutions hold reserves- fractional reserve banking

    -in the US, where do depository- Either as vault cash

    -a bank with 200 mil in transaction- 30 million

    -a depository institution has 2 million in transaction deposits- 200,000

    -if a bank holds 20,000 in required reserves- 50,000

    -a bank with 500 million- 15% ; 10%

    -suppose a nank is exactly meeting ists required reserve ratio of 10%- 67,500

    -total reserves- required reserves + excess reserves

    -the required reserve ration 10%. the bank has 500,000- 50,000

    -based on the above table-10%

    -the potential money muliptler for tble above- 10
    Q 14
  15. -to close a recessionary gap- increase the money supply

    -a recessionary gap currently exists- buy govnt securities

    -the Federal Open Market Committee- selling bonds

    -the real world, contractionary monetary- reduce the rate of inflation

    -when the dollar appreciates- foreign residents demand more of out goods, and us residents desire to purchase more foreign goods.

    -a depreciation of the dollar- makes us less exports in terms of foreign currency and imports more expensive

    -according to the equation of exchange- V is 4
    Q 15
  16. -active policy making except- unempoyment

    - what types of unemployment will still- frictional and structual unemp only

    - line ABCD is- Phillips curve

    - According to Phillips curve- there is an inverse relationship

    - suppose the RGDP growth rate was 4%- -3%

    -suppose the RGDP 3%- 1%

    -economic freedom- all the above
    Q 16
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