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The Latin term "ceteris paribus" means
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Terms in this set (85)
In the resource markethouseholds sell resources to businessesWhich business has only one owner who receives all of the profit or bears all of the loss?Sole proprietorshipTrue or false: the owners of a corporation are not personally responsible for financial losses of the business.TrueWhen high-school and college graduates apply for jobs in the labor markets,job applicants are the "sellers" while employers are the "buyers"Digital cameras and memory cards arecomplementary goodsA leftward shift in the supply curve for oil in the United States is most likely to result froman increase in the costs of exploration and drilling for oilAssume a drought in the Great Plains reduces the supply of wheat. Noting that wheat is a basic ingredient in the production of bread, and potatoes are a consumer substitute for bread, we would expect the price of wheat torise, the supply of bread to decrease, and the demand for potatoes to increaseWhich of the following would cause a leftward shift in the supply curve for car washes?An increase in the price of car wash equipmentThe market system automatically corrects a surplus condition in a competitive market byreducing the price of the commodity in question while increasing the quantity demandedAssuming competitive markets with typical supply and demand curves, which of the following statements is correct?An increase in demand with no change in supply will result in an increase in revenueUnemployment describes the condition wherea person cannot find a job but is willing to work and actively seeking workWhich of the following is used to compare the average standard of living across countries?real GDP per capitaIf consumers become pessimistic, the economy is likely to experience anegative demand shockWhich of these is a better indicator of true economic growth?real GDPWhat is bad for the adjustability of the economy?Sticky of inflexible pricesA nation's gross domestic product (GDP)can be found by summing C + IWhich of the following is a primary use for national income accounts?to measure changes in the value of production and income in the economyBusiness inventories increase when firms producemore than they sell, and the inventory increase is added to GDP.GDP calculates the monetary value of final goods and services produced in the economy. Therefore, intermediate goods are not counted as a part of GDP.TrueWhich classification of a good is intended to be used for a long period of time?Durable goodsWhen attempting to adjust for inflation, economists use a price index. This price index showshow the prices of a basket of goods have increased or decreased over a period of time.What is defined as, "recurring increases and decreases in the level of economic activity over periods of years, consisting of peaks, recessions, troughs, and expansions"?the business cycleThe highest point or temporary maximum of the business cyclepeakDuring which phase of the business cycle is inflation most likely to occur?during an expansionThe labor force is composed of the people who are employed and the people who are unemployed.TrueThe type of unemployment that results from an inefficient economy.cyclical unemploymentWhich of these causes inflation?All of these. When consumers spend a significant amount of money on purchases and businesses struggle to keep up with the demand. When the cost of inputs increases drastically, forcing businesses to cut back on production. When the government pumps a lot of money into the economy.The Consumer Price Index (CPI) measures the percentage price increase of a particular combination of goods and services over a specific time period.TrueWho is harmed by inflation?All of these. People receiving fixed income. Creditors (people who have lent others money and are expecting to be paid back). Savers (people who tend to save the majority of their money).Which of the following is a measure of economic growth that is most useful for comparing living standards?Real GDP per capitaThe number of years required for real GDP to double can be found bydividing 70 by the percentage rate of growth per yearWhich of the following is best considered a demand factor in economic growth?expanded purchases of goods and servicesEconomic growth can be portrayed asan outward shift of the production possibilities curveThe movement of workers from lower productivity jobs to higher productivity jobs would be an example ofimproved resource allocationWho perfected the efficient steam engine?James WattWhich of the following is a result of modern economic growth?All of these. Increased standards of living. The addition of women and minorities into the workforce. Moves toward democratic systems of government.The interconnected network of large scale capital goods needed to operate a technologically advanced economy is calledinfrastructureThe interconnected network of large scale capital goods needed to operate a technologically advanced economy is calledTrueEconomies of scale occur when a firm produces mass amounts of a good and is able to lower their average total cost of production.TrueConsumption is the portion of a household's income that is used to purchase items. In other words, expenditure.TrueSaving is the portion of income that is not used for expenditure.TrueWhich equation is correct?Disposable Income = Consumption + SavingThe fraction of any change in disposable income spent for consumer goodsMarginal Propensity to Consume (MPC)Marginal Propensity to Save is the portion of a change in disposable income that will not be spent.TrueMPC + MPS must equal1If the interest rate increases, total investment in the economy is expected todecreaseThe increase in profit a firm anticipates it will obtain by purchasing capital or engaging in research and development; expressed as a percentage of the total cost of the investmentexpected rate of returnA firm should participate in and investment endeavor ifthe expected rate of return is greater than the real interest rateThere is a(n) __________ relationship between investment demand and the real interest rate.inverseThe MPC can be defined asthat fraction of a change in income that is spent on consumptionOne factor that shifts the consumption schedule is household wealth. Households build wealth bynot spending all their current incomesThe investment demand curve suggests thatthere is an inverse relationship between the real rate of interest and the level of investment spending.The immediate determinants of investment spending are theexpected rate of return on capital and the real interest rateA decline in the real interest rate willincrease the amount of investment spendingWhich of the following was one of the causes of the Great Depression?firms' inventories were rising because people were not spending money, so firms cut back on production.Who is responsible for the aggregate expenditures model?John Maynard KeynesThe equilibrium quantity of GDP occurs where C+I =GDPThe aggregate demand curve isdownward slopingWhich of the following would increase aggregate demand?expectations that prices will rise in the futureIn the short run, the aggregate supply curve isupward slopingThe equilibrium price level and equilibrium level of real output occur where the Aggregate Demand and Aggregate Supply curves intersectTrueIf aggregate supply remains constant and aggregate demand increases, the price level will:increaseIf aggregate demand remains the same and aggregate supply decreases, theprice level will rise and the level of real output will fall.Discretionary Fiscal Policy is actively enacted by the current Congress.TrueChanges in government spending and tax collections designed to achieve full employment, price stability, and economic growth.Fiscal PolicyExpansionary fiscal policy is conducted in order toincrease aggregate demandwhich of these is a mechanism used when exercising expansionary fiscal policy?decreased taxes and increased government spendingWhen the government spends more money than they bring in through taxes they are running abudget deficitWhen the tax revenue brought in by the government is more than the government spends, they are running abudget surplusWhich describes a progressive tax structure?a tax structure in which people who have greater incomes pay a greater portion of their incomes in taxesWho is the US public debt owed toowners of the government debt, mostly in the form of treasury bondsMoney serves three purposes: operating as a medium of exchange, a unit of account, and a storer of valueTrueWhat is liquidity?the relative speed with which an asset can be converted into cashWhat is the governing body responsible for controlling the money supply in the United States?the Federal ReserveWhy does the money supply actually matter?All of these. It is a way to control inflation. It has a significant influence on interest rates. It can affect aggregate demand