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44 terms

econ 2301 summer 2012 final

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economics may best defined as the
social science cocerned with how individuals, institutions, and society make optimal choices under condtions of scarcity
through specialization and international trade a nation
can attain some combination of goods lying outside its prodcution possibilties curve
the economic perspective entails
a comparison of margianl benefits and marginal costs in decision making
in deciding whether to study for an econmics test or go to a movie, one is confronted by the idea of
scarcity and opportunity cost
macroeconomics approaches the study of economics from the viewpoint of
the entire economy
GDP is
the monetary value of all final goods and services produced within a nation in a specific year
whic is a demand factor in economic growth
an increase in total spending in the economy
which is best considered a supply factor for long run economic growth
the stock of capital goods
what is one of the major measures of economic growth
increase in per capita real GDP
a recession occurs when
total output, incom, and, employment decline for at least 6 months
if a unintended increase in business inventories occurs at some level of GDP, then GDP
is too high for equilubrium
viewed through the aggregate expenditures model, the U.S. recession of 07-09 resulted mainly from
insufficient aggergate expenditures
in the US, the money supply M1 is comprised of
coins, paper currency, and checkable deposits
the money supply is backed
by govt. ability to control the supply of money and therefore to keep its value relatively stable
near monies
are certain highly liquid financial assets that do not function directly as a medium of echange but can be readily converted into M1
checkable deposits are classifed as money b/c
they can readily used in purchuasing goods and paying debts
an economist who favors expanded govy would recomend
increases in govt spending during recession and tax increases during inflation
suppose that the economy is in the midst of a recession. which of the following policies would most likely end the recession and stimulate output growth
a reduction in federal tax rate on personal and coporate income
which of the following tools of monetary policy is considered the most important
open market operations
holding the money deposits of businesses and households and making loans ot public are the basic function of
commercial banks and thrifts
what is one significant charcterstic of fractional reserve banking
baks can create money through lending their reserves
bank net worth is the
claims of the owners of the banks against bank assets
the financial services modernization act of 99
permitted banks, thrifts, pension companies, and sec. firms to merge and sell each others products
the federal funds market is the market in which
banks can burrow reserves from one another on an overnight basis
the 12 fed reserve banks
hold the reserve deposits of commercial banks
fiscal policy refers to the
manipulation of govt spending and taxes to stablize domestic output, employment, and the price leve
discretionary fiscal policy refers to
changes in taxes and govt expenditures made by congress to stablize economy
contercyclical discretionary fiscal policy calls for
deficits during recessions and surpluses durning periods of demand pull inflation
expansionary fiscal policy is so named because it
is designed to expand real GDP
the value of US imports is
subrtacted from exports when calculating GDP b/c imports do not constitute production in US
the group that sets the federal reserve systems policy on buying and selling govt securties (bills, notes, and bonds) is the
federal open market commitee (FOMC)
an imprtant routine funciton of the FED is to
provide facilities by which commericial banks and thrifts institutions may collect checks
whic of the following is the basic economic policy function of FED
controlling the supply of money
countres engage in international trade speclaize in production based on
comparative advantage
undrea system of freely flaoting exchange rates , an increase in teh interantional value of a nations currency will
cause imports to rise
the idea that freely exchange rates equate the purchasing pwr of national currencies is called
the purchasing pwr parity theory
the gain from international trade is
more goods tha would be attainable throug domestic production alone
an excise tax on an imported good that helps shield domestic producers of the good is called a
protective traiff
suppse the US sets limit ont the ton of sugar tha be imported each year. this is an example
import quota
suppose US eliminates high tariffs on german bikes. as a result, we would expect
employment to decrease in the US bike industry
one of the consequences of the US trade deficit is
the accumaltion of American dollars in forigen hands has enabled foreign firms to build factories in US
under the manged floating system of exchange rates
exchange rates are essentially flexible, but govt intervene to offset disorderly fluctuations in rates
in the real world, specialization is rarely complete b/c
nations experience increasing opportunity costs in producing more of he product in which they are specialized
the three stats that are the main focus for those measuring the health of the macro economy are
real GDP, inflation, and unemployment