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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
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-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
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-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
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-which terms describe few or too many resources
- a market failure-a situation benfits or a cost associated- an externality
Q 4
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-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
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-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
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-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
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-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
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-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
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-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
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-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
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-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
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-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
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-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
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-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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