Economics may best be defined as the:
Social science concerned with how individuals, institutions, and society make optimal choices under conditions.
Microeconomics is concerned with:
A detailed examination of specific economic units that make up the economic system.
A production possibilities curve shows:
the maximum amounts of two goods that can be produced assuming the full use of available resources.
This is NOT one of the Five Fundamental Questions:
What goods and services should be produced by government?
In a competitive market for corn, the law of demand indicates that, other things equal, as:
The price of corn decreases, the quanitity of corn demanded will increase.
A result of a fall in the prices of gasoline, consumers buy more gasoline and take more driving vacations. This situation is an illustration of:
The income effect.
Which statement best illustrates the concept of diminishing marginal utility?
The more bags of potato chips a person eats, the less additional satisfaction the person gets from eating another bag.
If an increase in consumer incomes causes the demand curve for product Z to shift to the left, then it can be said that product Z is an:
If the price of gasoline increases and car dealers experience a decrease in demand for sport utiility vehicles, then gas and sport utility vehicles are:
All of the following would affect the position of the demand curve for personal computers, except the:
Price of personal computers
Which would cause a rightward shift in the supply curve for telephone service?
An improvement in telephone technology
An increase in demand and increase in supply will:
Affect price in an indeterminate was and increase the equilibrium quantity.
What combination of changes in supply and demand would most likely increase the equilibrium quantity?
When supply increases and demand increases.
By the fuctional distribution of income we mean:
The percentage of national income paid as wages, rents, interest, and profits.
What economic fuction is government pursuring when it enforces a system of weights and standards for products?
Maintaining a legal structure
When a US business builds a manufacturing plant in another country, this situation would be an example of a:
Which factor has contributed significantly to more international trade since the Second World War?
A general decline in tariffs
When a nation has a comparative advantage in some product this means that:
It can produce that product at a lower domestic opportunity cost than can a potential trading partner.
The depreciation of the US dollar relative to the French franc would make a vacation trip to:
The United States less expensive for the French.
Government payments to domestic producers to reduce the world price of exported goods are called:
Real gross domestic product
Measures the value of final goods and services produced within the borders of a given country during a given time period corrected for changing prices.
The value of corporate stocks and bonds traded in a given year is:
Excluded from the calculation of GDP because they make no contribution to current production of goods and services.
The expenditures or output approach to GDP measures it by summing:
The total spending for consumption, investment, net exports, and government purchases.
Which phase of the business cycles would be most closely associated with an economic contraction?
In calculating the unemployment rate, part-time workers are:
Counted as employed because they are receiving payment for work.
A headline reads: "steel industry suffers slump as import competition increases; unemployment rises." This type of unemployment can best be characterized in economic terms as:
The best examply of a "Frictionally Unemployed" worker is one who:
Is in the process of voluntarily switching jobs
A headline states: "Real GDP falls again as the economy slumps." This condition is most likely to produce what type of unemployment?
Inflation that occurs when total spending is greater than the economys ability to produce output at the existing price level is:
Given the expected rate of return on all possible investment opportunities in the economy, a:
decrease in the rate of interest will tend to increase the level of investment.
Other things being equal, a decrease in an economy's exports will:
Decrease domestic aggregate expenditures and the equilibrium level of GDP.
A decrease in taxes will have a greater effect on equilbrium GDP the:
Larger the marginal propensity to consume
The foreign purchases effect suggests that a:
Rise in our domestic price level will increase our imports and reduce our exports, thereby reducing the net exports component of aggregate demand.
The interest rate effect indicates that a:
Decrease in the price level will decrease the demand for money, decrease interest rates, and increase consumption and investment spending.
The real-balances effect suggest that a:
Lower price level will increase the real value of many financial assets and therefore cause an increase in spending.
The short-run aggregate supply curve shows the:
Direct relationship between the price level and real GDP produced
When the federal government uses taxation and spending actions to stimulate the economy it is conducting:
When changes to taxes and spending occur in the economy without explicit action by the Federal government, such policy is:
Which set of fiscal policies would tend to offset each other?
A decrease in government spending and taxes
With a progressice tax system, as the level of income increases in an economy, the average tax rate will:
One timing problem with fiscal policy to counter a recesstion is an "administrative lag" that occurs between the:
Time the need for the fiscal action is recognized and the time that the action is taken
The time which elapses between the beginnin of a recession or an inflationary episode and the identification of the macroeconomic problem is referred to as a:
If you are estimation your total expenses for school next semester, you are using money primarily as a:
Unit of account
If you place a part of your summer earning in a savings account, you are using money primarily as a:
Store of value
If you write a check on a bank to purchase a used Honda Civic, you are using money primarily as:
A medium of exchange
The money supply is backed:
by the governments ability to control the supply of money and therefore to keep its value relatively stable.
Checkable deposits are classified as money because:
they can be readily used in purchasing goods and paying debts.
To say that coins are token money means that:
Their face value is greater than their intrinsic value
The primary purpose of the legal reserve requirement is to:
provide a means by which the monetary authorities can influence the lending ability of commercial banks.
The amount of reserves that a commercial bank is required to hold is equal to:
its checkable deposits multiplied by the reserve requirement.
When a bank has a check drawn and cleared against it:
the amount of required reserves the bank must have will fall.
Other things equal, if the required reserve ration was lowered:
The size of the monetary multiplier would increase.
The equilibrium rate of interest in the market for money is determined by the intersection of the:
Supply of money curve and the total demand for money curve.
The four main tools of monetary policy are:
The discount rate, the reserve ration, the term auction facility, and open-market operations.
The Fed can change the money supply by:
changing the quantities of required and excess reserves by altering the legal reserve ration.
The purchase of government securities from the the public by the fed will cause:
The money supply to increase
The interest rate at which the Federal Reserve banks lend to commercial banks is called the:
The interest rate that banks charge one another on overnights loans is called the:
Federal funds rate
The sale of government bonds by the Federal Reserve Banks to commercial banks will:
Decrease aggregate demand