ECO 201 FINAL

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

-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

-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

-which terms describe few or too many resources

- a market failure-a situation benfits or a cost associated- an externality

-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

-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

-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

-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

-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

-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

-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

-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 13 dont have

-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

-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

-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